EXHIBIT
10.1


 




 


 





$55,000,000 CREDIT FACILITY


 


AMENDED AND RESTATED CREDIT AGREEMENT


 


Dated as of September 23, 2005


 


by and among


 


WII COMPONENTS, INC.,


 


a Delaware corporation,


 


as Borrower,


 


 


ANTARES CAPITAL CORPORATION,


 


for itself, as a Lender, and as Agent for all Lenders,


 


 


and


 


 


THE FINANCIAL INSTITUTIONS PARTY HERETO,


 


as Lenders




 


 





 





















 


TABLE OF CONTENTS


 


	
  ARTICLE I -

  	
  THE CREDITS

  	
   

  
	
  1.1

  	
  Amounts
  and Terms of Commitments

  	
   

  
	
  1.2

  	
  Notes

  	
   

  
	
  1.3

  	
  Interest

  	
   

  
	
  1.4

  	
  Loan Accounts

  	
   

  
	
  1.5

  	
  Procedure
  for Revolving Credit and CapEx Loan Borrowing

  	
   

  
	
  1.6

  	
  Conversion and
  Continuation Elections

  	
   

  
	
  1.7

  	
  Optional
  Prepayments

  	
   

  
	
  1.8

  	
  Mandatory
  Prepayments of Loans and Commitment Reductions

  	
   

  
	
  1.9

  	
  Fees

  	
   

  
	
  1.10

  	
  Payments
  by the Borrower

  	
   

  
	
  1.11

  	
  Payments
  by the Lenders to the Agent; Settlement

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE II -

  	
  CONDITIONS
  PRECEDENT

  	
   

  
	
  2.1

  	
  Conditions
  to Effectiveness

  	
   

  
	
  2.2

  	
  Conditions
  to All Borrowings

  	
   

  
	
  2.3

  	
  Conditions
  to Certain Loans and Acquisitions

  	
   

  
	
  2.4

  	
  Conditions to CapEx
  Loan Borrowings

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE III -

  	
  REPRESENTATIONS
  AND WARRANTIES

  	
   

  
	
  3.1

  	
  Corporate
  Existence and Power

  	
   

  
	
  3.2

  	
  Corporate
  Authorization; No Contravention

  	
   

  
	
  3.3

  	
  Governmental
  Authorization

  	
   

  
	
  3.4

  	
  Binding Effect

  	
   

  
	
  3.5

  	
  Litigation

  	
   

  
	
  3.6

  	
  No Default

  	
   

  
	
  3.7

  	
  ERISA
  Compliance

  	
   

  
	
  3.8

  	
  Use of Proceeds;
  Margin Regulations

  	
   

  
	
  3.9

  	
  Title to
  Property

  	
   

  
	
  3.10

  	
  Taxes

  	
   

  
	
  3.11

  	
  Financial
  Condition

  	
   

  
	
  3.12

  	
  Environmental
  Matters

  	
   

  
	
  3.13

  	
  Loan Documents

  	
   

  
	
  3.14

  	
  Regulated
  Entities

  	
   

  
	
  3.15

  	
  Solvency

  	
   

  
	
  3.16

  	
  Labor
  Relations

  	
   

  
	
  3.17

  	
  Copyrights,
  Patents, Trademarks and Licenses, etc.

  	
   

  
	
  3.18

  	
  Subsidiaries

  	
   

  
	
  3.19

  	
  Brokers’
  Fees; Transaction Fees

  	
   

  
	
  3.20

  	
  Insurance

  	
   

  
	
  3.21

  	
  Full
  Disclosure

  	
   

  
	
  3.22

  	
  Representations
  and Warranties Incorporated from Related Agreements

  	
   

  



 


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  3.23

  	
  Activities of
  Borrower

  	
   

  
	
  3.24

  	
  High Yield
  Unsecured Documents

  	
   

  
	
  3.25

  	
  Foreign Assets
  Control Regulations and Anti-Money Laundering

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV -

  	
  AFFIRMATIVE COVENANTS

  	
   

  
	
  4.1

  	
  Financial
  Statements

  	
   

  
	
  4.2

  	
  Certificates;
  Borrowing Base Certificates; Other Information

  	
   

  
	
  4.3

  	
  Notices

  	
   

  
	
  4.4

  	
  Preservation
  of Corporate Existence, Etc.

  	
   

  
	
  4.5

  	
  Maintenance
  of Property

  	
   

  
	
  4.6

  	
  Insurance

  	
   

  
	
  4.7

  	
  Payment
  of Obligations

  	
   

  
	
  4.8

  	
  Compliance
  with Laws

  	
   

  
	
  4.9

  	
  Inspection
  of Property and Books and Records

  	
   

  
	
  4.10

  	
  Use of
  Proceeds

  	
   

  
	
  4.11

  	
  Solvency

  	
   

  
	
  4.12

  	
  Further
  Assurances

  	
   

  
	
  4.13

  	
  Appraisals

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE V -

  	
  NEGATIVE COVENANTS

  	
   

  
	
  5.1

  	
  Limitation
  on Liens

  	
   

  
	
  5.2

  	
  Disposition
  of Assets

  	
   

  
	
  5.3

  	
  Consolidations
  and Mergers

  	
   

  
	
  5.4

  	
  Loans
  and Investments

  	
   

  
	
  5.5

  	
  Limitation
  on Indebtedness

  	
   

  
	
  5.6

  	
  Transactions
  with Affiliates

  	
   

  
	
  5.7

  	
  Management
  Fees and Compensation

  	
   

  
	
  5.8

  	
  Use
  of Proceeds

  	
   

  
	
  5.9

  	
  Contingent
  Obligations

  	
   

  
	
  5.10

  	
  Compliance
  with ERISA

  	
   

  
	
  5.11

  	
  Restricted
  Payments

  	
   

  
	
  5.12

  	
  Change
  in Business

  	
   

  
	
  5.13

  	
  Change
  in Structure

  	
   

  
	
  5.14

  	
  Accounting
  Changes

  	
   

  
	
  5.15

  	
  Amendments
  to Related Agreements

  	
   

  
	
  5.16

  	
  No
  Negative Pledges

  	
   

  
	
  5.17

  	
  Foreign
  Assets Control Regulations

  	
   

  
	
  5.18

  	
  Integration

  	
   

  
	
  5.19

  	
  Certain
  Leased Locations

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI -

  	
  FINANCIAL
  COVENANTS

  	
   

  
	
  6.1

  	
  Reserved

  	
   

  
	
  6.2

  	
  Leverage
  Ratio

  	
   

  
	
  6.3

  	
  Fixed
  Charge Coverage Ratio

  	
   

  
	
  6.4

  	
  Reserved

  	
   

  



 


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  6.5

  	
  EBITDA

  	
   

  
	
  6.6

  	
  Equity
  Contribution

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII -

  	
  EVENTS OF DEFAULT

  	
   

  
	
  7.1

  	
  Event
  of Default

  	
   

  
	
  7.2

  	
  Remedies

  	
   

  
	
  7.3

  	
  Rights
  Not Exclusive

  	
   

  
	
  7.4

  	
  Cash
  Collateral for Letters of Credit

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII -

  	
  THE AGENT

  	
   

  
	
  8.1

  	
  Appointment
  and Authorization

  	
   

  
	
  8.2

  	
  Delegation
  of Duties

  	
   

  
	
  8.3

  	
  Liability
  of Agent

  	
   

  
	
  8.4

  	
  Reliance
  by Agent

  	
   

  
	
  8.5

  	
  Notice
  of Default

  	
   

  
	
  8.6

  	
  Credit
  Decision

  	
   

  
	
  8.7

  	
  Indemnification

  	
   

  
	
  8.8

  	
  Agent
  in Individual Capacity

  	
   

  
	
  8.9

  	
  Successor
  Agent

  	
   

  
	
  8.10

  	
  Collateral
  Matters

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX -

  	
  MISCELLANEOUS

  	
   

  
	
  9.1

  	
  Amendments
  and Waivers

  	
   

  
	
  9.2

  	
  Notices

  	
   

  
	
  9.3

  	
  No
  Waiver; Cumulative Remedies

  	
   

  
	
  9.4

  	
  Costs
  and Expenses

  	
   

  
	
  9.5

  	
  Indemnity

  	
   

  
	
  9.6

  	
  Marshaling;
  Payments Set Aside

  	
   

  
	
  9.7

  	
  Successors
  and Assigns

  	
   

  
	
  9.8

  	
  Assignments,
  Participations, etc.

  	
   

  
	
  9.9

  	
  Confidentiality

  	
   

  
	
  9.10

  	
  Set-off;
  Sharing of Payments

  	
   

  
	
  9.11

  	
  Notification
  of Addresses, Lending Offices, Etc.

  	
   

  
	
  9.12

  	
  Counterparts

  	
   

  
	
  9.13

  	
  Severability;
  Facsimile Signature

  	
   

  
	
  9.14

  	
  Captions

  	
   

  
	
  9.15

  	
  Independence
  of Provisions

  	
   

  
	
  9.16

  	
  Interpretation

  	
   

  
	
  9.17

  	
  No
  Third Parties Benefited

  	
   

  
	
  9.18

  	
  Governing
  Law and Jurisdiction

  	
   

  
	
  9.19

  	
  Waiver
  of Jury Trial

  	
   

  
	
  9.20

  	
  Entire
  Agreement; Release

  	
   

  
	
  9.21

  	
  Patriot
  Act

  	
   

  
	
  9.22

  	
  Replacement
  of Lender

  	
   

  
	
  9.23

  	
  Continued
  Effectiveness; No Novation

  	
   

  



 


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  ARTICLE X
  -

  	
  TAXES,
  YIELD PROTECTION AND ILLEGALITY

  	
   

  
	
  10.1

  	
  Taxes

  	
   

  
	
  10.2

  	
  Illegality

  	
   

  
	
  10.3

  	
  Increased
  Costs and Reduction of Return

  	
   

  
	
  10.4

  	
  Funding
  Losses

  	
   

  
	
  10.5

  	
  Inability
  to Determine Rates

  	
   

  
	
  10.6

  	
  Reserves
  on LIBOR Rate Loans

  	
   

  
	
  10.7

  	
  Certificates
  of Lenders

  	
   

  
	
  10.8

  	
  Survival

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XI -

  	
  RESERVED

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XII -

  	
  DEFINITIONS

  	
   

  
	
  12.1

  	
  Defined
  Terms

  	
   

  
	
  12.2

  	
  Other
  Interpretive Provisions

  	
   

  
	
  12.3

  	
  Accounting
  Principles

  	
   

  



 


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  SCHEDULES

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule 1.1(a)

  	
  Term Loan Commitments and CapEx
  Loan Commitments

  	
   

  
	
  Schedule 1.1(b)

  	
  Revolving Loan Commitments

  	
   

  
	
  Schedule 3.2

  	
  Capitalization

  	
   

  
	
  Schedule 3.5

  	
  Litigation

  	
   

  
	
  Schedule 3.7

  	
  ERISA

  	
   

  
	
  Schedule 3.17

  	
  Intellectual
  Property

  	
   

  
	
  Schedule 4.2(e)

  	
  Expansion
  Capital Expenditures

  	
   

  
	
  Schedule 5.1

  	
  Liens

  	
   

  
	
  Schedule 5.5

  	
  Indebtedness

  	
   

  
	
  Schedule 5.9

  	
  Contingent
  Obligations

  	
   

  
	
  Schedule 12.2

  	
  Restricted
  Accounts

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBITS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit 4.2(b)

  	
  Compliance
  Certificate

  	
   

  
	
  Exhibit 12.1(a)

  	
  Borrowing
  Base Certificate

  	
   

  
	
  Exhibit 12.1(b)

  	
  Notice of
  Borrowing

  	
   

  
	
  Exhibit 12.1(c)

  	
  Notice of
  Continuation/Conversion

  	
   

  
	
  Exhibit 12.1(d)

  	
  Revolving
  Note

  	
   

  
	
  Exhibit 12.1(e)-1

  	
  Term Note

  	
   

  
	
  Exhibit 12.1(e)-2

  	
  CapEx Note

  	
   

  



 


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AMENDED AND RESTATED CREDIT AGREEMENT


 


This AMENDED AND RESTATED CREDIT AGREEMENT
(this “Agreement”) is entered into as of September 23, 2005, by and among
WII Components, Inc., a Delaware corporation (the “Borrower”), Antares
Capital Corporation, a Delaware corporation, as administrative agent for the
several financial institutions from time to time party to this Agreement
(collectively, the “Lenders” and individually each a “Lender”) and for itself
as a Lender, and such Lenders.


 


W I T N E S S E T H:


 


WHEREAS, the Borrower, the Agent and certain
of the Lenders are parties to a Credit Agreement dated as of February 18,
2004 (as heretofore amended, modified and supplemented, including, without
limitation, pursuant to that certain Consent, Waiver and First Amendment to
Credit Agreement (the “First Amendment”) dated as of April 30, 2004 and
that certain Consent, Waiver and Second Amendment to Credit Agreement (the “Second
Amendment”) dated as of July 28, 2005, the “Original Credit Agreement”);
and


 


WHEREAS, the Borrower, the Agent and the
Lenders desire to amend and restate in its entirety the Original Credit Agreement
to, among other things, increase the amount of the revolving credit facility
made available to the Borrower thereunder, and make available to the Borrower a
term loan and a capital expenditure loan facility, without constituting a
novation, all on the terms and subject to the conditions contained herein.


 


NOW,
THEREFORE, in consideration of the mutual agreements, provisions and covenants
contained herein, the parties hereto amend and restate the Original Credit
Agreement in its entirety as follows:


 


ARTICLE I - THE CREDITS


 


1.1                                 Amounts
and Terms of Commitments.


 


(a)                                  The
Term Loan and CapEx Loans.


 


(i)                                     Each Lender with a Term Loan Commitment severally and not jointly
agrees, on the terms and conditions hereinafter set forth, to lend to the
Borrower on the Restatement Effective Date, the amount set forth opposite such
Lender’s name in Schedule 1.1(a) under the heading “Term
Loan Commitment” (such amount being referred to herein as such Lender’s “Term
Loan Commitment”).  Amounts borrowed
under this subsection 1.1(a)(i) are referred to as the “Term Loan.”


 


(ii)                                  Each Lender with a CapEx Loan Commitment severally and not jointly
agrees, on the terms and conditions hereinafter set forth, to make loans to the
Borrower (each such Loan, a “CapEx Loan”) from time to time on any Business Day
during the period from the Restatement Effective Date to the CapEx Line
Termination Date, in an aggregate amount not to exceed at any time outstanding
the amount set forth opposite


 





















 


such Lender’s name in Schedule 1.1(a) under
the heading “CapEx Loan Commitment” (such amount as the same may be reduced
from time to time as a result of one or more assignments pursuant to Section 9.8,
being referred to herein as such Lender’s “CapEx Loan Commitment”); provided,
however, that, after giving effect to any Borrowing of CapEx Loans, the
aggregate principal amount of all outstanding CapEx Loans shall not exceed the
Aggregate CapEx Loan Commitment.


 


(iii)                               Amounts borrowed as a Term Loan or a CapEx Loan which are repaid or
prepaid may not be reborrowed.


 


(b)                                 The
Revolving Credit. 
Each Lender severally and not jointly agrees, on the terms and
conditions hereinafter set forth, to make Loans to the Borrower (each such
Loan, a “Revolving Loan”) from time to time on any Business Day during the period
from the Restatement Effective Date to the Revolving Termination Date, in an
aggregate amount not to exceed at any time outstanding the amount set forth
opposite such Lender’s name in Schedule 1.1(b) under the
heading “Revolving Loan Commitment” (such amount as the same may be reduced
from time to time pursuant to subsection 1.8(h)(ii) hereof or as a
result of one or more assignments pursuant to Section 9.8, being referred
to herein as such Lender’s “Revolving Loan Commitment”); provided, however,
that, after giving effect to any Borrowing of Revolving Loans, the aggregate
principal amount of all outstanding Revolving Loans shall not exceed the
Maximum Revolving Loan Balance.  Subject
to the other terms and conditions hereof, amounts borrowed under this subsection 1.1(b) may
be repaid and reborrowed from time to time. 
The “Maximum Revolving Loan Balance” from time to time will be the
lesser of:


 


(i)                                     the “Borrowing Base” (as calculated pursuant to the Borrowing Base
Certificate then most recently delivered to the Agent and Lenders in accordance
with the terms hereof) in effect from time to time, and


 


(ii)                                  the Aggregate Revolving Loan Commitment then in effect;


 


less, in either case, the amount of any Letter of Credit Participation
Liability.


 


If at any time the then outstanding principal
balance of Revolving Loans exceeds the Maximum Revolving Loan Balance, then
Borrower shall, within three (3) Business Days, prepay outstanding
Revolving Loans in an amount sufficient to eliminate such excess.  Immediately prior to the effectiveness of
this Agreement, the outstanding principal balance of Revolving Loans is
$4,300,000, such amount constituting the outstanding Revolving Loans under the
Original Credit Agreement.


 


(c)                                  Lender
Letters of Credit and Letter of Credit Participation Agreements.  Subject to the terms and
conditions of this Agreement and in reliance upon the representations and
warranties of Borrower herein set forth, the Revolving Loan Commitment may, in
addition to advances under the Revolving Loan, be utilized, upon the request of
the Borrower, for (i) the issuance of letters of credit by Agent (each
such letter of credit, a “Lender Letter of Credit”) or (ii) the issuance
of letter of credit participation agreements by Agent (each such letter of credit
participation, a “Letter of Credit Participation Agreement”) to confirm payment
to banks (whether or not such banks are Lenders) which issue letters of credit
for the account of Borrower


 


2





















 


or any
of its Subsidiaries on behalf of each Lender having a Revolving Loan Commitment
(severally and not jointly) according to such Lender’s Revolving Loan
Commitment.  The aggregate amount of
Letter of Credit Participation Liability with respect to all Lender Letters of
Credit and Letter of Credit Participation Agreements outstanding at any time
shall not exceed $2,000,000.


 


The Borrower shall be irrevocably and
unconditionally obligated forthwith without presentment, demand, protest or
other formalities of any kind, to reimburse the Agent for any amounts paid by
the Agent under any Lender Letter of Credit or Letter of Credit Participation
Agreement.  The Borrower hereby
authorizes and directs the Lenders with Revolving Loan Commitments (or if the
Revolving Loan Commitments have terminated, who had a Revolving Loan Commitment
at the time of such termination), at the Agent’s option, to make a Revolving
Loan in the amount of any payment made by the Agent with respect to any Lender
Letter of Credit or Letter of Credit Participation Agreement.  All amounts paid by the Agent with respect to
any Lender Letter of Credit or Letter of Credit Participation Agreement that
are not immediately repaid by Borrower with the proceeds of a Revolving Loan or
otherwise shall bear interest at the interest rate then applicable to Revolving
Loans, calculated using the Base Rate and the Applicable Margin.  Each Lender agrees to fund its Commitment
Percentage of any Revolving Loan made pursuant to this subsection 1.1(c) and,
if no such Revolving Loans are made, each Lender agrees to purchase, and shall
be deemed to have purchased, a participation in such Lender Letter of Credit or
Letter of Credit Participation Agreement in an amount equal to its ratable
share of such Lender Letter of Credit or Letter of Credit Participation
Agreement based upon the Revolving Loan Commitments then in effect and each
Lender agrees to pay to the Agent such share of any payments made by the Agent
under such Lender Letter of Credit or Letter of Credit Participation Agreement.  The obligations of each Lender under the
preceding two (2) sentences shall be absolute and unconditional and such
remittance shall be made notwithstanding the occurrence or continuation of an
Event of Default or Default or the failure to satisfy any condition set forth
in Section 2.2 hereof.


 


In addition to all other terms and conditions
set forth in this Agreement, the issuance by Agent of any Lender Letter of
Credit or Letter of Credit Participation Agreement shall be subject to the
condition precedent that the Lender Letter of Credit, Letter of Credit
Participation Agreement or the letter of credit or written contract for which
the Borrower requests a Letter of Credit Participation Agreement shall support
a transaction entered into by one of its Subsidiaries in the Ordinary Course of
Business, or otherwise reasonably acceptable to Agent, and shall be in such
form, be for such amount, and contain such terms as are reasonably satisfactory
to Agent.


 


The expiration date of each Lender Letter of
Credit shall be on a date which is the earlier of (a) one year from its
date of issuance, or (b) the thirtieth (30th) day before the Revolving
Termination Date.  Each Letter of Credit
Participation Agreement shall provide that the Letter of Credit Participation
Agreement terminates and all demands or claims for payment must be presented by
a date certain, which date will be the earlier of (a) one year from its
date of issuance, or (b) the thirtieth (30th) day before the Revolving
Termination Date.


 


The Borrower shall give Agent at least ten (10) Business
Days’ prior written notice specifying the date a Lender Letter of Credit or
Letter of Credit Participation Agreement is to be issued, identifying the
beneficiary and describing the nature of the transactions proposed to be


 


3





















 


supported
thereby.  The notice shall be accompanied
by the drawing terms for the Lender Letter of Credit or form of each letter of
credit or other written contract which will be supported by the Letter of
Credit Participation Agreement.


 


1.2                                 Notes.


 


(a)                                  The
Term Loan made by each Lender with a Term Loan Commitment shall be evidenced by
a Term Note payable to the order of such Lender in an amount equal to such
Lender’s Term Loan Commitment.


 


(b)                                 The
CapEx Loans made by each Lender with a CapEx Loan Commitment shall be evidenced
by a CapEx Note payable to the order of such Lender in an amount equal to such
Lender’s CapEx Loan Commitment.


 


(c)                                  The
Revolving Loans made, or deemed made, by each Lender shall be evidenced by a
Revolving Note payable to the order of such Lender in an amount equal to such
Lender’s Revolving Loan Commitment.


 


1.3                                 Interest.


 


(a)                                  Subject
to subsections 1.3(c) and 1.3(d), each Loan shall bear interest on the
outstanding principal amount thereof from the date when made at a rate per
annum equal to the LIBOR or the Base Rate, as the case may be, plus the
Applicable Margin.  Each determination of
an interest rate by the Agent shall be conclusive and binding on the Borrower
and the Lenders in the absence of demonstrable error.  All computations of fees and interest payable
under this Agreement shall be made on the basis of a 360-day year and actual
days elapsed.  Interest and fees shall
accrue during each period during which interest or such fees are computed from
the first day thereof to the last day thereof. 
The Borrower hereby agrees that accrued and unpaid interest in an
aggregate amount equal to $9,665.97 due and owing to the Persons who are
Lenders hereunder and “Lenders” under and as defined in the Original Credit
Agreement (each an “Existing Lender”) as of the Restatement Effective Date
shall be deemed accrued and continued hereunder and shall be paid in cash by
the Borrower to the Agent, for the benefit of the Existing Lenders, (i) with
respect to accrued and unpaid interest on Base Rate Loans under the Original
Credit Agreement, on the first Interest Payment Date with respect to Base Rate
Loans occurring after the Restatement Effective Date, and (ii) with
respect to accrued and unpaid interest on any LIBOR Rate Loans under the
Original Credit Agreement, on the respective Interest Payment Date applicable
to such LIBOR Rate Loan under the Original Credit Agreement.


 


(b)                                 Interest
on each Loan shall be paid in cash, in arrears on each Interest Payment Date
and on the date of any payment or prepayment of Loans in full.


 


(c)                                  At
the election of the Agent or the Required Lenders while any Event of Default
exists, the Borrower shall pay, in cash, interest (after as well as before entry
of judgment thereon to the extent permitted by law) on the Obligations from and
after the date of occurrence of such Event of Default, at a rate per annum
which is determined by adding two percent (2.0%) per annum to the Applicable
Margin for such Loans (plus, the LIBOR or Base Rate, as the case may be) and,
in the case of Obligations not subject to the Applicable Margin (other than the
fees


 


4





















 


described
in Section 1.9), at a rate per annum equal to the rate per annum
applicable to Revolving Loans which are (or if any were) Base Rate Loans
(including the Applicable Margin with respect thereto) plus two percent (2.0%);
provided, however, that, on and after the expiration of any
Interest Period applicable to any LIBOR Rate Loan outstanding during the
continuation of such Event of Default, the principal amount of such Loan shall,
during the continuation of such Event of Default, bear interest at a rate per
annum equal to the Base Rate plus the Applicable Margin plus two percent
(2.0%).  All such interest shall be
payable on demand of the Agent or the Required Lenders.


 


(d)                                 Anything
herein to the contrary notwithstanding, the obligations of the Borrower
hereunder and under the other Loan Documents shall be subject to the limitation
that payments of interest shall not be required, for any period for which
interest is computed hereunder or thereunder, to the extent (but only to the
extent) that contracting for or receiving such payment by the respective Lender
would be contrary to the provisions of any law applicable to such Lender
limiting the highest rate of interest which may be lawfully contracted for,
charged or received by such Lender, and in such event the Borrower shall pay
such Lender interest at the highest rate permitted by applicable law.


 


1.4                                 Loan
Accounts. 
The 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.  The Agent
shall deliver to the Borrower on a monthly basis a loan statement setting forth
such record for the immediately preceding month.  Such record shall, absent demonstrable error,
be conclusive evidence of the amount of the Loans made by the Lenders to the
Borrower 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 Borrower hereunder (and under any Note) to pay any amount
owing with respect to the Loans or provide the basis for any claim against the
Agent or any Lender.


 


1.5                                 Procedure
for Revolving Credit and CapEx Loan Borrowing.


 


(a)                                  Each
Borrowing of a Revolving Loan and/or a CapEx Loan shall be made upon the
Borrower’s irrevocable (subject to Section 10.5 hereof) written notice
delivered to the Agent in the form of a Notice of Borrowing, which notice must
be received by the Agent prior to 12:30 p.m. (Chicago time) (i) on
the requested Borrowing date in the case of each Base Rate Loan equal to or
less than $1,000,000 and in the case of the Loans to be made on the Restatement
Effective Date, (ii) on the date which is one (1) Business Day prior
to the requested Borrowing date of each Base Rate Loan in excess of $1,000,000
but equal to or less than $3,000,000 and (iii) on the day which is three (3) Business
Days prior to the requested Borrowing date in the case of each LIBOR Rate Loan
and each Base Rate Loan in excess of $3,000,000; provided, that with
respect to Loans subsequent to the Loans made on the Restatement Effective
Date, the Borrower may give notice of the requested Borrowing to the Agent by
telephone call, with such notice confirmed not later than the following
Business Day by delivery to the Agent of a signed Notice of Borrowing.  Such Notice of Borrowing shall specify:


 


(i)                                     the amount of the Borrowing (which shall be in an aggregate minimum
principal amount of $100,000 and multiples of $50,000 in excess thereof);


 


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(ii)                                  the requested Borrowing date, which shall be a Business Day;


 


(iii)                               whether the Borrowing is to comprise Revolving Loans or CapEx Loans;


 


(iv)                              whether the Borrowing is to comprise LIBOR Rate Loans and/or Base
Rate Loans; and


 


(v)                                 if the Borrowing is to comprise LIBOR Rate Loans, the Interest
Period applicable to such Loans.


 


provided, however, that with respect to the Borrowing to be made on
the Restatement Effective Date, such Borrowing will consist of Base Rate Loans
only and shall remain so for not less than three (3) Business Days.  Thereafter, the Borrower may request that
Revolving Loans and/or CapEx Loans be made as LIBOR Rate Loans and that Loans
be converted to or continued as LIBOR Rate Loans, provided only LIBOR Rate
Loans having an Interest Period of one (1) month shall be permitted during
the first sixty (60) days after the Restatement Effective Date.


 


(b)                                 Upon
receipt of the Notice of Borrowing, the Agent will promptly notify each Lender
with a Commitment affected thereby of such Notice and of the amount of such
Lender’s Commitment Percentage of the Borrowing.


 


(c)                                  Unless
Agent is otherwise directed in writing by the Borrower, the proceeds of each
requested Borrowing after the Restatement Effective Date will be made available
to the Borrower by the Agent by wire transfer (or ACH transfer) of such amount
to the Borrower pursuant to the wire transfer instructions specified on the
signature page hereto.


 


1.6                                 Conversion
and Continuation Elections.


 


(a)                                  The
Borrower may upon irrevocable (subject to subsection 10.2(c) and Section 10.5)
written notice to the Agent in accordance with subsection 1.6(b) elect
to convert on any Business Day, any Base Rate Loans into LIBOR Rate Loans or
elect to continue on the last day of the applicable Interest Period any LIBOR
Rate Loans having Interest Periods maturing on such day, in each instance, in
whole or in part in an amount not less than $100,000, or that is in an integral
multiple of $50,000 in excess thereof.


 


(b)                                 The
Borrower shall deliver a Notice of Continuation/Conversion to be received by
the Agent not later than 12:30 p.m. (Chicago time) at least three (3) Business
Days in advance of the requested Conversion Date or continuation date,
specifying:


 


(i)                                     the proposed Conversion Date or continuation date;


 


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


 


(iii)                               the duration of the requested Interest Period with respect to the
Loans to be converted or continued as LIBOR Rate Loans.


 


(c)                                  If
upon the expiration of any Interest Period applicable to LIBOR Rate Loans, the
Borrower has failed to select timely a new Interest Period to be applicable to
such LIBOR Rate


 


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Loans
or if any Event of Default shall then exist, the Borrower shall be deemed to
have elected to convert such LIBOR Rate Loans into Base Rate Loans effective as
of the expiration date of such current Interest Period.


 


(d)                                 Upon
receipt of a Notice of Continuation/Conversion, the Agent will promptly notify
each Lender thereof.  In addition, the
Agent will, with reasonable promptness, notify the Borrower and the Lenders of
each determination of LIBOR; provided, that any failure to do so shall
not relieve the Borrower of any liability hereunder or provide the basis for
any claim against the Agent.  All
conversions and continuations shall be made pro rata according to the
respective outstanding principal amounts of the Loans with respect to which the
notice was given held by each Lender.


 


(e)                                  Unless
the Required Lenders shall otherwise agree, during the existence of an Event of
Default, the Borrower may not elect to have a Loan converted into or continued
as a LIBOR Rate Loan.


 


(f)                                    Notwithstanding
any other provision contained in this Agreement, after giving effect to any
Borrowing, or to any continuation or conversion of any Loans, there shall not
be more than seven (7) different Interest Periods in effect.


 


(g)                                 LIBOR
Rate Loans that shall have been evidenced by the Original Credit Agreement and
remain outstanding as of the Restatement Effective Date shall continue as LIBOR
Rate Loans hereunder and the Interest Periods relating thereto shall continue
as Interest Periods hereunder.


 


1.7                                 Optional Prepayments.


 


(a)                                  The
Borrower may at any time upon at least one (1) Business Day’s prior
written notice to the Agent (which notice may, at the Borrower’s discretion,
also specify the manner in which prepayments being made pursuant to this Section 1.7
shall be applied to the Obligations), prepay the Loans
in whole or in part in an amount greater than or equal to $100,000, in each
instance, without penalty or premium except as provided in Section 10.4.  Optional partial prepayments of the Term Loan
and CapEx Loans shall be applied in the manner set forth in subsection 1.8(h)(i).  Optional partial prepayments in amounts less
than $100,000 shall not be permitted.


 


(b)                                 The
notice of any prepayment shall not thereafter be revocable by the Borrower and
the Agent will promptly notify each Lender thereof and of such Lender’s
Commitment Percentage of such prepayment. 
The payment amount specified in such notice shall be due and payable on
the date specified therein.  Together
with each prepayment under this Section 1.7, the Borrower shall pay any
amounts required pursuant to Section 10.4.


 


1.8                                 Mandatory
Prepayments of Loans and Commitment Reductions.


 


(a)                                  (i)                                     Term Loan.  The outstanding principal amount of the Term
Loan shall be paid in full on September 23, 2010.


 


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(ii)                                  Cap-Ex
Loans. 
Commencing at the close of business on the CapEx Line Termination Date
and at all times thereafter, the Lenders shall not be required or obligated to
make additional CapEx Loans and the aggregate outstanding principal balance of
all CapEx Loans on such date shall convert into a senior secured term loan and
shall be paid in full on September 23, 2010.


 


(b)                                 Revolving
Loan.  The
Borrower shall repay to the Lenders in full on the date specified in clause (a) of
the definition of “Revolving Termination Date” the aggregate principal amount
of the Revolving Loans outstanding on the Revolving Termination Date.


 


(c)                                  Asset
Dispositions. 
If the Borrower or any of its Subsidiaries shall at any time or from
time to time:


 


(i)                                     make or agree to make a Disposition; or


 


(ii)                                  suffer an Event of Loss;


 


and the aggregate amount of the Net Proceeds
received by the Borrower and its Subsidiaries in connection with such
Disposition or Event of Loss and all other Dispositions and Events of Loss
occurring during the fiscal year exceeds $1,000,000, then (A) the Borrower
shall promptly notify the Agent of such proposed Disposition or Event of Loss
(including the amount of the estimated Net Proceeds to be received by the
Borrower and/or any of its Subsidiaries in respect thereof) and (B) promptly
upon receipt by the Borrower and/or any of its Subsidiaries of the Net Proceeds
of such Disposition or Event of Loss, the Borrower shall deliver such Net
Proceeds to the Agent for distribution to the Lenders as a prepayment of the
Loans, which prepayment shall be applied in accordance with subsection 1.8(h)(ii) hereof.  Notwithstanding the foregoing and provided
(x) no Default or Event of Default has occurred and is continuing and (y) the
Borrower otherwise shall have complied with Section 5.2 in respect
thereof, such prepayment shall not be required to the extent a Subsidiary of
the Borrower reinvests the Net Proceeds of such Disposition or Event of Loss,
or a portion thereof, in productive assets of a kind then used or usable in the
business of such Subsidiary, within one hundred eighty (180) days after the
date of such Disposition or Event of Loss, or enters into a binding commitment
in respect thereof within said one hundred eighty (180) day period and subsequently
makes such reinvestment.  Pending such
reinvestment, such Net Proceeds shall be either (i) delivered to the
Agent, for distribution 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 (which application shall not be
required if, under the terms of the Indenture, such application is required to
result in a permanent reduction of the Revolving Loan Commitment) or (ii) held
by the Borrower in an account of the Borrower subject to a deposit account
control agreement to which the Agent is a party, and which is in form and
substance acceptable to the Agent; provided, such Net Proceeds deposited
into such deposit account shall be used by a Subsidiary of the Borrower solely
for reinvestment as and to the extent permitted herein or otherwise delivered
promptly to the Agent, for distribution to the Lenders, as a prepayment of the
Loans, to be applied in accordance with subsection 1.8(h)(ii).  The foregoing notwithstanding, if at any time
pending such reinvestment the aggregate outstanding principal balance of the
Revolving Loans exceeds the Maximum Revolving Loan Balance, then Agent hereby
is directed to apply such Net Proceeds deposited


 


8





















 


into such deposit account to the Revolving
Loans in an amount sufficient to eliminate such excess.


 


(d)                                 Issuance
of Debt Securities. 
Immediately upon the receipt by Borrower or any of its Subsidiaries of the
Net Issuance Proceeds of the issuance of debt securities by Borrower or any of
its Subsidiaries (other than Net Issuance Proceeds from Permitted Issuances),
Borrower shall deliver to Agent an amount equal to one hundred percent (100%)
of such proceeds for application to the Loans in accordance with subsection 1.8(h)(i).


 


(e)                                  Reserved.


 


(f)                                    Proceeds Under Acquisition Documents.  Immediately upon receipt of any
indemnification, purchase price adjustment, earnout, escrow or similar payment
(other than a working capital adjustment) under any Acquisition Documents by
the Borrower or any of its Subsidiaries, the Borrower shall deliver to the
Agent an amount equal to fifty percent (50%) of each such payments for
application to the Loans in accordance with subsection 1.8(h)(i); provided,
that the remaining fifty percent (50%) of any such payments is used by a
Subsidiary of the Borrower solely for purposes otherwise permitted hereunder,
including general working capital purposes.


 


(g)                                 Equity
Contribution. 
Immediately upon receipt by the Borrower or any of its Subsidiaries of
any equity contribution from Sponsor in accordance with Section 6.6,
Borrower shall deliver to Agent an amount equal to one hundred percent (100%)
of such proceeds (or otherwise repay the Loans in an amount equal to one
hundred percent (100%) of such proceeds) for application to the Loans in
accordance with subsection 1.8(h)(iii).


 


(h)                                 Application
of Prepayments.


 


(i)                                     Any
prepayments pursuant to Section 1.7 or subsection 1.8(d) or 1.8(f) shall
be applied as follows: (A) the first fifty percent (50%) of such
prepayment shall be applied to prepay the Term Loan and the CapEx Loans pro
rata based on the then outstanding principal balances thereof and (B) the
remaining fifty percent (50%) of such prepayment shall be applied to prepay the
outstanding Revolving Loans (without a corresponding reduction of the Revolving
Loan Commitment of any Lender) and, after the outstanding Revolving Loans shall
have been paid in full, any remaining portion of such prepayment shall be
applied to prepay the Term Loan and the CapEx Loans pro rata based on the then
outstanding principal balances thereof; provided, however, that
so long as no Default or Event of Default has occurred and is continuing,
prepayments made pursuant to Section 1.7 may be applied to the Obligations
at the direction of the Borrower, as specified in the applicable notice of
prepayment delivered by the Borrower pursuant to subsection 1.7(a); provided,
further, however, that in the absence of such direction by the
Borrower, such prepayments shall be applied to prepay the outstanding Revolving
Loans (without a corresponding reduction of the Revolving Loan Commitment of
any Lender) and, after the outstanding Revolving Loans shall have been paid in
full, any remaining portion of such prepayment shall be applied to prepay the
Term Loan and the CapEx Loans pro rata based on the then outstanding principal
balances thereof.


 


9





















 


(ii)                                  Any
prepayments pursuant to subsection 1.8(c) (other than prepayments of
Revolving Loans pending reinvestment as set forth therein) shall be applied as
follows: (A) the first fifty percent (50%) of such prepayment shall be
applied to prepay the Term Loan and the CapEx Loans pro rata based on the then
outstanding principal balances thereof and (B) the remaining fifty percent
(50%) of such prepayment shall be applied in permanent reduction of the
Revolving Loan, whereupon the Revolving Loan Commitment of each Lender shall
automatically and permanently be reduced by an amount equal to such Lender’s
ratable share of the aggregate of principal repaid, effective as of the earlier
of the date that such prepayment is made or the date by which such prepayment
is due and payable hereunder and, after the outstanding Revolving Loans shall
have been paid in full, any remaining portion of such prepayment shall be
applied to prepay the Term Loan and the CapEx Loans pro rata based on the then
outstanding principal balances thereof; provided, however, that
prepayments pursuant to subsection 1.8(c) shall not result in a
permanent reduction of the Revolving Loan Commitment if (1) the Borrower
has complied with Section 5.2 in respect thereof, including, without
limitation, by delivering to the Agent a replacement Borrowing Base Certificate
setting forth the calculation of the “Borrowing Base” after giving effect to
each underlying Disposition and Event of Loss, (2) at the request of the
Agent, an appraisal of the remaining equipment, machinery and/or real Property
to be included in such “Borrowing Base” has been undertaken within sixty (60)
days of the date of any such Disposition and Event of Loss, which request shall
be made, if ever, by the Agent within a reasonable period after the date upon
which the Borrower shall have notified the Agent in writing of such Disposition
or Event of Loss, and (3) the Indenture does not otherwise require such
application to result in a permanent reduction of the Revolving Loan
Commitment.


 


(iii)                               Any
prepayments pursuant to subsection 1.8(g) shall be applied to the
Revolving Loan (without a corresponding reduction of the Revolving Loan
Commitment of any Lender).


 


(iv)                              To the
extent permitted by the foregoing clauses (i), (ii) and (iii), amounts
prepaid shall be applied first to any Base Rate Loans then outstanding and then
to outstanding LIBOR Rate Loans with the shortest Interest Periods
remaining.  Together with each prepayment
under this Section 1.8, the Borrower shall pay any amounts required
pursuant to Section 10.4 hereof.


 


1.9                                 Fees.


 


(a)                                  Closing
and Agent’s Fees. 
The Borrower shall pay to the Agent, for the ratable benefit of the
Lenders, a closing fee, and for the Agent’s own account, an agent’s fee, in the
amounts and at the times set forth in an amended and restated letter agreement
between the Borrower and the Agent dated of even date herewith (the “Fee Letter”).


 


10





















 


(b)                                 Commitment
Fee.  The
Borrower shall pay to Agent, for the ratable benefit of the Lenders, a fee (the
“Commitment Fee”) in an amount equal to:


 


(i)                                     the Aggregate Revolving Loan Commitment, less


 


(ii)                                  the sum of (x) the average daily balance of all Revolving Loans
outstanding plus (y) the average daily amount of the Letter of Credit
Participation Liability, in each case, during the preceding quarter,


 


multiplied by three-eighths of one percent
(0.375%) per annum, such fee to be payable quarterly in arrears on the first
day of the quarter following the date hereof and the first day of each quarter
thereafter.  The Commitment Fee provided
in this subsection 1.9(b) shall accrue at all times from and after
mutual execution and delivery of this Agreement.  The Borrower hereby agrees that accrued and
unpaid Commitment Fees in an amount equal to $18,628.12 due and owing to the
Existing Lenders under the Original Credit Agreement as of the Restatement
Effective Date shall be deemed accrued and continued hereunder and shall be
paid in full in cash by the Borrower to the Agent, for the benefit of the
Existing Lenders, on the first day of the month following the date hereof.


 


(c)                                  Letter
of Credit Participation Fee.  The Borrower shall pay to Agent, for the
ratable benefit of the Lenders, fees for each Lender Letter of Credit and each
Letter of Credit Participation Agreement (the “Letter of Credit Participation
Fee”) for the period from and including the date of issuance of same to and
excluding the date of expiration or termination, equal to the average daily
amount of Letter of Credit Participation Liability multiplied by a rate per
annum equal to three percent (3.00%); provided, however, at the
Agent’s or Required Lenders’ option, while an Event of Default exists such
percent shall be increased by two percent (2.00%) per annum over the otherwise
applicable rate, such fees to be payable monthly in arrears on the first day of
the month following the date hereof and the first day of each month
thereafter.  The Borrower shall also
reimburse the Agent for any and all fees and expenses, if any, paid by the
Agent to the issuer of any letter of credit subject to a Letter of Credit
Participation Agreement.


 


(d)                                 CapEx
Commitment Fee. 
The Borrower shall pay to the Agent, for the ratable benefit of the
Lenders having CapEx Loan Commitments, a fee (the “CapEx Commitment Fee”) in an
amount equal to


 


(i)                                     the Aggregate CapEx Loan Commitment, less


 


(ii)                                  the average daily balance of all CapEx Loans outstanding during the
preceding calendar quarter,


 


multiplied by three-eighths of one percent
(0.375%) per annum, such fee to be payable quarterly in arrears on the first
day of the calendar quarter following the date hereof and the first day of each
calendar quarter thereafter.  The CapEx
Commitment Fee provided in this subsection 1.9(d) shall accrue at all
times from and after mutual execution and delivery of this Agreement until the
CapEx Line Termination Date (with all accrued fees due and payable in
accordance with the terms of this Agreement).


 


11





















 


1.10                           Payments by the Borrower.


 


(a)                                  All
payments (including prepayments) to be made by the Borrower on account of
principal, interest, fees and other amounts required hereunder shall be made
without set-off, recoupment, counterclaim or deduction of any kind, shall,
except as otherwise expressly provided herein, be made to the Agent for the
ratable account of the Lenders at the address for payment specified in the
signature page hereof in relation to the Agent (or such other address as
the Agent may from time to time specify in accordance with Section 9.2),
and shall be made in dollars and in immediately available funds, no later than
12:30 p.m. (Chicago time) on the date due. 
Any payment which is received by the Agent later than 12:30 p.m.
(Chicago time) shall be deemed to have been received on the immediately
succeeding Business Day and any applicable interest or fee shall continue to
accrue.  The Borrower hereby authorizes
the Agent and each Lender to (but neither the Agent nor any Lender shall have
any obligation to) make a Revolving Loan (which shall be a Base Rate Loan) to
pay (i) interest, agent fees, Commitment Fees, CapEx Commitment Fees and
Letter of Credit Participation Fees, in each instance, on the date due, or (ii) after
five (5) Business Days prior notice to the Borrower, other fees, costs or expenses
payable by the Borrower or any of its Subsidiaries hereunder or under the other
Loan Documents.


 


(b)                                 Subject
to the provisions set forth in the definition of “Interest Period” herein, if
any payment hereunder shall be stated to be due on a day other than a Business
Day, such payment shall be made on the next succeeding Business Day, and such
extension of time shall in such case be included in the computation of interest
or fees, as the case may be.


 


(c)                                  All
amounts collected or received by the Agent after the Obligations have been
accelerated (so long as such acceleration has not been rescinded) and all
proceeds received by the Agent as a result of the exercise of its remedies
under the Collateral Documents after the occurrence and during the continuance
of an Event of Default shall be applied as follows:


 


first, to payment of fees, costs and expenses, including Attorney Costs,
of the Agent payable or reimbursable by the Borrower and/or its Subsidiaries
under the Loan Documents;


 


second, to payment of Attorney Costs of Lenders payable or reimbursable by
the Borrower and/or its Subsidiaries under this Agreement;


 


third, to payment of all accrued unpaid interest on the Obligations pro
rata;


 


fourth, to payment of principal of the Obligations (including, if an Event
of Default has occurred and is continuing, cash collateralization of Letter of
Credit Participation Liability);


 


fifth, to payment of any other amounts owing constituting Obligations;
and


 


sixth, any remainder shall be for the account of and paid to whomever may
be lawfully entitled thereto.


 


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In carrying out the foregoing, (i) amounts
received shall be applied in the numerical order provided until exhausted prior
to the application to the next succeeding category; and (ii) each of the
Lenders shall receive an amount equal to its pro rata share of amounts
available to be applied pursuant to clauses second, third, fourth and fifth
above.


 


1.11                           Payments
by the Lenders to the Agent; Settlement.


 


(a)                                  As
set forth in subsection 1.5(b), upon receipt of a Notice of Borrowing, the
Agent will promptly notify each Lender of such Lender’s Commitment Percentage
of the Borrowing requested thereby.  Each
Lender will fund its Commitment Percentage of Borrowings of Revolving Loans to
the Agent at the Agent’s account specified on its signature page hereto,
or to such other account as the Agent may designate in writing, no later than
2:00 p.m. (Chicago time) on the scheduled Borrowing date.  Each Lender with a CapEx Loan Commitment will
fund its Commitment Percentage of Borrowings of CapEx Loans to the Agent at the
Agent’s account specified on its signature page hereto, or to such other
account as the Agent may designate in writing, no later than 2:00 p.m.
(Chicago time) on the scheduled Borrowing date.


 


(b)                                 Unless
the Agent shall have received notice from a Lender on the Restatement Effective
Date or, with respect to each Borrowing after the Restatement Effective Date,
by 1:00 p.m. (Chicago time) on the date of any proposed Borrowing, that
such Lender will not make available to the Agent as and when required hereunder
for the account of the Borrower the amount of such Lender’s Commitment
Percentage of the proposed Borrowing, the Agent may assume that each Lender has
made such amount available to the Agent in immediately available funds on the
applicable Borrowing date and the Agent may (but shall not be so required), in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount.  If and to the
extent any Lender shall not have made its full amount available to the Agent in
immediately available funds and the Agent in such circumstances has made
available to the Borrower such amount, that Lender shall on the next Business
Day following the date of such Borrowing make such amount available to the
Agent, together with interest at the Federal Funds Rate for and determined as
of each day during such period.  A notice
of the Agent submitted to any Lender with respect to amounts owing under this
subsection 1.11(b) shall be conclusive, absent manifest error.  If such amount is so made available, such
payment to the Agent shall constitute such Lender’s Loan on the date of
Borrowing for all purposes of this Agreement. 
If such amount is not made available to the Agent on the next Business
Day following the date of such Borrowing, the Agent shall notify the Borrower
of such failure to fund and, upon demand by the Agent, the Borrower shall pay
such amount to the Agent for the Agent’s account, together with interest
thereon for each day elapsed since the date of such Borrowing, at a rate per
annum equal to the interest rate applicable at the time to the Loans comprising
such Borrowing.


 


(c)                                  The
failure of any Lender to make any Loan on any date of Borrowing shall not
relieve any other Lender of any obligation hereunder to make a Loan on the date
of such Borrowing, but no Lender shall be responsible for the failure of any
other Lender to make the Loan to be made by such other Lender on the date of any
Borrowing.  Without limiting the
generality of the foregoing, each Lender shall be obligated to fund its
Commitment Percentage of any Revolving Loan made after any acceleration of the
Obligations with respect to any draw on any Lender Letter of Credit or any
payment made under any Letter of Credit Participation Agreement.


 


13





















 


(d)                                 Provided
that such Lender has made all payments required to be made by it under this
Agreement, the Agent will pay to such Lender, by wire transfer to such Lender’s
account (as specified by such Lender on such Lender’s respective signature page to
this Agreement or the applicable Assignment and Acceptance) such Lender’s
Commitment Percentage of principal, interest, Commitment Fees, CapEx Commitment
Fees and Letter of Credit Participation Fees, in each instance, received by the
Agent, promptly after the Agent’s receipt thereof.


 


(e)                                  Unless
the Agent shall have received notice from the Borrower prior to the date on
which any payment is due to the Lenders hereunder that the Borrower will not
make such payment in full as and when required hereunder, the Agent may assume
that the Borrower has made such payment in full to the Agent on such date in
immediately available funds and the Agent may (but shall not be so required),
in reliance upon such assumption, cause to be distributed to each Lender on
such due date an amount equal to the amount then due such Lender.  If the 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 the Agent from the Borrower and such related payment is not
received by the Agent, the Agent shall be entitled to recover such amount from
such Lender, and each Lender shall repay to the Agent on demand such amount,
together with interest thereon for each day from the date such amount is
distributed to such Lender until the date such Lender repays such amount to the
Agent, at the Federal Funds Rate, without setoff, recoupment, counterclaim or
deduction of any kind.  If the Agent
determines at any time that any amount received by the Agent under this
Agreement must be returned to the Borrower or paid to any other Person pursuant
to any solvency, fraudulent conveyance or similar law or otherwise, then,
notwithstanding any other term or condition of this Agreement, the Agent will
not be required to distribute any portion of such payment to any Lender.  In addition, each Lender will repay to the
Agent on demand any portion of such amount that the Agent has distributed to
such Lender, together with interest thereon at such rate, if any, as the Agent
is required to pay to the Borrower or such other Person, without setoff,
recoupment, counterclaim or deduction of any kind.


 


ARTICLE II - CONDITIONS PRECEDENT


 


2.1                                 Conditions
to Effectiveness. 
The effectiveness of this Agreement and the obligation of each Lender to
make Loans and of the Agent to issue Lender Letters of Credit or Letter of
Credit Participation Agreements hereunder are subject to the condition that the
Agent shall have received on or before the Restatement Effective Date all of
the following, in form and substance reasonably satisfactory to the Agent and
each Lender and (except for the Notes and any instruments or documents which
are Pledged Collateral) in sufficient counterparts for each Lender, duly
executed by all parties thereto:


 


(a)                                  Credit
Agreement and Notes.  This Agreement executed by the Borrower, the
Agent and each of the Lenders, and the Notes executed by the Borrower;


 


14





















 


(b)                                 Secretary’s
Certificates; Resolutions; Incumbency.  A certificate of the Secretary or Assistant
Secretary of the Borrower and each Subsidiary of the Borrower which is a party
to any Loan Document, certifying:


 


(i)                                     the names and true signatures of the officers of the Borrower and
each such Subsidiary authorized to execute, deliver and perform, as applicable,
this Agreement, and all other Loan Documents to be delivered hereunder; and


 


(ii)                                  copies of the resolutions of the board of directors or other
governing body of the Borrower and each such Subsidiary approving and
authorizing the execution, delivery and performance, as applicable, by the
Borrower or such Subsidiary of this Agreement and the other Loan Documents to
be executed or delivered by it hereunder;


 


(c)                                  Organization
Documents and Good Standing.  Each of the following documents:


 


(i)                                     the Organization Documents of the Borrower and each of its
Subsidiaries, as such Organization Documents are in effect on the Restatement
Effective Date, certified by the Secretary of State (or similar, applicable
Governmental Authority) of the state of incorporation or formation of the
Borrower or such Subsidiary as of a recent date, if and as applicable, all
certified by the Secretary or Assistant Secretary of the Borrower or such
Subsidiary as of the Restatement Effective Date; and


 


(ii)                                  a good standing certificate for the Borrower and each of its
Subsidiaries from the Secretary of State (or similar, applicable Governmental Authority)
of its state of incorporation or formation, as applicable, and each state where
the Borrower or such Subsidiary is qualified to do business as a foreign entity
as of a recent date;


 


(d)                                 Collateral
Documents. 
The Collateral Documents, executed by the Borrower and each of its
Subsidiaries who are a party thereto in appropriate form for recording, where
necessary, together with the following, to the extent not previously delivered
to the Agent under the Original Credit Agreement:


 


(i)                                     acknowledgment copies of all uniform commercial code financing
statements filed, registered or recorded to perfect the security interests of
the Agent, for the benefit of the Agent and the Lenders, granted pursuant to
the Collateral Documents, or other evidence reasonably satisfactory to the
Agent that there has been filed, registered or recorded all financing
statements and other filings, registrations and recordings reasonably necessary
and advisable to perfect the Liens of the Agent, for the benefit of the Agent
and the Lenders, granted pursuant to the Collateral Documents, in accordance
with applicable law;


 


(ii)                                  uniform commercial code financing statement, federal and state tax
lien, pending litigation and judgment searches as the Agent shall have
reasonably requested of the Borrower, each of its Subsidiaries and such other
Persons as the Agent may request, and such termination statements, releases or
other documents as may be reasonably necessary to confirm that the Collateral
is subject to no other Liens in favor of any Persons (other than Permitted
Liens);


 


15





















 


(iii)                               all certificates and instruments representing the Pledged
Collateral, irrevocable proxies and stock transfer powers executed in blank or
other executed endorsements reasonably satisfactory to the Agent, with
signatures guaranteed as the Agent may require;


 


(iv)                              evidence that all other actions reasonably necessary or, in the
reasonable opinion of the Agent, desirable to perfect and protect the Liens
created by the Collateral Documents have been taken;


 


(v)                                 funds sufficient to pay any filing or recording tax or fee in
connection with any and all uniform commercial code financing statements and,
if applicable, the Mortgages or amendments thereto, all title insurance
premiums, documentary stamp or intangible taxes, recording fees and mortgage
taxes payable in connection with the recording of any Mortgage or filing of any
uniform commercial code financing statements or the issuance of the title
insurance policies (whether due on the Restatement Effective Date or in the
future) including sums due in connection with any future advances;


 


(vi)                              with respect to each parcel of real Property in respect of which
there is delivered by the Borrower or any of its Subsidiaries a Mortgage, an
A.L.T.A. mortgagee policy of title insurance (or, with respect to mortgagee
policies of title insurance delivered in connection with the Original Credit
Agreement, date down endorsements), or a binder issued by a title insurance
company reasonably satisfactory to the Agent insuring (or undertaking to
insure, in the case of a binder) that the Mortgage creates and constitutes a
valid first Lien against such real Property in favor of the Agent, for the
benefit of Agent and the Lenders, in an amount and subject only to exceptions
reasonably acceptable to the Agent, with such endorsements and affirmative
insurance as the Agent may reasonably request;


 


(vii)                           if required by the Agent, flood insurance and earthquake insurance
on terms satisfactory to the Agent;


 


(viii)                        if required by the Agent, the most recent A.L.T.A. surveys and
surveyor’s certifications certified to the Agent as to all real Property in
respect of which there is delivered a Mortgage by the Borrower or any of its
Subsidiaries, each in form and substance reasonably satisfactory to the Agent;
and


 


(ix)                                such consents, estoppels, subordination agreements and other
documents and instruments executed by landlords, tenants and other Persons
party to material contracts relating to any Collateral as to which the Agent
shall be granted a Lien for the benefit of Agent and the Lenders, as reasonably
requested by the Agent;


 


(e)                                  Legal
Opinions. 
Such opinions of counsel to the Borrower and its Subsidiaries, in each
instance addressed to the Agent and the Lenders, in form and substance
reasonably satisfactory to Agent;


 


16





















 


(f)                                    Payment of Fees.  Evidence reasonably acceptable to it that the
Borrower shall have paid all accrued and unpaid fees, costs and expenses to the
extent then due and payable on the Restatement Effective Date, together with
Attorney Costs of the Agent;


 


(g)                                 Certificate.  A certificate signed on
behalf of the Borrower by a Responsible Officer, dated as of the Restatement
Effective Date, stating that:


 


(i)                                     the representations and warranties contained in Article III
hereof are true and correct in all material respects on and as of such date, as
though made on and as of such date;


 


(ii)                                  no Default or Event of Default exists or would result from the
Borrowing or issuance of the Lender Letters of Credit or Letter of Credit
Participation Agreements to be made on the Restatement Effective Date or from
the consummation of any of the other transactions contemplated hereby; and


 


(iii)                               there has occurred since December 31, 2004 no event or
circumstance that has resulted or would reasonably be expected to result in (A) a
Material Adverse Effect or (B) a material adverse change in, or a material
adverse effect upon, the prospects of the Borrower or the Borrower and its
Subsidiaries taken as a whole;


 


(h)                                 Financial
Statements. 
Copies of all of the financial statements of the Borrower and its
Subsidiaries referred to in Section 3.11, certified on behalf of the
Borrower by a Responsible Officer;


 


(i)                                     Insurance Policies.  Standard lenders’ loss payable and other
endorsements in favor of the Agent with respect to the insurance policies or
other instruments or documents evidencing insurance coverage on the Property of
the Borrower in accordance with Section 4.6;


 


(j)                                     Borrowing Base Certificate.  A duly completed Borrowing Base Certificate
setting forth the “Borrowing Base” as of July 31, 2005.  Not more than $10,000,000 in Revolving Loans
shall be outstanding on the Restatement Effective Date, and after giving effect
to the funding of the Loans to be made on the Restatement Effective Date, the
Maximum Revolving Loan Balance shall exceed the outstanding principal balance
of Revolving Loans by not less than $30,000,000;


 


(k)                                  High
Yield Unsecured Indebtedness.  Evidence reasonably satisfactory to it that
no more than $120,000,000 in stated principal amount of High Yield Unsecured
Indebtedness is outstanding;


 


(l)                                     EBITDA. Evidence reasonably satisfactory
to it demonstrating that EBITDA (with such adjustments as the Agent may
reasonably approve) of the Borrower and its Subsidiaries for the twelve (12)
month period ended July 31, 2005 was at least $33,500,000;


 


(m)                               Projections.  Projections in form and
substance satisfactory to the Agent for the Borrower and its Subsidiaries for
the period from 2005 through 2008, including projections on a quarter by
quarter basis for the twelve calendar months immediately following the
Restatement


 


17





















 


Effective
Date and delivery of actual results for the most recent twelve calendar month
period prior to the Restatement Effective Date for which financial statements
are available; and


 


(n)                                 Other
Documents. 
Such other approvals, opinions, documents or materials as the Agent may
reasonably request.


 


2.2                                 Conditions
to All Borrowings. 
The obligation of each Lender to make any Loan and of the Agent to issue
any Lender Letter of Credit or Letter of Credit Participation Agreement, or to
continue a Loan as, or convert any Loan to, a LIBOR Rate Loan, is subject to
the satisfaction of the following conditions precedent on the relevant
Borrowing date, continuation date or Conversion Date:


 


(a)                                  Notice
of Borrowing or Continuation/Conversion.  The Agent shall have received (with, in the
case of the Loans to be made on the Restatement Effective Date only, a copy for
each Lender) a Notice of Borrowing or a Notice of Continuation/Conversion, as
applicable, in accordance with Section 1.5 or Section 1.6;


 


(b)                                 Representations
and Warranties. 
The representations and warranties contained in this Agreement that are
made by the Borrower and the representations and warranties contained in the
other Loan Documents and in the Related Agreements that are made by the
Borrower and each of its Subsidiaries party thereto shall be true and correct
in all material respects on and as of such Borrowing date, continuation date or
Conversion Date with the same effect as if made on and as of such Borrowing
date, continuation date or Conversion Date (except to the extent such representations
and warranties (i) expressly refer to an earlier date, in which case they
shall be true and correct as of such earlier date, (ii) are not true and
correct due to events or conditions, the occurrence or existence of which are
not prohibited by this Agreement or the other Loan Documents and which do not,
in and of themselves, constitute a Default or an Event of Default, or (iii) are
not true and correct as a result of disclosures made in writing to, and
approved by, the Agent and Lenders in connection with Permitted Acquisitions);


 


(c)                                  No
Existing Default. 
No Default or Event of Default shall exist or shall result from such
Borrowing or continuation or conversion; and


 


(d)                                 Permitted
Acquisitions. 
To the extent the proceeds of any Loan are used to finance a Permitted
Acquisition, Borrower shall have complied with the conditions included in Section 2.3
and the definition of “Permitted Acquisition” contained in Section 11.1
hereof on or prior to the disbursement of such Loan.


 


Each Notice of Borrowing and Notice of
Continuation/Conversion submitted by the Borrower hereunder shall constitute a
representation and warranty by the Borrower hereunder, as of the date of each
such notice or application and as of the date of each Borrowing or continuation
or conversion, as applicable, that the conditions in Section 2.2 are
satisfied.


 


2.3                                 Conditions
to Certain Loans and Acquisitions.  The consummation of any Permitted Acquisition
by any Subsidiaries of the Borrower and, in the event the proceeds of the Revolving
Loan are to be used to finance all or a portion of the purchase price of a
Permitted Acquisition, the obligations of each Lender to make such Loan, in
each case shall be subject to the satisfaction of the following conditions
precedent on the relevant Borrowing date:


 


18





















 


(a)                                  Evidence
of Perfected First Priority Security Interest.  With respect to the Target acquired, and
prior to or simultaneously with the consummation of such Acquisition and the
funding of such Loan, the Agent shall have been granted, for the benefit of
Agent and the Lenders, a first priority Lien on and security interest in such
Target thereof, subject only to Permitted Liens, and shall have received,
without limitation, (i) the items described in subsection 2.1(d)(ii) and
Section 4.12, and (ii) duly executed uniform commercial code
financing statements or amendments to existing financing statements with
respect to such Target, in form and substance reasonably satisfactory to the
Agent and which, upon filing, shall perfect the security interest of the Agent,
for the benefit of Agent and the Lenders, in such Property to the extent such
security interest can be perfected by filing such financing statements.  In the event real Property is being acquired
in connection with such Acquisition, prior to or simultaneously with the
funding of such Loan, the Agent shall have received (x) to the extent not
encumbered with a Lien permitted under subsection 5.1(h), a fully executed
Mortgage, in form and substance reasonably satisfactory to the Agent together
with an A.L.T.A. lender’s title insurance policy issued by a title insurer
reasonably satisfactory to the Agent, in form and substance and in an amount
reasonably satisfactory to the Agent insuring that the Mortgage is a valid and
enforceable first priority Lien on the respective Property, free and clear of
all defects, encumbrances and Liens other than Permitted Liens, (y) to the
extent not encumbered with a Lien permitted under subsection 5.1(h), then
current A.L.T.A. surveys, certified to the Agent by a licensed surveyor
sufficient to allow the issuer of the lender’s title insurance policy to issue
such policy without a survey exception and (z) an environmental site assessment
prepared by a qualified firm reasonably acceptable to the Agent and the
Required Lenders, in form and substance reasonably satisfactory to the Agent
and the Required Lenders.


 


(b)                                 Approval.  Such Acquisition is a
Permitted Acquisition.


 


2.4                                 Conditions
to CapEx Loan Borrowings.  The obligation of each Lender to make a CapEx
Loan is subject to the satisfaction of each of the following conditions
precedent:


 


(a)                                  General.  The Capital Expenditure for
which the proceeds of such CapEx Loan will be used shall be made to expand the
current operations of the Borrower and its Subsidiaries in compliance with the
provisions of Section 5.12; provided, that proceeds of CapEx Loans
shall not be used to purchase Accounts or Inventory.  The Borrower may request and, subject to
compliance with the provisions of this Section 2.4 and of Section 2.2,
the Lenders shall make, CapEx Loans in advance of the Borrower making the
applicable Capital Expenditure for which the proceeds of such CapEx Loan shall
be used.


 


(b)                                 Evidence
of Perfected First Priority Security Interest.  Prior to or simultaneously with the making of
any Capital Expenditure and the funding of such CapEx Loan, the Agent shall
have been granted, for the benefit of Agent and the Lenders, a first priority
Lien on and security interest in any Property acquired in connection therewith,
subject only to Permitted Liens, and shall have received, without limitation, (i) the
items described in subsection 2.1(d)(ii) and Section 4.12, and (ii) duly
executed uniform commercial code financing statements or amendments to existing
financing statements with respect to any such Property, in form and substance
reasonably satisfactory to the Agent and which, upon filing, shall perfect the
security interest of the Agent, for the benefit of Agent and the Lenders, in
such Property to the extent such security interest can be perfected by filing
such financing statements.  In the event
real


 


19





















 


Property
is being acquired in connection with the making of such Capital Expenditure,
prior to or simultaneously with the funding of such Loan, the Agent shall have
received (x) to the extent not encumbered with a Lien permitted under subsection 5.1(h),
a fully executed Mortgage, in form and substance reasonably satisfactory to the
Agent together with an A.L.T.A. lender’s title insurance policy issued by a
title insurer reasonably satisfactory to the Agent, in form and substance and
in an amount reasonably satisfactory to the Agent insuring that the Mortgage is
a valid and enforceable first priority Lien on the respective Property, free
and clear of all defects, encumbrances and Liens other than Permitted Liens,
(y) to the extent not encumbered with a Lien permitted under subsection 5.1(h),
then current A.L.T.A. surveys, certified to the Agent by a licensed surveyor
sufficient to allow the issuer of the lender’s title insurance policy to issue
such policy without a survey exception and (z) an environmental site assessment
prepared by a qualified firm reasonably acceptable to the Agent and the
Required Lenders, in form and substance reasonably satisfactory to the Agent
and the Required Lenders; provided, however, that with respect to
any such acquisition of real Property located in Mercer County, Pennsylvania
occurring on or prior to October 7, 2005, the foregoing deliveries shall
be made no later than ten (10) Business Days following the date(s) of
acquisition of such real Property.


 


ARTICLE III - REPRESENTATIONS AND WARRANTIES


 


The Borrower represents and warrants to the
Agent and each Lender that the following are, and after giving effect to the
Related Transactions will be, true, correct and complete:


 


3.1                                 Corporate
Existence and Power.  The Borrower and each of its Subsidiaries:


 


(a)                                  is a
corporation, limited liability company or limited partnership, as applicable,
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or formation, as applicable;


 


(b)                                 has
the power and authority and all governmental licenses, authorizations, consents
and approvals to own its assets, carry on its business and execute, deliver,
and perform its obligations under, the Loan Documents and the Related
Agreements to which it is a party;


 


(c)                                  is
duly qualified as a foreign corporation, limited liability company or limited
partnership, as applicable, and licensed and in good standing, under the laws
of each jurisdiction where its ownership, lease or operation of Property or the
conduct of its business requires such qualification or license; and


 


(d)                                 is in
compliance with all Requirements of Law;


 


except, in each case referred to in clause (c) or
clause (d), to the extent that the failure to do so would not reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect.


 


20





















 


3.2                                 Corporate
Authorization; No Contravention.


 


(a)                                  The
execution, delivery and performance by the Borrower of this Agreement, and the
Borrower and its Subsidiaries of any other Loan Document and Related Agreement
to which any of such Persons is party, have been duly authorized by all
necessary action, and do not and will not:


 


(i)                                     contravene the terms of any of such Person’s Organization Documents;


 


(ii)                                  conflict with or result in any material breach or contravention of,
or result in the creation of any Lien under, any document evidencing any
material Contractual Obligation to which such Person is a party or any order,
injunction, writ or decree of any Governmental Authority to which such Person
or its Property is subject; or


 


(iii)                               violate any material Requirement of Law in any material respect.


 


(b)                                 Schedule 3.2 sets forth the authorized equity securities of the Borrower and
each of its Subsidiaries.  All issued and
outstanding equity securities of the Borrower and each of its Subsidiaries are
duly authorized and validly issued, fully paid, non-assessable, and free and
clear of all Liens other than, with respect to the equity securities of the
Borrower’s Subsidiaries, those in favor of the Agent, for the benefit of the
Agent and Lenders, and such securities were issued in compliance with all
applicable state and federal laws concerning the issuance of securities.  All of the issued and outstanding equity
securities of Woodcraft are owned by the Borrower.  All of the issued and outstanding equity
securities of Primewood, Brentwood and Grand Valley Acquisition Sub are owned
by Woodcraft.  All of the issued and
outstanding equity securities of Borrower are owned by the Persons and in the
amounts set forth on Schedule 3.2. 
Except as set forth on Schedule 3.2, there are no
pre-emptive or other outstanding rights, options, warrants, conversion rights
or other similar agreements or understandings for the purchase or acquisition
of any shares of capital stock or other securities of any such entity.


 


3.3                                 Governmental
Authorization. 
No approval, consent, exemption, authorization, or other action by, or
notice to, or filing with, any Governmental Authority is necessary or required
in connection with the execution, delivery or performance by, or enforcement
against, the Borrower or any of its Subsidiaries of this Agreement, any other
Loan Document or any Related Agreement except (a) for recordings and
filings in connection with the Liens granted to the Agent under the Collateral
Documents, (b) those obtained or made on or prior to the Restatement
Effective Date and (c) in the case of any Related Agreement, those which,
if not obtained or made, would not reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect.


 


3.4                                 Binding
Effect.  This
Agreement and each other Loan Document and Related Agreement to which the
Borrower or any of its Subsidiaries is a party constitutes the legal, valid and
binding obligations of the Borrower and each such Subsidiary, enforceable
against such Person in accordance with their respective terms, except as
enforceability may be limited by applicable bankruptcy, insolvency, or similar
laws affecting the enforcement of creditors’ rights generally or by equitable
principles relating to enforceability.


 


21





















 


3.5                                 Litigation.  Except as specifically
disclosed in Schedule 3.5, there are no actions, suits,
proceedings, claims or disputes pending, or to the best knowledge of the
Borrower, threatened or contemplated, at law, in equity, in arbitration or
before any Governmental Authority, against the Borrower, any of its
Subsidiaries or any of their respective Property which:


 


(a)                                  purport
to affect or pertain to this Agreement, any other Loan Document or any Related
Agreement, or any of the transactions contemplated hereby or thereby; or


 


(b)                                 if
determined adversely to the Borrower or any of its Subsidiaries, could
reasonably be expected to result in equitable relief or monetary judgment(s),
individually or in the aggregate, in excess of $1,500,000.


 


No injunction, writ, temporary restraining
order or any order of any nature has been issued by any court or other
Governmental Authority purporting to enjoin or restrain the execution, delivery
or performance of this Agreement, any other Loan Document or any Related
Agreement, or directing that the transactions provided for herein or therein
not be consummated as herein or therein provided.


 


3.6                                 No
Default.  No
Default or Event of Default exists or would result from the incurring of any
Obligations by the Borrower or the grant or perfection of the Agent’s Liens on
the Collateral or the consummation of the Related Transactions.  Neither the Borrower nor any of its
Subsidiaries is in default under or with respect to any Contractual Obligation
in any respect which, individually or together with all such defaults, would
reasonably be expected to have a Material Adverse Effect or that would, if such
default had occurred after the Restatement Effective Date, create an Event of
Default under subsection 7.1(e).


 


3.7                                 ERISA Compliance.


 


(a)                                  Schedule 3.7 lists all Qualified Plans and Multiemployer Plans.  The Borrower and each of its Subsidiaries is
in compliance in all material respects with all requirements of each Plan, and
each Plan complies in all material respects, and is operated in compliance in
all material respects, with all applicable provisions of law.  The Borrower is not aware, after due inquiry,
of any item of non-compliance which could reasonably be expected to result in
the loss of Plan qualification or tax-exempt status, or give rise to a material
excise tax or other penalty imposed by a Governmental Authority.  No material proceeding, claim, lawsuit and/or
investigation is pending concerning any Plan. 
All required contributions have been and will be made in accordance with
the provisions of each Qualified Plan and Multiemployer Plan, and with respect
to the Borrower or any ERISA Affiliate, there are, have been and will be no material
Unfunded Pension Liabilities or Withdrawal Liabilities.


 


(b)                                 No
ERISA Event has occurred or is expected to occur with respect to any Qualified
Plan, Multiemployer Plan or Plan.


 


(c)                                  Members
of the Controlled Group currently comply and have complied in all material
respects with the notice and continuation coverage requirements of Section 4980B
of the Code.


 


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3.8                                 Use
of Proceeds; Margin Regulations.  The proceeds of the Loans are intended to be
and shall be used solely for the purposes set forth in and permitted by Section 4.10,
and are intended to be and shall be used in compliance with Section 5.8.  Neither the Borrower nor any of its
Subsidiaries is generally engaged in the business of purchasing or selling
Margin Stock or extending credit for the purpose of purchasing or carrying
Margin Stock.  Proceeds of the Loans
shall not be used for the purpose of purchasing or carrying Margin Stock.


 


3.9                                 Title
to Property. 
The Borrower and each of its Subsidiaries have good record and
marketable title in fee simple to, or valid leasehold interests in, all real
Property necessary or used in the ordinary conduct of their respective
businesses, except for Permitted Liens.  None
of the Property of the Borrower or any of its Subsidiaries is subject to any
Liens, other than Permitted Liens.


 


3.10                           Taxes.  The Borrower and its
Subsidiaries have filed all Federal and other material tax returns and reports
required to be filed, and have paid all Federal and other material taxes,
assessments, fees and other governmental charges levied or imposed upon them or
their Property, income or assets otherwise due and payable, except those which
are being contested in good faith by appropriate proceedings diligently
prosecuted and for which adequate reserves have been provided in accordance
with GAAP and no notice of Lien has been filed or recorded. There is no
proposed tax assessment against the Borrower or any of its Subsidiaries which
would, if the assessment were made, either individually or in the aggregate,
have a Material Adverse Effect.


 


3.11                           Financial Condition.


 


(a)                                  Each
of (i) the audited consolidated balance sheet of the Borrower and its
Subsidiaries for its 2004 fiscal year, and the related audited consolidated
statements of income or operations, shareholders’ equity and cash flows for the
fiscal year ended on that date and (ii) the unaudited interim consolidated
balance sheet of the Borrower and its Subsidiaries dated June 30, 2005 and
the related unaudited consolidated statements of income, shareholders’ equity
and cash flows for the six (6) months then ended:


 


(x)                                   were
prepared in accordance with GAAP consistently applied throughout the respective
periods covered thereby, except as otherwise expressly noted therein, subject
to, in the case of the unaudited interim financial statements, normal year-end
adjustments and the lack of footnote disclosures; and


 


(y)                                 present
fairly in all material respects the consolidated financial condition of
Borrower and its Subsidiaries as of the dates thereof and results of operations
for the periods covered thereby.


 


(b)                                 Since
December 31, 2004, there has been no Material Adverse Effect.


 


(c)                                  Borrower
and its Subsidiaries have no Indebtedness other than Indebtedness permitted
pursuant to Section 5.5 and have no Contingent Obligations other than
Contingent Obligations permitted pursuant to Section 5.9.


 


23





















 


3.12                           Environmental Matters.


 


(a)                                  The
ongoing operations of the Borrower and each of its Subsidiaries comply in all
respects with all Environmental Laws, except those for which non-compliance
which would not (if enforced in accordance with applicable law) reasonably be
expected to result in, either individually or in the aggregate, a Material Adverse
Effect.


 


(b)                                 The
Borrower and each of its Subsidiaries have obtained all licenses, permits,
authorizations and registrations required under any Environmental Law (“Environmental
Permits”) and necessary for their respective Ordinary Course of Business, all
such Environmental Permits are in good standing, and the Borrower and each of
its Subsidiaries are in compliance with all material terms and conditions of
such Environmental Permits, except where the failure to obtain, to maintain in
good standing, or to be in compliance with such Environmental Permits would not
reasonably be expected to result in material liability to the Borrower or any
of its Subsidiaries and could not reasonably be expected to result in, either
individually or in the aggregate, a Material Adverse Effect.


 


(c)                                  None
of the Borrower, any of its Subsidiaries or any of their respective present
Property or operations, is subject to any outstanding written order from or
agreement with any Governmental Authority, nor subject to any judicial or
docketed administrative proceeding, respecting any Environmental Law,
Environmental Claim or Hazardous Material.


 


(d)                                 There
are no Hazardous Materials or other conditions or circumstances existing with
respect to any Property, or arising from operations prior to the Restatement
Effective Date, of the Borrower or any of its Subsidiaries that would
reasonably be expected to result, either individually or in the aggregate, in a
Material Adverse Effect.  In addition,
neither the Borrower nor any of its Subsidiaries has any underground storage
tanks (i) that are not properly registered or permitted under applicable
Environmental Laws, or (ii) that are leaking or disposing of Hazardous
Materials.


 


3.13                           Loan
Documents. 
All representations and warranties of the Borrower, its Subsidiaries and
any other party to any Loan Document (other than the Agent and/or any Lender)
contained in the Loan Documents are true and correct in all material respects.


 


3.14                           Regulated
Entities. 
None of the Borrower, any Person controlling the Borrower, or any
Subsidiary of the Borrower, is (a) an “investment company” within the
meaning of the Investment Company Act of 1940; or (b) subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act, any state public utilities code, or any
other Federal or state statute or regulation limiting its ability to incur
Indebtedness.


 


3.15                           Solvency.  The Borrower and each of
its Subsidiaries, individually, is, and the Borrower and each of its
Subsidiaries, on a consolidated basis, are, Solvent.


 


3.16                           Labor
Relations. 
There are no strikes, lockouts or other labor disputes against the
Borrower or any of its Subsidiaries, or, to the best of the Borrower’s
knowledge, threatened against or affecting the Borrower or any of its
Subsidiaries, in any case which would reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect and no


 


24





















 


significant
unfair labor practice complaint is pending against the Borrower or any of its
Subsidiaries or, to the best knowledge of the Borrower, threatened against any
of them before any Governmental Authority in any case which would reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect.


 


3.17                           Copyrights,
Patents, Trademarks and Licenses, etc.  Schedule 3.17 identifies all
United States and foreign patents, trademarks, material service marks, material
trade names and registered copyrights, and all registrations and applications
for registration thereof and all licenses thereof, owned or held by the
Borrower and its Subsidiaries on the Restatement Effective Date after giving
effect to the Related Transactions, and identifies the jurisdictions in which
such registrations and applications have been filed.  Except as otherwise disclosed in Schedule 3.17,
as of the Restatement Effective Date, the Borrower and its Subsidiaries are the
sole beneficial owners of, or have the right to use, free from any
restrictions, claims, rights encumbrances or burdens, all intellectual
property, including the intellectual property identified on Schedule 3.17,
and all other processes, designs, formulas, computer programs, computer
software packages, trade secrets, inventions, product manufacturing
instructions, technology, research and development, know-how and all other
intellectual property that are necessary for the operation of the Borrower’s
and its Subsidiaries’ businesses as being operated on the Restatement Effective
Date after giving effect to the Related Transactions.  Each patent, trademark, service mark, trade
name, copyright and license listed on Schedule 3.17 is in full
force and effect except to the extent the failure to be in effect will not and
would not reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect. 
Except as set forth in Schedule 3.17, to the best knowledge
of the Borrower, as of the Restatement Effective Date (a) none of the
present or contemplated products or operations of the Borrower or its
Subsidiaries infringes any patent, trademark, service mark, trade name,
copyright, license of intellectual property or other right owned by any other
Person, and (b) there is no pending or threatened claim or litigation
against or affecting the Borrower or any of its Subsidiaries contesting the
right of any of them to manufacture, process, sell or use any such product or
to engage in any such operation except for claims and/or litigation which would
not reasonably be expected to have a Material Adverse Effect.  None of the trademark registrations set forth
on Schedule 3.17 is an “intent-to-use” registration.


 


3.18                           Subsidiaries.  The Borrower has no
Subsidiaries or equity investments in any other corporation or entity other
than those specifically disclosed in Schedule 3.2.


 


3.19                           Brokers’
Fees; Transaction Fees.  Neither the Borrower nor any of its
Subsidiaries has any obligation to any Person in respect of any finder’s,
broker’s or investment banker’s fee in connection with the transactions
contemplated hereby.


 


3.20                           Insurance.  The Borrower and each of
its Subsidiaries and its Property 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 Property
in localities where the Borrower or its Subsidiaries operate.  A true and complete listing of such insurance,
including issuers, coverages and deductibles, has been provided to the Agent.


 


25





















 


3.21                           Full
Disclosure. 
None of the representations or warranties made by the Borrower or any of
its Subsidiaries in the Loan Documents as of the date such representations and
warranties are made or deemed made, and none of the statements contained in
each exhibit, report, statement or certificate furnished by or on behalf of the
Borrower or any of its Subsidiaries in connection with the Loan Documents
(including the offering and disclosure materials, if any, delivered by or on
behalf of the Borrower to the Lenders prior to the Restatement Effective Date),
contains any untrue statement of a material fact or omits any material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they are made, not misleading as of
the time when made or delivered.


 


3.22                           Representations
and Warranties Incorporated from Related Agreements.  Each of the representations and warranties
made in each of the Related Agreements by the Borrower and its Subsidiaries
and, to the knowledge of the Borrower, by each of the other parties thereto was
true and correct in all material respects as of the date such representations
and warranties were made, except to the extent that such representations or
warranties relate to a specific date, in which case such representations and
warranties were true as of such earlier date, and such representations and
warranties are hereby incorporated herein by reference with the same effect as
though set forth in their entirety herein, as qualified therein.


 


3.23                           Activities
of Borrower. 
The Borrower was formed for the sole purpose of acquiring and holding all
of the outstanding equity securities of Woodcraft and, except for the
foregoing, the Borrower has conducted no business activities, entered into no
transactions, incurred no liability and taken no actions, directly or
indirectly, that would have violated Section 5.12 of this Agreement.


 


3.24                           High
Yield Unsecured Documents.  The Obligations are permitted and constitute “Senior
Indebtedness” under the terms of the High Yield Unsecured Documents.  The execution, delivery and performance by
the Borrower of this Agreement, and by the Borrower and its Subsidiaries of any
other Loan Document and Related Agreement to which such Person is party, do not
and will not conflict with or result in any material breach or contravention
of, or result in the creation of any Lien or default or event of default under,
any of the High Yield Unsecured Documents. 
None of the High Yield Unsecured Documents prohibits or otherwise
restricts in any manner the making of any payments hereunder by the Borrower or
any of its Subsidiaries.  The High Yield
Unsecured Offering was made in compliance with all Requirements of Law,
including, without limitation, the Trust Indenture Act of 1939 (15 U.S.C.
§§ 77aaa-77bbbb), as amended.


 


3.25                           Foreign
Assets Control Regulations and Anti-Money Laundering.


 


(a)                                  OFAC.  Neither Borrower nor any
Subsidiary of Borrower (i) is a person whose property or interest in
property is blocked or subject to blocking pursuant to Section 1 of
Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting
Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism
(66 Fed. Reg. 49079 (2001)), (ii) engages in any dealings or transactions
prohibited by Section 2 of such executive order, or is otherwise
associated with any such person in any manner violative of Section 2, or (iii) is
a person on the list of Specially Designated Nationals and Blocked Persons or
subject to


 


26





















 


the
limitations or prohibitions under any other U.S. Department of Treasury’s
Office of Foreign Assets Control regulation or executive order.


 


(b)                                 Patriot
Act. 
Borrower and each of its Subsidiaries are in compliance, in all material
respects, with the Patriot Act.  No part
of the proceeds of the Loans will be used, 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.


 


ARTICLE IV - AFFIRMATIVE COVENANTS


 


The Borrower covenants and agrees that, so
long as any Lender shall have any Commitment hereunder, or any Loan or other
Obligation (other than contingent indemnification Obligations to the extent no
claim giving rise thereto has been asserted) shall remain unpaid or
unsatisfied, unless the Required Lenders waive compliance in writing:


 


4.1                                 Financial
Statements. 
The Borrower shall maintain, and shall cause each of its Subsidiaries to
maintain, a system of accounting established and administered in accordance
with sound business practices to permit the preparation of financial statements
in conformity with GAAP (provided that quarterly financial statements
shall not be required to have footnote disclosure and shall be subject to
normal year-end adjustments).  The
Borrower shall deliver to the Agent and each Lender in form and detail
reasonably satisfactory to the Agent and the Required Lenders:


 


(a)                                  as
soon as available, but not later than ninety (90) days after the end of each
fiscal year, a copy of the audited consolidated balance sheet of Borrower and
its Subsidiaries as at the end of such year and the related consolidated
statements of income or operations, shareholders’ equity and cash flows for
such fiscal year, setting forth in each case in comparative form the figures
for the previous fiscal year, and accompanied by the unqualified opinion of any
“Big Four” or other nationally-recognized independent public accounting firm
reasonably acceptable to the Agent which report shall state that such
consolidated financial statements present fairly in all material respects the
financial position for the periods indicated in conformity with GAAP applied on
a basis consistent with prior years;


 


(b)                                 as
soon as available, but not later than forty-five (45) days after the end of
each fiscal quarter of each year, a copy of the unaudited consolidated and
consolidating balance sheets of Borrower and its Subsidiaries, and the related
consolidated and consolidating statements of income, shareholders’ equity and
cash flows as of the end of such quarter and for the portion of the fiscal year
then ended, all certified on behalf of the Borrower by an appropriate
Responsible Officer of the Borrower as being complete and correct and fairly
presenting in all material respects, in accordance with GAAP, the financial
position and the results of operations of the Borrower and its Subsidiaries,
subject to normal year-end adjustments and absence of footnote disclosure.


 


27





















 


4.2                                 Certificates;
Borrowing Base Certificates; Other Information.  The Borrower shall furnish to the Agent and
each Lender:


 


(a)                                  concurrently
with the delivery of the annual financial statements referred to in subsection 4.1(a) above,
a certificate of the independent certified public accountants reporting on such
financial statements stating that in making the examination necessary therefor
no knowledge was obtained of any Default or Event of Default, except as
specified in such certificate;


 


(b)                                 concurrently
with the delivery of the financial statements referred to in subsections 4.1(a) and
4.1(b) above, a fully and properly completed Compliance Certificate in the
form of Exhibit 4.2(b), certified on behalf of the Borrower by a
Responsible Officer of the Borrower;


 


(c)                                  promptly
after the same are sent, copies of all financial statements and material
reports which the Borrower sends to its shareholders or other equity holders,
as applicable, generally; and promptly after the same are filed, copies of all
financial statements and regular, periodic or special reports which the
Borrower may make to, or file with, the Securities and Exchange Commission or
any successor or similar Governmental Authority;


 


(d)                                 as
soon as available and in any event within ten (10) Business Days after the
end of each calendar month, as otherwise required under Section 5.2 and at
such other times as the Agent may reasonably require, a Borrowing Base
Certificate, certified on behalf of the Borrower by a Responsible Officer of
the Borrower, setting forth the “Borrowing Base” of the Borrower as at the end
of the most-recently ended fiscal month or as at such other date as the Agent
may reasonably require;


 


(e)                                  (i) together
with each delivery of financial statements pursuant to subsection 4.1(a) and
subsection 4.1(b), (A) a management report, in reasonable detail,
signed by the chief financial officer of the Borrower, describing the
operations and financial condition of the Borrower and its Subsidiaries for the
quarter and the portion of the fiscal year then ended (or for the fiscal year
then ended in the case of annual financial statements), it being understood
that such report may be in the form of a “Management’s Discussion and Analysis
of Financial Condition and Results of Operation”, as required to be delivered
pursuant to the High Yield Unsecured Indenture, and (B) until the later of
(1) the date upon which each of the expansion projects described on Schedule 4.2(e) shall
have been completed and (2) June 30, 2007, an expansion Capital
Expenditure report, which report shall be in a form substantially similar to
that attached hereto as Schedule 4.2(e), and management discussion
of the Capital Expenditures described in such report, in each case, in
reasonable detail and signed by the chief financial officer of the Borrower,
describing the expansion Capital Expenditures made by the Borrower and its
Subsidiaries for the quarter and the portion of the fiscal year then ended (or
for the fiscal year then ended in the case of annual financial statements), and
(ii) together with each delivery of financial statements pursuant to subsection 4.1(b),
a report setting forth in comparative form the corresponding figures for the
corresponding periods of the previous fiscal year and the corresponding figures
from the most recent projections for the current fiscal year delivered pursuant
to subsection 4.2(g) and discussing the reasons for any significant
variations;


 


28





















 


(f)                                    upon
the request of the Agent, at any time if an Event of Default shall have
occurred and be continuing but otherwise not more often than once a year, the
Borrower will, at the Borrower’s expense, obtain and deliver to the Agent a
report of an independent collateral auditor satisfactory to the Agent with
respect to the Accounts and Inventory, which report shall indicate whether or
not the information set forth in the Borrowing Base Certificate most recently
delivered is accurate and complete in all material respects;


 


(g)                                 concurrently
with delivery thereof to the Trustee, copies of any and all notices,
certificates, statements, reports and other deliveries required to be made
pursuant to Section 4.02 of the High Yield Unsecured Indenture, including,
without limitation, all reports required to be filed pursuant to Sections 13
and 15(d) of the Securities Exchange Act of 1934, as amended, and Section 4.14
of the High Yield Unsecured Indenture, including, without limitation, all
compliance certificates required to be delivered pursuant thereto;


 


(h)                                 as
soon as available and in any event no later than thirty (30) days after the
last day of each fiscal year of the Borrower, (i) projections of the
Borrower’s and its Subsidiaries’ consolidated and consolidating financial
performance for the forthcoming fiscal year on a quarterly basis, which
projections shall include balance sheets and statements of income, shareholders’
equity and cash flows, and (ii) projections of the costs and expenses to
be incurred by the Borrower and its Subsidiaries in connection with Capital
Expenditures in the forthcoming fiscal year on a quarterly basis;


 


(i)                                     Intentionally Omitted;


 


(j)                                     promptly
upon receipt thereof, copies of any material reports submitted by the Borrower’s
certified public accountants in connection with each annual, interim or special
audit or review of any type of the financial statements or internal control
systems of the Borrower made by such accountants, including any comment letters
submitted by such accountants to management of the Borrower in connection with
their services;


 


(k)                                  (i) once
during the Term of this Agreement at the discretion of Agent at any time no
Default or Event of Default shall have occurred and be continuing, (ii) from
time to time, if the Agent reasonably determines that obtaining appraisals is
necessary in order for the Agent or any Lender to comply with applicable laws
or regulations, and (iii) from time to time, and at any time if a Default
or an Event of Default shall have occurred and be continuing, the Agent may, or
may require the Borrower to, in either case at the Borrower’s expense, obtain
appraisals in form and substance and from appraisers reasonably satisfactory to
the Agent stating the then current fair market value of all or any portion of
the real or personal property of the Borrower and any of its Subsidiaries; and


 


(l)                                     promptly,
such additional business, financial, corporate affairs, perfection certificates
and other information as the Agent may from time to time reasonably request.


 


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4.3                                 Notices.  The Borrower shall notify
promptly the Agent and each Lender of each of the following (and in no event
later than three (3) Business Days after a Responsible Officer becoming
aware thereof):


 


(a)                                  the
occurrence or existence of any Default or Event of Default, or any event or
circumstance that would reasonably be expected to result in a Default or Event
of Default;


 


(b)                                 any
breach or non-performance of, or any default under, any Contractual Obligation
of the Borrower or any of its Subsidiaries, or any violation of, or
non-compliance with, any Requirement of Law, which would reasonably be expected
to result, either individually or in the aggregate, in a Material Adverse
Effect, including a description of such breach, non-performance, default, violation
or non-compliance and the steps, if any, the Borrower or any such Subsidiary
has taken, is taking or proposes to take in respect thereof;


 


(c)                                  any
dispute, litigation, investigation, proceeding or suspension which may exist at
any time between the Borrower or any of its Subsidiaries and any Governmental
Authority which would reasonably be expected to result, either individually or
in the aggregate, in a Material Adverse Effect;


 


(d)                                 the
commencement of, or any material development in, any litigation or proceeding
affecting the Borrower or any of its Subsidiaries in which: (i) the amount
of damages claimed is $1,500,000 (or its equivalent in any other currency or
currencies) or more, (ii) injunctive or similar relief is sought and
which, if adversely determined, would reasonably be expected to have a Material
Adverse Effect, or (iii) the relief sought is an injunction or other stay
of the performance of this Agreement, any Loan Document or any Related
Agreement;


 


(e)                                  any
of the following if the same would reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect: (i) any
enforcement, cleanup, removal or other governmental or regulatory actions
instituted, completed or threatened against the Borrower, any of its Subsidiaries
or any of its Property pursuant to any applicable Environmental Laws, (ii) any
other Environmental Claims, and (iii) any environmental or similar
condition on any real property adjoining the Property of the Borrower or any of
its Subsidiaries that could reasonably be anticipated to cause the Borrower’s
or any such Subsidiary’s Property or any part thereof to be subject to any
material restrictions on the ownership, occupancy, transferability or use of
such Property under any Environmental Laws;


 


(f)                                    any
of the following if the same would reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect, together with a
copy of any notice with respect to such event that may be required to be filed
with a Governmental Authority and any notice delivered by a Governmental
Authority to the Borrower or any member of its Controlled Group with respect to
such event:


 


(i)                                     an ERISA Event;


 


(ii)                                  the adoption of any new Qualified Plan that is subject to Title IV
of ERISA or Section 412 of the Code by any member of the Controlled Group;


 


30





















 


(iii)                               the adoption of any amendment to a Qualified Plan that is subject to
Title IV of ERISA or Section 412 of the Code, if such amendment results in
a material increase in benefits or unfunded liabilities; or


 


(iv)                              the commencement of contributions by any member of the Controlled
Group to any Multiemployer Plan or any Qualified Plan that is subject to Title
IV of ERISA or Section 412 of the Code;


 


(g)                                 any
Material Adverse Effect subsequent to the date of the most recent audited
financial statements of the Borrower and its Subsidiaries delivered to the
Agent and Lenders pursuant to this Agreement;


 


(h)                                 any
material change in accounting policies or financial reporting practices by the
Borrower or any of its Subsidiaries;


 


(i)                                     any
labor controversy resulting in or threatening to result in any strike, work
stoppage, boycott, shutdown or other labor disruption against or involving the
Borrower or any of its Subsidiaries if the same would reasonably be expected to
have, either individually or in the aggregate, a Material Adverse Effect;


 


(j)                                     the
creation, establishment or acquisition of any Subsidiary or the issuance by the
Borrower of any capital stock, warrant or similar agreement in respect thereof;


 


(k)                                  the
occurrence of a default, an event of default or a “Change of Control” under any
of the High Yield Unsecured Documents; and


 


(l)                                     promptly
from time to time, copies of any notices or other deliveries from time to time
made or received by the Borrower or any of its Subsidiaries under or pursuant
to the Related Agreements, including, without limitation, any working capital
or other purchase price adjustments, and any indemnification claims and disbursements
of escrowed funds under any Related Agreement;


 


Each notice pursuant to this Section shall
be accompanied by a written statement by a Responsible Officer of the Borrower,
setting forth reasonable details of the occurrence referred to therein, and
stating what action the Borrower proposes to take with respect thereto and at
what time.  Each notice under subsection 4.3(a) shall
describe with reasonable particularity any and all clauses or provisions of
this Agreement or other Loan Document that have been breached or violated.


 


4.4                                 Preservation
of Corporate Existence, Etc.  The Borrower shall, and shall cause each of
its Subsidiaries to:


 


(a)                                  preserve
and maintain in full force and effect its organizational existence and good
standing under the laws of its state or jurisdiction of incorporation,
organization or formation, as applicable, except in connection with any
transaction permitted by Section 5.3;


 


(b)                                 preserve
and maintain in full force and effect all rights, privileges, qualifications,
permits, licenses and franchises necessary in the normal conduct of its
business except in


 


31





















 


connection
with transactions permitted by Section 5.3 and sales of assets permitted
by Section 5.2 and except as would not reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect;


 


(c)                                  use
its reasonable efforts, in the Ordinary Course of Business, to preserve its
business organization and preserve the goodwill and business of the customers,
suppliers and others having material business relations with it, except where
failure to do so would not reasonably be expected to have, either individually
or in the aggregate, a Material Adverse Effect; and


 


(d)                                 preserve
or renew all of its registered trademarks, trade names and service marks, the
non-preservation of which would reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect.


 


4.5                                 Maintenance
of Property. 
The Borrower shall maintain, and shall cause each of its Subsidiaries to
maintain, and preserve all of their respective Property which are used or
useful in their respective businesses in good working order and condition,
ordinary wear and tear and casualty excepted and shall make all necessary
repairs thereto and renewals and replacements thereof except where the failure
to do so would not reasonably be expected to have, either individually or in
the aggregate, a Material Adverse Effect.


 


4.6                                 Insurance.  The Borrower shall
maintain, and shall cause each of its Subsidiaries to maintain, with
financially sound and reputable independent insurers, insurance with respect to
their respective Property and businesses against loss or damage of the kinds
customarily insured against by Persons engaged in the same or similar
businesses, of such types and in such amounts as are customarily carried under
similar circumstances by such other Persons, including workers’ compensation
insurance, public liability and property and casualty insurance, which amounts shall
not be reduced by the Borrower or any of its Subsidiaries in the absence of
thirty (30) days’ prior notice to the Agent and business interruption insurance
in an amount not less than projected EBITDA (EBITDA is computed in the manner
set forth in Exhibit 4.2(b)) for a period of not less than six (6) months
and, in any event, in an amount not less than $16,500,000.  All property damage and casualty insurance
shall name the Agent as loss payee/mortgagee, all liability insurance shall
name the Agent and the Lenders as additional insureds and all business
interruption insurance shall name the Agent as assignee.  Upon request of the Agent or any Lender, the
Borrower shall furnish the Agent, with sufficient copies for each Lender, at
reasonable intervals (but not more than once per calendar year), a certificate
of a Responsible Officer of the Borrower (and, if requested by the Agent, any
insurance broker of the Borrower) setting forth the nature and extent of all
insurance maintained by the Borrower and its Subsidiaries in accordance with
this Section 4.6.  Unless the
Borrower provides the Agent with evidence of the insurance coverage required by
this Agreement, the Agent may purchase insurance at the Borrower’s expense to
protect the Agent’s and Lenders’ interests in the Borrower’s and its
Subsidiaries’ Property; provided, that the Agent shall provide notice to
the Borrower of its intentions to purchase such insurance so long as no Default
or Event of Default has occurred and is continuing.  This insurance may, but need not, protect
Borrower’s and its Subsidiaries’ interests. 
The coverage that the Agent purchases may not pay any claim that the
Borrower or any of its Subsidiaries makes or any claim that is made against the
Borrower or any of its Subsidiaries in connection with said Property.  The Borrower may later cancel any


 


32





















 


insurance
purchased by the Agent, but only after providing the Agent with evidence that
the Borrower has obtained insurance as required by this Agreement.  If the Agent purchases insurance, the
Borrower will be responsible for the costs thereof, including interest and any
other charges the Agent may impose in connection with the placement of
insurance, until the effective date of the cancellation or expiration of such
insurance. The costs of such insurance may be added to the Obligations.  The costs of the insurance may be more than
the cost of insurance the Borrower may be able to obtain on its own.  Notwithstanding anything herein to the contrary,
if the Agent shall directly receive any proceeds of any business interruption
insurance policy by reason of this Agreement, then, so long as no Default or
Event of Default has occurred and is continuing on the date such proceeds are
received by the Agent, or would result therefrom, the Agent shall disburse such
proceeds promptly to the Borrower; provided, that any such disbursement
of such proceeds to the Borrower shall not be deemed, or operate as, a waiver
or alteration of or modification to any of the obligations or covenants of the
Borrower or any of its Subsidiaries under this Agreement or any other Loan
Document and such proceeds received by the Borrower shall be used only for
purposes otherwise permitted hereunder.


 


4.7                                 Payment
of Obligations. 
The Borrower shall, and shall cause each of its Subsidiaries to, pay,
discharge and perform as the same shall become due and payable or required to
be performed, all of their respective obligations and liabilities, including,
without limitation:


 


(a)                                  all
tax liabilities, assessments and governmental charges or levies upon them or
their property or assets, unless the same are being contested in good faith by
appropriate proceedings diligently prosecuted which stay the enforcement of any
Lien and for which adequate reserves in accordance with GAAP are being
maintained by the Borrower or such Subsidiaries;


 


(b)                                 all
lawful claims which, if unpaid, would by law become a Lien upon their Property
unless the same are being contested in good faith by appropriate proceedings
diligently prosecuted which stay the imposition or enforcement of the Lien and
for which adequate reserves in accordance with GAAP are being maintained by the
Borrower;


 


(c)                                  all
Indebtedness, as and when due and payable, but subject to any subordination
provisions contained herein or in any instrument or agreement evidencing such
Indebtedness; and


 


(d)                                 the
performance of all obligations under any Contractual Obligation to which the
Borrower or any of its Subsidiaries is bound, or to which it or any of its
Property is subject, including the Related Agreements, except where the failure
to perform would not reasonably be expected to have, either individually or in
the aggregate, a Material Adverse Effect.


 


4.8                                 Compliance
with Laws. 
The Borrower shall comply, and shall cause each of its Subsidiaries to
comply, in all material respects, with all Requirements of Law of any
Governmental Authority having jurisdiction over it or its business (including,
without limitation, all Environmental Laws), except (a)(i) such as may be
contested in good faith by appropriate proceedings diligently prosecuted
without risk of loss of any Collateral, (ii) as to which a bona fide
dispute exists, and (iii) for which appropriate reserves have been
established on the


 


33





















 


Borrower’s
financial statements, or (b) where the failure to comply would not
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect.


 


4.9                                 Inspection
of Property and Books and Records.  The Borrower shall maintain and shall cause
each of its Subsidiaries to maintain proper books of record and account, in
which full, true and correct entries in conformity with GAAP consistently
applied shall be made of all financial transactions and matters involving the
assets and business of the Borrower and its Subsidiaries.  The Borrower shall permit, and shall cause
each of its Subsidiaries to permit: (i) representatives and independent
contractors of the Agent to visit and inspect any of their respective Property,
to examine their respective corporate, financial and operating records, and
make copies thereof or abstracts therefrom, and to discuss their respective
affairs, finances and accounts with their respective directors, officers, and
independent public accountants; provided, that (a) if no Event of
Default exists, any such visits and inspections may only occur during normal
business hours and upon reasonable advance notice and the number of such visits
and inspections combined shall not exceed more than one (1) time per year,
and (b) if any Event of Default exists, any such visits and inspections
may occur at any time during normal business hours and without advance notice;
and (ii) representatives and independent contractors of any Lender to do
any of the foregoing during the existence of any Event of Default and, in any
such case described in this clause (ii), any such visits and inspections may
occur at any time during normal business hours and without advance notice.  All actions permitted to be taken by the
Agent and any Lender under this Section 4.9 shall be at the sole cost and
expense of the Borrower.


 


4.10                           Use of
Proceeds. 
The Borrower shall use the proceeds of the Loans solely as follows: (a) to
pay costs and expenses required to be paid pursuant to Section 2.1, (b) to
finance the payment of the cash purchase price of Permitted Acquisitions, (c) for
working capital and other general corporate purposes of its Subsidiaries not in
contravention of any Requirement of Law and not in violation of this Agreement
and (d) with respect to CapEx Loans, only for the payment of expansion
Capital Expenditures.  For clarification,
all proceeds of the Loans shall be utilized by the Subsidiaries of Borrower for
the purposes described above and, except with respect to (a) and (b) above,
not by Borrower itself.


 


4.11                           Solvency.  Borrower and each of its
Subsidiaries, individually, and Borrower and each of its Subsidiaries, on a
consolidated basis, shall at all times be Solvent.


 


4.12                           Further Assurances.


 


(a)                                  The
Borrower shall ensure that all written information, exhibits and reports
furnished to the Agent or the Lenders do not and will not contain any untrue
statement of a material fact and do not and will not omit to state any material
fact or any fact necessary to make the statements contained therein not
misleading in light of the circumstances in which made, and will promptly
disclose to the Agent and the Lenders and correct any defect or error that may
be discovered therein or in any Loan Document or in the execution,
acknowledgement or recordation thereof.


 


(b)                                 Promptly
upon request by the Agent, the Borrower shall (and shall cause each of its
Subsidiaries to) take such additional actions as the Agent may reasonably
require from time to


 


34





















 


time in
order (i) to subject to the Liens created by any of the Collateral
Documents any of the Property, rights or interests covered by any of the
Collateral Documents, (ii) to perfect and maintain the validity,
effectiveness and priority of any of the Collateral Documents and the Liens
intended to be created thereby, and (iii) to better assure, convey, grant,
assign, transfer, preserve, protect and confirm to the Agent and Lenders the
rights granted or now or hereafter intended to be granted to the Agent and the
Lenders under any Loan Document or under any other document executed in
connection therewith.  Without limiting
the generality of the foregoing and except as otherwise approved in writing by
Required Lenders, the Borrower shall cause each of its Subsidiaries to guaranty
the Obligations and to cause each such Subsidiary to grant to the Agent, for
the benefit of the Agent and Lenders, a security interest in all of such
Subsidiary’s Property to secure such guaranty. 
Furthermore and except as otherwise approved in writing by Required
Lenders, the Borrower shall, and shall cause each of its Subsidiaries to,
pledge all of the stock or other equity interests of each of their respective
Subsidiaries to the Agent, for the benefit of the Agent and Lenders, to secure
the Obligations.  In connection with each
pledge of stock or other equity interests, the Borrower shall deliver, or cause
to be delivered, to the Agent, the items described in subsection 2.1(d)(iii),
if applicable.  In the event the Borrower or any of its Subsidiaries acquires any real
Property, simultaneously with such acquisition, the Borrower or such Subsidiary
shall execute and/or deliver, or cause to be executed and/or delivered, to the
Agent, (x) a fully executed Mortgage, in form and substance reasonably
satisfactory to the Agent together with an A.L.T.A. lender’s title insurance
policy issued by a title insurer reasonably satisfactory to the Agent, in form
and substance and in an amount reasonably satisfactory to the Agent insuring
that the Mortgage is a valid and enforceable first priority Lien on the
respective Property, free and clear of all defects, encumbrances and Liens
other than Permitted Liens, (y) with respect to real Property owned in fee
only, then current A.L.T.A. surveys, certified to the Agent and the Lenders by
a licensed surveyor sufficient to allow the issuer of the lender’s title
insurance policy to issue such policy without a survey exception and (z) an
environmental site assessment prepared by a qualified firm reasonably
acceptable to the Agent, in form and substance satisfactory to the Agent.


 


(c)                                  The
Borrower shall, and shall cause each of its Subsidiaries to, in accordance with
the terms of the applicable Collateral Documents, cause each financial
institution (other than U.S. Bank in respect of the Restricted Accounts) at
which the Borrower or any such Subsidiary maintains any lockbox, deposit
account, securities account or other similar account to deliver to the Agent a
control agreement, in form and substance satisfactory to the Agent.  The foregoing and anything contained in any
Collateral Document to the contrary notwithstanding, the Borrower shall not be
required to deliver any such control agreement in respect of any Restricted
Account (to the extent the Borrower otherwise is in compliance with the other
terms of this paragraph); provided, that, the Borrower shall not, and
shall not cause or permit any of its Subsidiaries to, deposit or maintain funds
in excess of (i) $70,000 in the Restricted Credit Card Account at any time
or (ii) $150,000 in the aggregate in all Restricted Accounts (other than
the Restricted Credit Card Account and the Restricted Payroll Account) at any
time; provided, further, that, the Borrower shall not, and shall
not cause or permit any of its Subsidiaries to, deposit or maintain funds in
the Restricted Payroll Account other than funds deposited therein in the
Ordinary Course of Business for purposes of funding current payroll
liabilities.


 


4.13                           Appraisals.  In addition to any
appraisals undertaken by or at the request of Agent pursuant to Section 4.2(k)
or Section 5.2, for purposes of calculating the “Borrowing Base”


 


35





















 


pursuant
to and in accordance with the terms of the Borrowing Base Certificate, and for
Borrower and its Subsidiaries to be permitted to include machinery, equipment
and owned real Property in the Borrowing Base Certificate at any time after the
Restatement Effective Date, if requested by the Agent at any time within thirty
(30) days after the Restatement Effective Date, the Agent shall be entitled to
receive, at the Borrower’s expense, appraisals in form and substance and from
appraisers reasonably satisfactory to the Agent setting forth the orderly
liquidation value of the machinery and equipment of Borrower or any of its
Subsidiaries and the fair market value of all or any portion of such real
Property of Borrower or any of its Subsidiaries, in each case appraised at the
time of such appraisals.  After receipt
of such appraisals, appraisals in respect of such Property may be undertaken or
required by Agent pursuant to Section 4.2(k) and/or Section 5.2, the
results of which shall result in changes in the “Borrowing Base” based upon changes
in the components thereof relating to such Property as necessary and
required.  Further, if a Subsidiary of
the Borrower exercises reinvestment rights under Section 1.8(c) and
the Property in which such Subsidiary reinvests constitutes equipment, machinery
and/or real Property that the Borrower desires to include in the “Borrowing
Base” under the Borrowing Base Certificate, then Agent may require, as a
condition thereto, appraisals of such Property that otherwise comply with the
requirements of Section 4.2(k).  The
“Borrowing Base” shall be calculated in accordance with the terms of the
Borrowing Base Certificate.


 


ARTICLE V - NEGATIVE COVENANTS


 


The Borrower covenants and agrees that, so
long as any Lender shall have any Commitment hereunder, or any Loan or other
Obligation (other than contingent indemnification Obligations to the extent no
claim giving rise thereto has been asserted) shall remain unpaid or
unsatisfied, unless the Required Lenders waive compliance in writing:


 


5.1                                 Limitation
on Liens. 
The Borrower shall not, and shall not suffer or permit any of its
Subsidiaries to, directly or indirectly, make, create, incur, assume or suffer
to exist any Lien upon or with respect to any part of its Property, whether now
owned or hereafter acquired, other than, with respect to its Subsidiaries, the
following, provided the same is permitted and solely to the extent permitted,
under the High Yield Unsecured Documents (“Permitted Liens”):


 


(a)                                  any
Lien existing on the Property of the Borrower’s Subsidiaries on the Restatement
Effective Date and set forth in Schedule 5.1 securing Indebtedness
outstanding on such date and permitted by subsection 5.5(c), including
replacement Liens on the Property currently subject to such Liens securing
Indebtedness permitted by subsection 5.5(c);


 


(b)                                 any
Lien created under any Loan Document;


 


(c)                                  Liens
for taxes, fees, assessments or other governmental charges (i) which are
not delinquent or remain payable without penalty or (ii) the non-payment
of which is permitted by Section 4.7; provided, that in respect of
this clause (ii), all such Liens secure claims in the aggregate at any time
outstanding for the Borrower’s Subsidiaries not exceeding $500,000;


 


36





















 


(d)                                 carriers’,
warehousemen’s, mechanics’, landlords’, materialmen’s, repairmen’s or other
similar Liens arising in the Ordinary Course of Business which are not
delinquent for more than ninety (90) days or remain payable without penalty or
which are being contested in good faith and by appropriate proceedings
diligently prosecuted, which proceedings have the effect of preventing the
forfeiture or sale of the Property subject thereto and for which adequate
reserves in accordance with GAAP are being maintained;


 


(e)                                  Liens
(other than any Lien imposed by ERISA) consisting of pledges or deposits
required in the Ordinary Course of Business in connection with workers’
compensation, unemployment insurance and other social security legislation or
to secure the performance of tenders, statutory obligations, surety, stay,
customs and appeals bonds, bids, leases, governmental contract, trade
contracts, performance and return of money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed money) or to secure
liability to insurance carriers;


 


(f)                                    Liens
consisting of judgment or judicial attachment liens, provided, that the
enforcement of such Liens is effectively stayed and all such Liens secure
claims in the aggregate at any time outstanding for the Borrower’s Subsidiaries
not exceeding $500,000;


 


(g)                                 easements,
rights-of-way, zoning and other restrictions, minor defects or other
irregularities in title, and other similar encumbrances existing on the
Restatement Effective Date or incurred in the Ordinary Course of Business
which, in each case, either individually or, in the aggregate, are not
substantial in amount, and which do not in any case materially detract from the
value of the Property subject thereto or interfere in any material respect with
the ordinary conduct of the businesses of the Borrower and its Subsidiaries;


 


(h)                                 Liens
on any Property acquired or held by the Borrower’s Subsidiaries securing
Indebtedness incurred or assumed for the purpose of financing (or refinancing)
all or any part of the cost of acquiring such Property and permitted under subsection 5.5(d);
provided, that (i) any such Lien attaches to such Property
concurrently with or within twenty (20) days after the acquisition thereof, (ii) such
Lien attaches solely to the Property so acquired in such transaction, and (iii) the
principal amount of the debt secured thereby does not exceed 100% of the cost
of such Property;


 


(i)                                     Liens
securing Capital Lease Obligations permitted under subsection 5.5(d);


 


(j)                                     any
interest or title of a lessor or sublessor, as lessor or sublessor, under any
lease permitted by this Agreement; and


 


(k)                                  Liens
arising from precautionary uniform commercial code financing statements filed
under any lease permitted by this Agreement.


 


5.2                                 Disposition
of Assets.  The
Borrower shall not, and shall not suffer or permit any of its Subsidiaries to,
directly or indirectly, sell, assign, lease, convey, transfer or otherwise
dispose of (whether in one or a series of transactions) any Property (including
accounts and notes receivable, with or without recourse) or enter into any
agreement to do any of the foregoing, except, with respect to the Borrower’s
Subsidiaries and in each instance, provided the same is permitted, and solely
to the extent permitted, under the High Yield Unsecured Documents:


 


37





















 


(a)                                  dispositions
of inventory, or used, worn-out or surplus equipment, all in the Ordinary
Course of Business; and


 


(b)                                 dispositions
not otherwise permitted hereunder which are made for fair market value and the
mandatory prepayment in the amount of the Net Proceeds of such disposition is
made if and to the extent required by Section 1.8; provided, that (i) at
the time of any disposition, no Event of Default shall exist or shall result
from such disposition, (ii) the aggregate sales price from such
disposition shall be paid in cash, (iii) the aggregate fair market value
of all assets so sold by the Borrower’s Subsidiaries, together, shall not
exceed in any fiscal year $2,000,000, (iv) if the aggregate Net Proceeds
received by the Borrower and its Subsidiaries for all dispositions and Events
of Loss occurring during the current fiscal year exceeds $1,000,000, and such
dispositions and Events of Loss involved machinery, equipment and/or real
Property that previously was included in the “Borrowing Base” under the
Borrowing Base Certificate then in effect, the Borrower shall have delivered to
the Agent a replacement Borrowing Base Certificate setting forth the
calculation of the “Borrowing Base” after giving effect to such dispositions
and/or Events of Loss and, if requested by the Agent, appraisals of the
remaining equipment, machinery and/or real Property to be included in such “Borrowing
Base”, and (v) after giving effect to such disposition, the Borrower shall
be in compliance on a pro forma basis with the covenants set forth in Article VI,
recomputed for the most recent quarter for which financial statements have been
delivered.


 


5.3                                 Consolidations
and Mergers. 
The Borrower shall not, and shall not suffer or permit any of its
Subsidiaries to, merge, consolidate with or into, or convey, transfer, lease or
otherwise dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to or in favor of any Person, except upon not less than
five (5) Business Days’ prior written notice to the Agent, any Subsidiary
of the Borrower may merge with, or dissolve or liquidate into a Wholly-Owned
Subsidiary of the Borrower; provided, that such Wholly-Owned Subsidiary
shall be the continuing or surviving entity.


 


5.4                                 Loans
and Investments. 
The Borrower shall not and shall not suffer or permit any of its
Subsidiaries to (i) purchase or acquire, or make any commitment to purchase
or acquire any capital stock, equity interest, or any obligations or other
securities of, or any interest in, any Person, including the establishment or
creation of a Subsidiary, or (ii) make or commit to make any Acquisitions,
or any other acquisition of all or substantially all of the assets of another
Person, or of any business or division of any Person, including without
limitation, by way of merger, consolidation or other combination or (iii) make
or commit to make any advance, loan, extension of credit or capital
contribution to or any other investment in, any Person including any Affiliate
of the Borrower or any Subsidiary of the Borrower (the items described in
clauses (i), (ii) and (iii) are referred to as “Investments”), except
for, in each instance, provided the same is permitted, and solely to the extent
permitted, under the High Yield Unsecured Documents:


 


(a)                                  Investments
in cash and Cash Equivalents;


 


(b)                                 extensions
of credit by the Borrower to any of its Wholly-Owned Subsidiaries; provided,
that the obligations of each obligor shall be evidenced by notes, which notes
shall be


 


38





















 


pledged
to the Agent, for the benefit of the Agent and Lenders, and have such other
terms as the Agent may reasonably require;


 


(c)                                  loans
and advances by the Borrower’s Subsidiaries to employees in the Ordinary Course
of Business not to exceed $250,000 in the aggregate at any time outstanding;
and


 


(d)                                 Permitted
Acquisitions.


 


5.5                                 Limitation
on Indebtedness. 
The Borrower shall not, and shall not suffer or permit any of its
Subsidiaries to, create, incur, assume, suffer to exist, or otherwise become or
remain directly or indirectly liable with respect to, any Indebtedness, except,
in each instance, provided the same is permitted, and solely to the extent
permitted, under the High Yield Unsecured Documents:


 


(a)                                  Indebtedness
incurred pursuant to this Agreement;


 


(b)                                 Indebtedness
consisting of Contingent Obligations described in clause (i) of the
definition thereof and permitted pursuant to Section 5.9;


 


(c)                                  Indebtedness
of the Borrower’s Subsidiaries existing on the Restatement Effective Date and
set forth in Schedule 5.5 including extensions and refinancings
thereof which do not increase the principal amount of such Indebtedness as of
the date of such extension or refinancing;


 


(d)                                 Indebtedness
of the Borrower’s Subsidiaries not to exceed $10,000,000 in the aggregate at
any time outstanding, consisting of Capital Lease Obligations or secured by
Liens permitted by subsection 5.1(h);


 


(e)                                  High
Yield Unsecured Indebtedness not to exceed $120,000,000 in the aggregate
principal amount at any time outstanding (reduced from time to time by
principal payments made thereon, the making of which remain subject to the
provisions of this Agreement) evidenced by the High Yield Unsecured Notes and
Contingent Obligations of the Borrower’s Subsidiaries resulting from unsecured
guarantees thereof;


 


(f)                                    unsecured
intercompany Indebtedness permitted pursuant to subsection 5.4(b);


 


(g)                                 other unsecured Indebtedness of the Borrower’s Subsidiaries not
exceeding in the aggregate at any time outstanding $800,000, reduced by the
aggregate amount of Contingent Obligations outstanding that are permitted
pursuant to Section 5.9(i);


 


(h)                                 unsecured contingent Indebtedness of Grand Valley Acquisition Sub
constituting the Grand Valley Earn-Out Obligation incurred in connection with the Grand Valley Asset
Acquisition in an aggregate maximum potential amount not to exceed $1,000,000;
and


 


(i)                                     unsecured contingent Indebtedness of Woodcraft constituting the
Dimension Earn-Out Obligation incurred in connection with the Dimension
Acquisition in an aggregate maximum potential amount not to exceed $7,000,000
plus accrued interest on the Dimension


 


39





















 


Earn-Out Obligation at the rate specified in the
Dimension Purchase Agreement as in effect on the Second Amendment Closing Date.


 


5.6                                 Transactions
with Affiliates. 
The Borrower shall not, and shall not suffer or permit any of its
Subsidiaries to, enter into any transaction with any Affiliate of the Borrower
or of any such Subsidiary, except:


 


(a)                                  as
expressly permitted by this Agreement; or


 


(b)                                 in
the Ordinary Course of Business and pursuant to the reasonable requirements of
the business of the Borrower or such Subsidiary; provided, that in the
case of this clause (b), upon fair and reasonable terms no less favorable to
the Borrower or such Subsidiary than would be obtained in a comparable arm’s-length
transaction with a Person not an Affiliate of the Borrower or such Subsidiary
and which are disclosed in writing to the Agent.


 


5.7                                 Management
Fees and Compensation.  The Borrower shall not, and shall not permit
any of its Subsidiaries to, pay any management, consulting or similar fees to
any Affiliate of the Borrower or to any officer, director or employee of the
Borrower or any of its Subsidiaries or Affiliates except:


 


(a)                                  payment
of reasonable compensation to officers and employees for actual services
rendered to the Borrower and its Subsidiaries in the Ordinary Course of
Business;


 


(b)                                 payment
of directors’ fees and reimbursement of actual out-of-pocket expenses incurred
in connection with attending board of director meetings not to exceed in the
aggregate, with respect to all such items, $100,000 in any fiscal year of the
Borrower;


 


(c)                                  Intentionally
Omitted;


 


(d)                                 payment
of a one-time closing fee in January 2006 to Behrman Brothers Management
Corp. in connection with the Dimension Acquisition in an amount not to exceed $100,000;
and


 


(e)                                  payment
of transaction or similar fees to Behrman Brothers Management Corp. from time
to time in connection with (i) equity offerings or raises by the Borrower,
(ii) the sale, merger or other business combination involving the
business, securities or assets of the Borrower, (iii) the acquisition by
the Borrower of any portion of the business, securities or assets of another
entity constituting a Permitted Acquisition and (iv) any extraordinary
distribution of assets or dividends in connection with a recapitalization of
the Borrower (each such transaction described in the foregoing clauses (i),
(ii), (iii) and (iv), a “Transaction”), in each case provided that (x)
such fee does not exceed two percent (2%) of aggregate transaction value and is
paid from the proceeds of such Transaction, (y) no Event of Default would arise
as a result of the consummation of the applicable Transaction and (z) such
Transaction was not consummated for purposes of Section 6.6 (it being
agreed and understood that nothing contained in this paragraph (e) shall
be deemed to constitute (I) a waiver of, or otherwise affect or impair any
obligation of the Borrower or its Subsidiaries to comply with, any provision
contained herein or in any other Loan Document prohibiting or otherwise not
permitting the consummation of any such


 


40





















 


Transaction,
or (II) express or implied consent or approval by the Agent or any Lender to
the consummation of any such Transaction);


 


provided, however, that no such fees or other payments described in
the foregoing clauses (c), (d) or (e) shall be paid during any period
while any Event of Default has occurred and is continuing or would arise as a
result of such payment.


 


5.8                                 Use
of Proceeds. 
The Borrower shall not and shall not suffer or permit any of its
Subsidiaries to use any portion of the Loan proceeds, directly or indirectly,
to purchase or carry Margin Stock or repay or otherwise refinance Indebtedness
of the Borrower or others incurred to purchase or carry Margin Stock, or
otherwise in any manner which is in contravention of any Requirement of Law or
in violation of this Agreement.


 


5.9                                 Contingent
Obligations. 
The Borrower shall not, and shall not suffer or permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any Contingent
Obligations except in respect of the Obligations and except:


 


(a)                                  endorsements
of the Borrower’s Subsidiaries for collection or deposit in the Ordinary Course
of Business;


 


(b)                                 Rate
Contracts entered into in the Ordinary Course of Business for bona fide hedging
purposes and not for speculation with the Agent’s prior written consent;


 


(c)                                  unsecured
Contingent Obligations of the Borrower and its Subsidiaries existing as of the
Restatement Effective Date and listed in Schedule 5.9, including
extension and renewals thereof which do not increase the amount of such
Contingent Obligations as of the date of such extension or renewal;


 


(d)                                 Contingent
Obligations incurred in the Ordinary Course of Business of the Borrower’s
Subsidiaries with respect to surety and appeal bonds, performance bonds and
other similar obligations;


 


(e)                                  Contingent
Obligations arising under indemnity agreements to title insurers to cause such
title insurers to issue to the Agent title insurance policies;


 


(f)                                    Contingent
Obligations arising with respect to customary indemnification obligations in
favor of (i) sellers in connection with Permitted Acquisitions and (ii) purchasers
in connection with dispositions permitted under subsection 5.2(b);


 


(g)                                 Contingent
Obligations arising under Lender Letters of Credit and other letters of credit
which are the subject of a Letter of Credit Participation Agreement;


 


(h)                                 Contingent
Obligations arising under permitted guarantees of the Subordinated Indebtedness
evidenced by the High Yield Unsecured Notes; and


 


(i)                                     other
Contingent Obligations not exceeding $800,000 at any time outstanding reduced
by the aggregate amount of Indebtedness outstanding that is permitted pursuant
to Section 5.5(g).


 


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5.10                           Compliance
with ERISA. 
The Borrower shall not, and shall not suffer or permit any of its
Subsidiaries to:


 


(a)                                  terminate
any Plan subject to Title IV of ERISA so as to result in any material liability
to the Borrower;


 


(b)                                 permit
to exist any ERISA Event or any other event or condition, which would
reasonably be expected to have a Material Adverse Effect;


 


(c)                                  make
a complete or partial withdrawal (within the meaning of ERISA Section 4201)
from any Multiemployer Plan so as to result in any material liability to the
Borrower or any of its Subsidiaries;


 


(d)                                 enter
into any new Plan or modify any existing Plan so as to increase its obligations
thereunder which would reasonably be expected to have a Material Adverse
Effect; or


 


(e)                                  permit
the present value of all nonforfeitable accrued benefits under any Plan (using
the actuarial assumptions utilized by the PBGC upon termination of a Plan)
materially to exceed the fair market value of Plan assets allocable to such benefits,
all determined as of the most recent valuation date for each such Plan.


 


5.11                           Restricted
Payments. 
The Borrower shall not, and shall not suffer or permit any of its
Subsidiaries to, (i) declare or make any dividend payment or other
distribution of assets, properties, cash, rights, obligations or securities on
account of any shares of any class of its capital stock, partnership interests,
membership interests or other equity securities, (ii) purchase, redeem or
otherwise acquire for value any shares of its capital stock, partnership
interests, membership interests or other equity securities or any warrants,
rights or options to acquire such shares, interests or securities now or
hereafter outstanding, (iii) make any payment or prepayment of principal
of, premium, if any, interest, fees, redemption, exchange, purchase,
retirement, defeasance, payment in trust, sinking fund or similar payment with
respect to, Subordinated Indebtedness, or any payment on account of the Grand
Valley Earn-Out Obligation or the Dimension Earn-Out Obligation, (iv) make
any payment or prepayment of principal of, premium, if any, interest, fees,
redemption, exchange, purchase, retirement, defeasance, payment in trust,
sinking fund or similar payment with respect to, the High Yield Unsecured
Indebtedness, or (v) make any direct or indirect payment in respect of any
consulting, management, non-competition or similar agreement, arrangement or
fee (the items described in clauses (i), (ii), (iii), (iv) and (v) above
are referred to as “Restricted Payments”); except that any Wholly-Owned
Subsidiary of the Borrower may declare and pay dividends to any Wholly-Owned
Subsidiary of the Borrower and except as follows, in each instance provided the
same is permitted, and solely to the extent permitted, under the High Yield
Unsecured Documents:


 


(a)                                  the
Borrower may declare and make dividend payments or other distributions payable
solely in its Permitted Securities;


 


(b)                                 the
Borrower’s Subsidiaries may make distributions to Borrower in amounts necessary
to enable Borrower to redeem from management stockholders shares of the
Borrower’s common stock or warrants or options to acquire any such shares, and
the Borrower


 


42





















 


promptly
shall so redeem such shares, warrants or options with the proceeds thereof; provided,
that any such redemptions are made promptly by the Borrower after its receipt
of such proceeds; and provided, further, that all of the
following conditions are satisfied:


 


(i)                                     no Default or Event of Default has occurred and is continuing or
would arise as a result of such Restricted Payment;


 


(ii)                                  after giving effect to such Restricted Payment, the Borrower shall
be in compliance on a pro forma basis with the covenants set forth in Article VI,
recomputed for the most recent month for which financial statements have been
delivered;


 


(iii)                               the aggregate amount of such Restricted Payments permitted (x) in
any fiscal year of the Borrower shall not exceed $350,000 and (y) during the
term of this Agreement shall not exceed $2,000,000; and


 


(iv)                              after giving effect to such Restricted Payment, the Maximum
Revolving Loan Balance shall exceed the aggregate outstanding principal balance
of Revolving Loans by not less than $2,000,000;


 


(c)                                  Intentionally
Omitted;


 


(d)                                 Intentionally
Omitted;


 


(e)                                  in
the event the Borrower files a consolidated income tax return with its
Subsidiaries, the Borrower’s Subsidiaries may make distributions to Borrower to
permit Borrower to pay federal and state income taxes then due and owing,
franchise taxes and other similar licensing expenses incurred in the Ordinary
Course of Business; provided, that the amount of such distribution shall
not be greater, nor the receipt by the Borrower of tax benefits less, than they
would have been had the Borrower not filed a consolidated return with its
Subsidiaries;


 


(f)                                    the
Borrower’s Subsidiaries may make distributions to Borrower in amounts necessary
to enable Borrower to pay, as and when due and payable, and the Borrower may
pay with the proceeds thereof, provided, that any such payments are made
promptly by the Borrower after its receipt of such proceeds, (i) regularly
scheduled semi-annual payments of interest on the High Yield Unsecured
Indebtedness at a rate not to exceed ten percent (10%) per annum in accordance
with the terms set forth in the High Yield Unsecured Documents, (ii) regularly
scheduled payments of interest and principal on any Subordinated Indebtedness
to the extent permitted under the subordination terms with respect thereto and (iii) any
other payments that are required under this Agreement and any of the other Loan
Documents;


 


(g)                                 the
Borrower’s Subsidiaries may make distributions to Borrower in amounts necessary
to enable Borrower to make cash dividends or distributions to its holders of
capital stock so long as the aggregate amount of such Restricted Payments and
all other Restricted Payments made under this Section 5.11(g) since
the Original Closing Date does not exceed the sum of (without duplication):


 


43





















 


(i)                                     fifty-percent (50%) of the “Consolidated Net Income” (as defined in
the High Yield Unsecured Indenture) accrued during the period (treated as one
accounting period) from the beginning of the fiscal quarter immediately
following the fiscal quarter during which the Original Closing Date occurred to the end of the most recent
fiscal quarter ending prior to the date of such Restricted Payment for which
quarterly financial statements are available and have been delivered to the
Agent and the Lenders in accordance with the terms hereof (or, in case such
Consolidated Net Income shall be a deficit, minus 100% of such deficit); plus


 


(ii)                                  one hundred percent (100%) of the aggregate Net Proceeds received by
the Borrower from the issuance or sale of its Permitted Securities subsequent
to the Original Closing Date (other than an issuance or sale to a Subsidiary of
the Borrower and other than an issuance or sale to an employee stock ownership
plan or to a trust established by the Borrower or any of its Subsidiaries for
the benefit of their employees) and one hundred percent (100%) of any cash
capital contribution received by the Borrower from its shareholders subsequent to the Original Closing Date (other than for
purposes of Section 6.6); plus


 


(iii)                               the amount by which Indebtedness of the Borrower is reduced on the
Borrower’s balance sheet upon the conversion or exchange subsequent to the
Original Closing Date of any Indebtedness of the Borrower convertible or
exchangeable for Permitted Securities (less the amount of any cash, or the fair
value of any other property, distributed by the Borrower upon such conversion
or exchange) to the extent the same shall have been permitted under this
Agreement; provided, however, that the foregoing amount shall not
exceed the net cash proceeds received by the Borrower or any of its
Subsidiaries from the sale of such Indebtedness (excluding Net Proceeds from
sales to a Subsidiary of the Borrower or to an employee stock ownership plan or
to a trust established by the Borrower or any of its Subsidiaries for the
benefit of their employees); plus


 


(iv)                              an amount equal to the net reduction in the Investments made by the
Borrower or any Subsidiary in any Person (other than the Borrower or any of its
Subsidiaries) resulting from repurchases, repayments or redemptions of such
Investments by such Person, proceeds realized on the sale of such Investments
and proceeds representing the return of capital (excluding dividends and
distributions), in each case received by the Borrower or any of its
Subsidiaries and to the extent the same shall have been permitted under this
Agreement; and


 


provided,
that all of the following conditions are satisfied:


 


(i)                                     no Default or Event of Default shall have occurred and be continuing
or would arise as a result of such Restricted Payment;


 


(ii)                                  after giving effect to such Restricted Payment, the Borrower shall
be in compliance on a pro forma basis with the covenants set forth in Article VI,
recomputed for the most recent quarter for which financial statements have been
delivered;


 


44





















 


(iii)                               after giving effect to such Restricted Payment, the Leverage Ratio,
recalculated for the twelve (12) month period ending on the last day of the
most recently ended quarter for which the Agent and the Lenders shall have
received financial statements in accordance with the terms of this Agreement,
shall be less than 4.00 to 1.00; and


 


(iv)                              after giving effect to such Restricted Payment, the Maximum
Revolving Loan Balance shall exceed the aggregate outstanding principal balance
of Revolving Loans by not less than $5,000,000;


 


(h)                                 Grand Valley Acquisition Sub may pay, as and when due and payable, a
one-time cash payment in an amount required to be paid pursuant to the terms of
the Grand Valley Earn-Out Obligation in accordance with the provisions of Section 1.4(b) of
the Grand Valley Asset Purchase Agreement as in effect on the First Amendment
Closing Date; provided, that all of the following conditions are
satisfied:


 


(i)                                     no Default or Event of Default shall have occurred and be continuing
or would arise as a result of such Restricted Payment or any transactions which
may occur to enable Grand Valley Acquisition Sub to make such Restricted
Payment;


 


(ii)                                  such Restricted Payment is required to be made under the terms of
the Grand Valley Asset Purchase Agreement;


 


(iii)                               after giving effect to such Restricted Payment, the Borrower shall
be in compliance on a pro forma basis with the covenants set forth in Article VI,
recomputed for the most recent quarter for which financial statements have been
delivered;


 


(iv)                              the aggregate amount of such Restricted Payment shall not exceed
$1,000,000 (or, if less, the amount determined in accordance with the terms of
the Grand Valley Asset Purchase Agreement as in effect on the First Amendment
Closing Date);


 


(v)                                 after giving effect to such Restricted Payment, the Maximum
Revolving Loan Balance shall exceed the aggregate outstanding principal balance
of Revolving Loans by not less than $5,000,000;


 


(vi)                              the “Available Liquidity” (as defined in the High Yield Unsecured
Indenture) of the Borrower shall be at least $7,500,000; and


 


(vii)                           if required pursuant to the terms of the High Yield Subordinated
Indenture and/or in the event that the Leverage Ratio of the Borrower and its
Subsidiaries after giving effect to such Restricted Payment shall be greater
than 4.00:1.00, at least fifty percent (50%) of the amount of such Restricted
Payment shall have been financed with “Acceptable Capital Contributions” (as
defined in the High Yield Unsecured Indenture), and not more than $500,000 of
Revolving


 


45





















 


Loans and cash on hand of the Borrower (to the extent not constituting
proceeds of such Acceptable Capital Contributions) (or, if less, an amount not
to exceed fifty percent (50%) of such Restricted Payment) in the aggregate
shall be used to make such Restricted Payment; and


 


(i)                                     Woodcraft may pay, as and when due and payable, cash payments in
amounts required to be paid pursuant to the terms of the Dimension Earn-Out
Obligation in accordance with the provisions of Section 1.6(c) of
the Dimension Purchase Agreement as in effect on the Second Amendment Closing
Date; provided, that all of the following conditions are satisfied:


 


(i)                                     no Default or Event of Default shall have occurred and be continuing
or would arise as a result of such Restricted Payment or any transactions which
may occur to enable Woodcraft to make such Restricted Payment;


 


(ii)                                  such Restricted Payment is required to be made under the terms of
the Dimension Purchase Agreement;


 


(iii)                               after giving effect to such Restricted Payment, the Borrower shall
be in compliance on a pro forma basis with the covenants set forth in Article VI,
recomputed for the most recent quarter for which financial statements have been
delivered;


 


(iv)                              the amount of such Restricted Payment shall not exceed the amount
determined in accordance with the terms of the Dimension Purchase Agreement as
in effect on the Second Amendment Closing Date;


 


(v)                                 after giving effect to such Restricted Payment, the Maximum
Revolving Loan Balance shall exceed the aggregate outstanding principal balance
of Revolving Loans by not less than $5,000,000;


 


(vi)                              the “Available Liquidity” (as defined in the High Yield Unsecured
Indenture) of the Borrower shall be at least $7,500,000; and


 


(vii)                           if required pursuant to the terms of the High Yield Subordinated
Indenture and/or in the event that the Leverage Ratio of the Borrower and its
Subsidiaries after giving effect to such Restricted Payment shall be greater
than 4.00:1.00, at least fifty percent (50%) of the amount of such Restricted
Payment shall have been financed with “Acceptable Capital Contributions” (as
defined in the High Yield Unsecured Indenture), and not more than an amount of
Revolving Loans and cash on hand of the Borrower (to the extent not
constituting proceeds of such Acceptable Capital Contributions) equal to fifty
percent (50%) of such Restricted Payment shall be used to make such Restricted
Payment.


 


5.12                           Change
in Business. 
The Borrower shall not permit any of its Subsidiaries to engage in any
material line of business substantially different from those respective lines
of business carried on by each of them on the date hereof.  The Borrower shall not (i) engage in any


 


46





















 


business
activity other than (A) its ownership of the equity securities of
Woodcraft, (B) activities incidental to maintenance of its corporate existence
and (C) performance of its obligations under the Loan Documents, the High
Yield Unsecured Documents and the other Related Agreements to which it is a
party, (ii) receive or retain any Restricted Payment except to the extent
expressly permitted hereunder (provided Borrower uses the proceeds thereof
solely for such specified purposes) or (iii) incur, grant or suffer to
exist any Liens, Indebtedness or Contingent Obligations other than (x) Liens
granted to the Agent, for the benefit of the Agent and the Lenders, or (y)
Indebtedness and Contingent Obligations pursuant to the Loan Documents, the
High Yield Unsecured Documents and the other Related Agreements to which it is
a party.


 


5.13                           Change
in Structure. 
Except as expressly permitted under Section 5.3, the Borrower shall
not, and shall not permit any of its Subsidiaries to, make any material changes
in its equity capital structure (including in the terms of its outstanding
capital stock), or amend any of its Organization Documents in any material respect
or in any respect adverse to the Agent or Lenders.


 


5.14                           Accounting
Changes.  The
Borrower shall not, and shall not suffer or permit any of its Subsidiaries to,
make any significant change in accounting treatment or reporting practices,
except as required by GAAP, or change the fiscal year of the Borrower or of any
of its Subsidiaries.


 


5.15                           Amendments
to Related Agreements.


 


(a)                                  The
Borrower shall not, and shall not permit any of its Subsidiaries to, (i) amend,
supplement, waive or otherwise modify any provision of, any Related Agreement
in a manner adverse to the Agent or Lenders or which could reasonably be
expected to have a Material Adverse Effect, or (ii) take or fail to take
any action under any Related Agreement that would reasonably be expected to
have a Material Adverse Effect.


 


(b)                                 The
Borrower shall not, and shall not permit any of its Subsidiaries directly or
indirectly to, change or amend the terms of any Subordinated Indebtedness, if
the effect of such amendment would be to: (i) increase the interest rate
on such Indebtedness; (ii) shorten the dates upon which payments of
principal or interest are due on such Indebtedness; (iii) add or change in
a manner adverse to the Borrower any event of default or add or make more
restrictive any covenant with respect to such Indebtedness; (iv) change in
a manner adverse to the Borrower the prepayment provisions of such
Indebtedness; (v) change the subordination provisions thereof (or the
subordination terms of any guaranty thereof); or (vi) change or amend any
other term if such change or amendment would materially increase the
obligations of the obligor or confer additional material rights on the holder
of such Indebtedness in a manner adverse to the Borrower, any of its
Subsidiaries, the Agent or the Lenders.


 


(c)                                  The
Borrower shall not, and shall not permit any of its Subsidiaries directly or
indirectly to, change or amend the terms of the High Yield Unsecured
Indebtedness or any of the High Yield Unsecured Documents, if the effect of
such change or amendment would be to: (i) increase the interest rate on or
principal amount of such Indebtedness; (ii) shorten the dates upon which payments
of principal or interest are due on such Indebtedness; (iii) add or change
in a manner adverse to the Borrower any event of default or add or make more
restrictive any


 


47





















 


covenant
with respect to such Indebtedness; (iv) change in a manner adverse to the
Borrower the prepayment or redemption provisions of such Indebtedness; (v) change
or amend any other term if such change or amendment would increase the
obligations of the obligor or confer additional rights on the holder of such
Indebtedness in a manner adverse to the Borrower, any of its Subsidiaries, the
Agent or the Lenders; (vi) provide that any such Indebtedness will become
secured, or (vii) provide that such Indebtedness will become guaranteed,
except by any Subsidiaries that are also providing guarantees of the
Obligations hereunder; and provided that the Borrower and any such Subsidiaries
have complied with all of the conditions set forth in Section 4.12 hereof
on or prior to the provision of such guarantee.


 


(d)                                 The
Borrower shall not, and shall not permit any of its Subsidiaries directly or
indirectly to, change, amend, supplement, waive or otherwise modify any
provision of any of the Grand Valley Purchase Documents, any other term or
provision relating to the Grand Valley Earn-Out Obligation, any of the
Dimension Purchase Documents or any other term or provision relating to the
Dimension Earn-Out Obligation.


 


5.16                           No Negative Pledges.


 


(a)                                  The
Borrower shall not, and shall not permit any of its Subsidiaries directly or
indirectly to, create or otherwise cause or suffer to exist or become effective
any consensual restriction or encumbrance of any kind on the ability of any
such Subsidiary to pay dividends or make any other distribution on any of such
Subsidiary’s equity securities or to pay fees, including management fees, or
make other payments and distributions to the Borrower or any of its
Subsidiaries, other than restrictions contained herein or in the High Yield
Unsecured Documents with respect to distributions by a Subsidiary of the
Borrower which is not a Wholly-Owned Subsidiary of Borrower.  The Borrower shall not, and shall not permit
any of its Subsidiaries directly or indirectly to, enter into, assume or become
subject to any Contractual Obligation prohibiting or otherwise restricting the
existence of any Lien upon any of its assets in favor of the Agent, whether now
owned or hereafter acquired except in connection with any document or
instrument governing Liens permitted pursuant to subsections 5.1(h) and
(i); provided, that any such restriction contained therein relates only
to the asset or assets subject to such Permitted Liens.


 


(b)                                 The Borrower shall not issue any shares of the Borrower’s equity
securities, including, without limitation, Permitted Securities, if such
issuance would result in an Event of Default under subsection 7.1(l).


 


5.17                           Foreign
Assets Control Regulations.  Borrower will not, and will not permit any of
its Subsidiaries to, (i) use any proceeds from the Loans to knowingly
engage in any material dealings or transactions with any blocked persons
described in Section 1 of Executive Order 13224 of the September 23,
2001 Blocking Property and Prohibiting Transaction With Persons Who Commit and
Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49049 (2001)), or (ii) engage
in transactions with any Person or country to the extent restricted by the
Trading with the Enemy Act, as amended, or use the proceeds from the Loans to
so engage.


 


5.18                           Integration.  Notwithstanding anything in
this Article V to the contrary, no action otherwise permitted under this Article V
shall be permitted if such action is prohibited or is


 


48





















 


otherwise
not permitted under any of the High Yield Unsecured Documents and the Agent
shall have the right, at any time, to require the Borrower to deliver a
certificate executed by a Responsible Officer of Borrower and otherwise in form
and substance reasonably satisfactory to Agent which certifies to Agent and
Lenders that any such action, at the time such action is to be taken, is
permitted under the High Yield Unsecured Documents.  Furthermore, all covenants contained in each
of the High Yield Unsecured Documents hereby are incorporated herein, mutatis mutandis, as if such covenants
were set forth in this Agreement, and shall be deemed in addition to, and not
in substitution of, the covenants contained in the Loan Documents.


 


5.19                           Certain
Leased Locations. 
The Borrower shall not permit Inventory, machinery and equipment having
a value in excess of $750,000, in the aggregate, at any time to be located at
the Borrower’s warehousing facilities maintained at (a) 2815 Clearwater
Road, St. Cloud, Minnesota 56301 or (b) 14500 Parallel, Suite T,
Basehor, Kansas 66007, unless the Borrower shall have delivered a bailee waiver
or warehousing agreement, as the case may be, duly executed by the bailor or
warehouser, as the case may be, of each such location, in each case, in form
and substance reasonably satisfactory to the Agent.


 


ARTICLE VI - FINANCIAL COVENANTS


 


The Borrower covenants and agrees that, so
long as any Lender shall have any Commitment hereunder, or any Loan or other
Obligation (other than contingent indemnification Obligations to the extent no
claim giving rise thereto has been asserted) shall remain unpaid or
unsatisfied, unless the Required Lenders waive compliance in writing:


 


6.1                                 Reserved.


 


6.2                                 Leverage
Ratio.  The
Borrower shall not permit its Leverage Ratio for the twelve (12) month period
ending on the last day of any fiscal quarter of the Borrower (commencing with
the fiscal quarter of the Borrower ending September 30, 2005) to be
greater than 7.00 to 1.00.


 


“Leverage Ratio” shall be calculated in the
manner set forth in Exhibit 4.2(b).


 


6.3                                 Fixed
Charge Coverage Ratio.  The Borrower shall not permit its Fixed
Charge Coverage Ratio for the twelve (12) month period ending on the last day
of any fiscal quarter of the Borrower (commencing with the fiscal quarter of
the Borrower ending September 30, 2005) to be less than the minimum ratio
set forth in the table below opposite such date: 


 


	
  Date

  	
   

  	
  Minimum Fixed Charge

  Ratio

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  September 30,
  2005

  	
   

  	
  1.05
  to 1.00

  	
   

  
	
  December 31,
  2005

  	
   

  	
  1.05
  to 1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  March 31,
  2006

  	
   

  	
  1.05
  to 1.00

  	
   

  
	
  June 30,
  2006

  	
   

  	
  1.05
  to 1.00

  	
   

  
	
  September 30,
  2006

  	
   

  	
  1.05
  to 1.00

  	
   

  
	
  December 31,
  2006

  	
   

  	
  1.05
  to 1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  March 31, 2007 and the last day of each fiscal quarter
  thereafter

  	
   

  	
  1.10
  to 1.00

  	
   

  



 


49





















 


“Fixed Charge Coverage Ratio” shall be
calculated in the manner set forth in Exhibit 4.2(b).


 


6.4                                 Reserved.


 


6.5                                 EBITDA.  The Borrower shall not
permit its EBITDA for the twelve (12) month period ending on the last day of
any fiscal quarter of the Borrower (commencing with the fiscal quarter of the
Borrower ending September 30, 2005) to be less than $21,000,000.


 


“EBITDA” shall be calculated in the manner
set forth in Exhibit 4.2(b).


 


6.6                                 Equity
Contribution. 
Anything contained in this Article VI to the contrary
notwithstanding, if the Borrower violates any financial covenant contained in
Sections 6.2, 6.3 and/or 6.5 as of any date of measurement, no Event of Default
shall occur in respect thereof to the extent each of the following conditions
is satisfied in respect thereof:


 


(a)                                  contemporaneously
with the delivery of the Compliance Certificate in accordance with the terms of
this Agreement relating to such date of measurement, Sponsor delivers to Agent
a writing by which Sponsor unconditionally and irrevocably commits, for the
benefit of Agent and the Lenders, to contribute cash common equity to Borrower
in an amount at least equal to the relevant EBITDA Plug Amount for purposes of
this paragraph;


 


(b)                                 on or
before the fifth (5th) day after the date on which such Compliance Certificate
and writing are delivered to the Agent, Sponsor makes a cash common equity
contribution in a net cash amount at least equal to the relevant EBITDA Plug
Amount and the terms of such equity shall not provide for, include or grant any
mandatory or required redemption or repurchase rights or any rights to
mandatory or required dividends, distributions or other payments thereon or in
respect thereto (each such contribution, a “Cash Contribution”);


 


(c)                                  upon
receipt of such Cash Contribution by the Borrower, the Borrower immediately
makes a mandatory prepayment of the Loans and other Obligations with the
proceeds thereof in accordance with the terms of subsection 1.8(g); and


 


(d)                                 no
other Default or Event of Default exists or otherwise would be created by the
making of any such contributions;


 


it being understood that the amount of any
such contributions shall be added to EBITDA (or, in respect of the Fixed Charge
Coverage ratio under Section 6.3, Cash Flow) solely for the applicable
test period and date of measurement and shall not be included or considered (or
credited) in the calculation of EBITDA (or Cash Flow, as applicable) for any
subsequent test period or date of measurement. 
The Borrower agrees and acknowledges that an Event of Default shall
occur immediately and automatically upon the failure of Sponsor or the Borrower
to timely comply with any of the foregoing.


 


50





















 


ARTICLE VII - EVENTS OF DEFAULT


 


7.1                                 Event
of Default. 
Any of the following shall constitute an “Event of Default”:


 


(a)                                  Non-Payment.  The Borrower fails to pay (i) when
and as required to be paid herein, any amount of principal of or interest on
any Loan, including after maturity of the Loans, whether by acceleration or
otherwise, or (ii) within ten (10) days after the same shall become
due, any fee or any other amount payable hereunder or pursuant to any other
Loan Document; or


 


(b)                                 Representation
or Warranty. 
Any representation, warranty or certification by or on behalf of the
Borrower or any of its Subsidiaries made or deemed made herein, in any other
Loan Document, or which is contained in any certificate, document or financial
or other statement by the Borrower, any of its Subsidiaries, or any of their
respective Responsible Officers, furnished at any time under this Agreement, or
in or under any other Loan Document, shall prove to have been incorrect in any
material respect on or as of the date made or deemed made; or


 


(c)                                  Specific
Defaults. 
The Borrower fails to perform or observe any term, covenant or agreement
contained in any of Sections 4.1, 4.2(b), 4.2(d), 4.4 (other than 4.4(c)), 4.6,
4.9, 4.13 or Article V or, subject to Section 6.6, Article VI
hereof; or


 


(d)                                 Other
Defaults. 
The Borrower or any of its Subsidiaries fails to perform or observe any
other term, covenant or agreement contained in this Agreement or any other Loan
Document, and such default shall continue unremedied for a period of thirty
(30) days after the earlier to occur of (i) the date upon which a
Responsible Officer becomes aware of such default and (ii) the date upon
which written notice thereof is given to the Borrower by the Agent or Required
Lenders; or


 


(e)                                  Cross-Default.  (i) The Borrower or
any of its Subsidiaries (A) fails to make any payment in respect of any
Indebtedness (other than the Obligations) or Contingent Obligation having an
aggregate principal amount (including undrawn committed or available amounts
and including amounts owing to all creditors under any combined or syndicated
credit arrangement) of more than $1,000,000 when due (whether by scheduled
maturity, required prepayment, acceleration, demand, or otherwise) and such failure
continues after the applicable grace or notice period, if any, specified in the
document relating thereto on the date of such failure; or (B) fails to
perform or observe any other condition or covenant, or any other event shall
occur or condition exist, under any agreement or instrument relating to any
such Indebtedness or Contingent Obligation, if the effect of such failure,
event or condition is to cause, or to permit the holder or holders of such
Indebtedness or beneficiary or beneficiaries of such Indebtedness (or a trustee
or agent on behalf of such holder or holders or beneficiary or beneficiaries)
to cause such Indebtedness to be declared to be due and payable prior to its
stated maturity, or such Contingent Obligation to become payable or cash collateral
in respect thereof to be demanded; or (ii) any default or event of default
occurs under or in respect of the High Yield Unsecured Indebtedness or any of
the High Yield Unsecured Documents; or (iii) any default or event of
default occurs under or in respect of any Subordinated Indebtedness; or


 


51





















 


(f)                                    Insolvency; Voluntary Proceedings.  The Borrower or any of its Subsidiaries: (i) ceases
or fails to be Solvent; (ii) generally fails to pay, or admits in writing
its inability to pay, its debts as they become due, subject to applicable grace
periods, if any, whether at stated maturity or otherwise; (iii) voluntarily
ceases to conduct its business in the ordinary course; (iv) commences any
Insolvency Proceeding with respect to itself; or (v) takes any action to
effectuate or authorize any of the foregoing; or


 


(g)                                 Involuntary
Proceedings. 
(i) Any involuntary Insolvency Proceeding is commenced or filed
against the Borrower or any of its Subsidiaries, or any writ, judgment, warrant
of attachment, execution or similar process, is issued or levied against a
substantial part of the Borrower’s or any of its Subsidiaries’ Property, and
any such proceeding or petition shall not be dismissed, or such writ, judgment,
warrant of attachment, execution or similar process shall not be released,
vacated or fully bonded within sixty (60) days after commencement, filing or
levy; (ii) the Borrower or any of its Subsidiaries admits the material
allegations of a petition against it in any Insolvency Proceeding, or an order
for relief (or similar order under non-U.S. law) is ordered in any Insolvency
Proceeding; or (iii) the Borrower or any of its Subsidiaries acquiesces in
the appointment of a receiver, trustee, custodian, conservator, liquidator,
mortgagee in possession (or agent therefor), or other similar Person for itself
or a substantial portion of its Property or business; or


 


(h)                                 ERISA.  (i) A member of the
Controlled Group shall fail to pay when due, after the expiration of any
applicable grace period, any installment payment with respect to its Withdrawal
Liability under a Multiemployer Plan; (ii) a member of the Controlled
Group shall fail to satisfy its contribution requirements under Section 412(c)(11)
of the Code, whether or not it has sought a waiver under Section 412(d) of
the Code; (iii) the occurrence of an ERISA Event; (iv) a Plan that is
intended to be qualified under Section 401(a) of the Code shall lose
its qualification; (v) any member of the Controlled Group engages in or
otherwise becomes liable for a non-exempt prohibited transaction; (vi) a
violation of Section 404 or 405 of ERISA or the exclusive benefit rule under
Section 401(a) of the Code; or (vii) any member of the
Controlled Group is assessed a tax under Section 4980B of the Code or
incurs a liability under Section 601 et seq. of ERISA;
and, the occurrence of any such event listed in clauses (i) through (vii),
or the occurrence of any combination of events listed in clauses (i) through
(vii) results in, or could reasonably be expected to result in, a Material
Adverse Effect or result in exposure to the Borrower in an amount in excess of
$800,000; or


 


(i)                                     Monetary Judgments.  One or more judgments, non-interlocutory
orders, decrees or arbitration awards shall be entered against the Borrower or
any of its Subsidiaries involving in the aggregate a liability (to the extent
not covered by independent third-party insurance) as to any single or related
series of transactions, incidents or conditions, of $800,000 or more, and the
same shall remain unsatisfied, unvacated and unstayed pending appeal for a
period of thirty (30) days after the entry thereof; or


 


(j)                                     Non-Monetary Judgments.  One or more non-monetary judgments, orders or
decrees shall be rendered against the Borrower or any of its Subsidiaries which
does or would reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect, and there shall be any period of ten (10) consecutive
days during which a stay of


 


52





















 


enforcement
of such judgment or order, by reason of a pending appeal or otherwise, shall
not be in effect; or


 


(k)                                  Collateral.  Any material provision of
any Collateral Document shall for any reason cease to be valid and binding on
or enforceable against the Borrower or any Subsidiary of the Borrower party
thereto or the Borrower or any of its Subsidiaries shall so state in writing or
bring an action to limit its obligations or liabilities thereunder; or any
Collateral Document shall for any reason (other than pursuant to the terms
thereof) cease to create a valid security interest in the Collateral purported
to be covered thereby or such security interest shall for any reason (other
than the failure of the Agent to take any action within its control) cease to
be a perfected and first priority security interest subject only to Permitted
Liens; or


 


(l)                                     Ownership.  (i) Sponsor at any time shall cease to
own, beneficially, at least eighty percent (80%) of each class of the issued
and outstanding capital stock of Borrower owned by it on the Restatement
Effective Date (as the same may be adjusted for any combination,
recapitalization or reclassification into a greater or smaller number of
shares); or (ii) Sponsor at any time shall fail to own, beneficially,
directly or indirectly, at least fifty-one percent (51%) of the issued and
outstanding voting capital stock of Borrower or, in any event, capital stock
representing voting control of Borrower; or (iii) Borrower shall cease to
own, beneficially, one hundred percent (100%) of the issued and outstanding
equity securities of Woodcraft; or (iv) the Borrower or any of its
Subsidiaries shall cease to own, beneficially, one hundred percent (100%) of
the issued and outstanding equity securities of any of its Subsidiaries (except
as otherwise permitted pursuant to Section 5.3) in each instance in
clauses (i), (ii), (iii) and (iv), free and clear of all Liens, rights,
options, warrants or other similar agreements or understandings, other than
Liens in favor of Agent, for the benefit of Agent; or (vi) a “Change of
Control” (as defined in the High Yield Unsecured Indenture) shall have
occurred; or


 


(m)                               Invalidity
of Subordination Provisions.   The subordination provisions of any
agreement or instrument governing any Subordinated Indebtedness shall for any
reason be revoked or invalidated, or otherwise cease to be in full force and
effect, or any Person shall contest in any manner the validity or
enforceability thereof or deny that it has any further liability or obligation
thereunder, or the Obligations, for any reason shall not have the priority
contemplated by this Agreement or such subordination provisions; or


 


(n)                                 Failure
to Procure and Pay Acceptable Capital Contributions.


 


(i)                                     If required by Section 5.11(h)(vii) at the time, if
any, that (i) the Grand Valley Earn-Out Obligation becomes due and payable
in accordance with the provisions of Section 1.4(b) of the
Grand Valley Asset Purchase Agreement as in effect on the First Amendment Closing
Date and (ii) all of the conditions specified in clauses (i) through (vi) of
Section 5.11(h) shall have been satisfied, the Borrower shall
fail to receive, and thereafter contribute to Grand Valley Acquisition Sub,
proceeds of Acceptable Capital Contributions in an aggregate amount equal to at
least fifty percent (50%) of the Restricted Payment in respect of the Grand
Valley Earn-Out Obligation on or before the date such Restricted Payment is due
and payable or otherwise fails to use such proceeds for such purpose on a
timely basis;


 


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(ii)                                  If required by Section 5.11(i)(vii) at the time, if
any, that (i) any portion of the Dimension Earn-Out Obligation becomes due
and payable in accordance with the provisions of Section 1.6(c) of
the Dimension Purchase Agreement as in effect on the Second Amendment Closing
Date and (ii) all of the conditions specified in clauses (i) through (vi) of
Section 5.11(i) shall have been satisfied, the Borrower shall
fail to receive proceeds of Acceptable Capital Contributions in an aggregate
amount equal to at least fifty percent (50%) of the Restricted Payment in
respect of such portion of the Dimension Earn-Out Obligation on or before the
date such Restricted Payment is due and payable or otherwise fails to use such
proceeds for such purpose on a timely basis; or


 


(iii)                               If the Borrower shall fail to finance at least fifty percent (50%)
of any future expenditures with respect to transaction costs related to the
Dimension Acquisition with Acceptable Capital Contributions; or


 


(o)                                 Revocation
under Guaranty or Grand Valley Guaranty.  If any of the Borrower’s Subsidiaries
revokes, terminates, discontinues, or otherwise seeks to vacate, invalidate,
set aside, overturn or eliminate its obligations under, any portion of the
Guaranty or the Grand Valley Guaranty pursuant to Section 8
thereof, or notifies the Borrower or the Agent of its intention to undertake
any of the foregoing.


 


7.2                                 Remedies.  Upon the occurrence and
during the continuation of any Event of Default, the Agent may, and shall at
the request of the Required Lenders:


 


(a)                                  declare
all or any portion of the Commitment of each Lender to make Loans or issue
Lender Letters of Credit or Letter of Credit Participation Agreements to be
terminated, whereupon such Commitments shall forthwith be terminated;


 


(b)                                 declare
all or any portion of the unpaid principal amount of all outstanding Loans, all
interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due and payable;
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by the Borrower; and


 


(c)                                  exercise
on behalf of itself and the Lenders all rights and remedies available to it and
the Lenders under the Loan Documents or applicable law;


 


provided, however, that upon the occurrence of any event specified in
subsections 7.1(f) or 7.1(g) above (in the case of clause (i) of
subsection 7.1(g) upon the expiration of the sixty (60) day period
mentioned therein), the obligation of each Lender to make Loans and the
obligation of Agent to issue Lender Letters of Credit and Letter of Credit
Participation Agreements shall automatically terminate and the unpaid principal
amount of all outstanding Loans and all interest and other amounts as aforesaid
shall automatically become due and payable without further act of the Agent or
any Lender.


 


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7.3                                 Rights
Not Exclusive. 
The rights provided for in this Agreement and the other Loan Documents
are cumulative and are not exclusive of any other rights, powers, privileges or
remedies provided by law or in equity, or under any other instrument, document
or agreement now existing or hereafter arising.


 


7.4                                 Cash
Collateral for Letters of Credit.  If an Event of Default has occurred and is
continuing or this Agreement (or the Revolving Loan Commitment) shall be
terminated for any reason or the Term Loans and CapEx Loans have been paid in
full, then the Agent may, and upon request of the Lenders holding at least
sixty-six and two-thirds percent (662/3%) of the Revolving Loan
Commitments shall, demand (which demand shall be deemed to have been delivered
automatically upon any acceleration of the Loans and other obligations
hereunder pursuant to Section 7.2 hereof), and the Borrower shall
thereupon deliver to the Agent, to be held for the benefit of the Agent and the
Lenders entitled thereto, an amount of cash equal to the amount of Letter of
Credit Participation Liability (determined in accordance with subsection 1.1(c) hereof)
as additional collateral security for the Borrower’s Obligations in respect of
any outstanding Lender Letter of Credit and Letter of Credit Participation
Agreement.  The Agent may at any time
apply any or all of such cash and cash collateral to the payment of any or all
of the Borrower’s Obligations in respect of any Lender Letters of Credit or
Letter of Credit Participation Agreements. 
Pending such application, the Agent may (but shall not be obligated to)
invest the same in an interest bearing account in the Agent’s name, for the
benefit of the Agent and the Lenders entitled thereto, under which deposits are
available for immediate withdrawal, at such bank or financial institution as
the Agent may, in its discretion, select.


 


ARTICLE VIII - THE AGENT


 


8.1                                 Appointment
and Authorization. 
Each Lender hereby irrevocably appoints, designates and authorizes the
Agent to take such action on its behalf under the provisions of this Agreement
and each other Loan Document and to exercise such powers and perform such
duties as are expressly delegated to it by the terms of this Agreement or any
other Loan Document, together with such powers as are reasonably incidental
thereto.  Notwithstanding any provision
to the contrary contained elsewhere in this Agreement or in any other Loan
Document, the Agent shall not have any duties or responsibilities, except those
expressly set forth herein, nor shall the Agent 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 Agent.


 


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


 


8.3                                 Liability
of Agent. 
None of the Agent-Related Persons shall (i) be liable for any
action taken or omitted to be taken by any of them under or in connection with
this Agreement or any other Loan Document (except for its own gross negligence
or willful misconduct, as determined by a court of competent jurisdiction), or (ii) be
responsible in any manner to any of


 


55





















 


the
Lenders for any recital, statement, representation or warranty made by the
Borrower or any of its Subsidiaries, or any officer thereof, contained in this
Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Agent under or in connection with, this Agreement or any other Loan Document,
or for the value of any Collateral or the validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document, or
for any failure of the Borrower or any other party to any Loan Document to
perform its obligations hereunder or thereunder.  No Agent-Related Person shall be under any
obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the Property, books or
records of the Borrower or any of its Subsidiaries or Affiliates.


 


8.4                                 Reliance
by Agent. 
The Agent shall be entitled to rely, and shall be fully protected in
relying, upon any writing, resolution, notice, consent, certificate, affidavit,
letter, telegram, facsimile or telephone message, statement or other document
or conversation believed by it to be genuine and to have been signed, sent or
made by the proper Person or Persons, and upon advice and statements of legal
counsel (including counsel to the Borrower), independent accountants and other
experts selected by the Agent.  The Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless it shall first receive such advice
or concurrence of the Lenders (or, where an action or waiver need only be
approved by the Required Lenders, by the Required Lenders) as it deems
appropriate and, if it so requests, it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such
action.  The Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this Agreement
or any other Loan Document in accordance with a request or consent of the
Lenders (or, where an action or waiver need only be approved by the Required
Lenders, by the Required Lenders) and such request and any action taken or
failure to act pursuant thereto shall be binding upon all of the Lenders.


 


8.5                                 Notice
of Default. 
The Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default, except with respect to defaults
in the payment of principal, interest and fees required to be paid to the Agent
for the account of the Lenders, unless the Agent shall have received written
notice from a Lender or the Borrower referring to this Agreement, describing
such Default or Event of Default and stating that such notice is a “notice of
default.”  In the event that the Agent
receives such a notice, the Agent shall give notice thereof to the
Lenders.  The Agent shall take such
action with respect to such Default or Event of Default as shall be requested
by the Required Lenders in accordance with Article VII; provided, however,
that unless and until the Agent shall have received any such request, the Agent
may (but shall not be obligated to) take such action, or refrain from taking
such action, with respect to such Default or Event of Default as it shall deem
advisable or in the best interest of the Lenders.


 


8.6                                 Credit
Decision. 
Each Lender expressly acknowledges that none of the Agent-Related
Persons has made any representation or warranty to it and that no act by the
Agent hereinafter taken, including any review of the affairs of the Borrower
and its Subsidiaries shall be deemed to constitute any representation or
warranty by the Agent to any Lender. 
Each Lender represents to the Agent that it has, independently and
without reliance upon the Agent


 


56





















 


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


 


8.7                                 Indemnification.  Whether or not the
transactions contemplated hereby shall be consummated, upon demand therefor the
Lenders shall indemnify the Agent (to the extent not reimbursed by or on behalf
of the Borrower and without limiting the obligation of the Borrower to do so),
severally and ratably from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses and
disbursements of any kind whatsoever which may at any time (including at any
time following the repayment of the Loans and the termination or resignation of
the Agent) be imposed on, incurred by or asserted against the Agent in any way
relating to or arising out of this Agreement or any document contemplated by or
referred to herein or the transactions contemplated hereby or thereby or any
action taken or omitted by the Agent under or in connection with any of the
foregoing; provided, however, that no Lender shall be liable for
the payment to the Agent of any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements to the extent resulting from the Agent’s gross negligence or
willful misconduct as determined by a court of competent jurisdiction.  In addition, each Lender shall reimburse the
Agent upon demand for its ratable share of any costs or out-of-pocket expenses
(including Attorney Costs) incurred by the Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein
to the extent that the Agent is not reimbursed for such expenses by or on
behalf of the Borrower.  Without limiting
the generality of the foregoing, if the Internal Revenue Service or any other Governmental
Authority of the United States or other jurisdiction asserts a claim that the
Agent did not properly withhold tax from amounts paid to or for the account of
any Lender (because the appropriate form was not delivered, was not properly
executed, or because such Lender failed to notify the Agent of a change in
circumstances which rendered the exemption from, or reduction of, withholding
tax ineffective, or for any other reason) such Lender shall indemnify the Agent
fully for all amounts paid, directly or indirectly, by the Agent as tax or
otherwise, including penalties and interest, and including any taxes imposed by
any jurisdiction on the amounts payable to the Agent under this Section 8.7,
together with all related costs and expenses (including Attorney Costs).  The obligation of the Lenders in this Section 8.7
shall survive the payment of all Obligations hereunder.


 


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8.8                                 Agent
in Individual Capacity.  Antares and its Affiliates may make loans to,
issue letters of credit for the account of, accept deposits from, acquire
equity interests in and generally engage in any kind of banking, trust,
financial advisory or other business with the Borrower and its Subsidiaries and
Affiliates as though Antares were not the Agent hereunder and without notice to
or consent of the Lenders.  With respect
to its Loans, Antares shall have the same rights and powers under this
Agreement as any other Lender and may exercise the same as though it were not
the Agent, and the terms “Lender” and “Lenders” shall include Antares in its
individual capacity.


 


8.9                                 Successor
Agent.  The
Person then acting as Agent may resign as Agent upon thirty (30) days’ prior
notice to the Lenders and to the Borrower. 
If such Person shall resign as Agent under this Agreement, the Required
Lenders shall appoint from among the Lenders a successor agent for the
Lenders.  If no successor agent is
appointed prior to the effective date of the resignation of the Agent, the
Agent may thereupon appoint a successor agent from among the Lenders reasonably
acceptable to the Borrower.  Upon the
acceptance of its appointment as successor agent hereunder, such successor
agent shall succeed to all the rights, powers and duties of the retiring Agent
and the term “Agent” shall mean such successor agent and the retiring Agent’s
appointment, powers and duties as Agent shall terminate.  After any retiring Agent’s resignation
hereunder as Agent, the provisions of this Article VIII and Sections 9.4
and 9.5 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement.  If no successor agent has accepted
appointment as Agent by the date which is thirty (30) days following a retiring
Agent’s notice of resignation (or, if later, ten (10) days after the date
upon which the Agent designates a successor agent), the retiring Agent’s
resignation shall nevertheless thereupon become effective and the Lenders shall
perform all of the duties of the Agent hereunder until such time, if any, as
the Required Lenders appoint a successor agent as provided for above.


 


8.10                           Collateral Matters.


 


(a)                                  The
Agent is authorized (but not required) on behalf of all the Lenders, without
the necessity of any notice to or further consent from the Lenders, from time
to time to take any action with respect to any Collateral or the Collateral
Documents which may be necessary to perfect and maintain perfected the security
interest in and Liens upon the Collateral granted pursuant to the Collateral Documents.


 


(b)                                 The
Lenders irrevocably authorize the Agent, at its option and in its discretion,
to release any Lien granted to or held by the Agent upon any Collateral:


 


(i)                                     upon termination of the Commitments and payment in full of all Loans
and all other Obligations then payable under this Agreement and under any other
Loan Document;


 


(ii)                                  constituting Property sold or to be sold or disposed of as part of
or in connection with any disposition permitted hereunder;


 


(iii)                               consisting of an instrument evidencing Indebtedness or of any other
debt instrument, if the Indebtedness evidenced thereby has been paid in full;
or


 


58





















 


(iv)                              if approved, authorized or ratified in writing by the Required
Lenders or all the Lenders, as the case may be, as provided in subsection 9.1(f).


 


Upon request by the Agent at any time, the
Lenders will confirm in writing the Agent’s authority to release particular
types or items of Collateral pursuant to this subsection 8.10(b).


 


(c)                                  Each
Lender agrees with and in favor of each other Lender (which agreement shall not
be for the benefit of the Borrower or any of its Subsidiaries) that the
Borrower’s obligation to such Lender under this Agreement and the other Loan
Documents shall be equally and ratably secured by any real property and/or
other collateral now or hereafter securing any obligations of the Borrower or
any of its Subsidiaries to such Lender, whether or not the same constitutes
Collateral hereunder.


 


ARTICLE IX - MISCELLANEOUS


 


9.1                                 Amendments
and Waivers. 
No amendment or waiver of any provision of this Agreement or any other
Loan Document, and no consent with respect to any departure by the Borrower
therefrom, shall be effective unless the same shall be in writing and signed by
the Required Lenders, the Borrower and acknowledged by the Agent, and then such
waiver shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no such waiver,
amendment, or consent shall, unless in writing and signed by all the Lenders,
the Borrower and acknowledged by the Agent, do any of the following:


 


(a)                                  increase
or extend the Commitment of any Lender, reinstate any Commitment terminated
pursuant to subsection 7.2(a), increase the Aggregate Revolving Loan
Commitment or extend the CapEx Line Termination Date;


 


(b)                                 postpone
or delay any date fixed for, or waive, any payment of principal, interest, fees
or other amounts due to the Lenders (or any of them) hereunder or under any
other Loan Document (other than any postponement or delay of any date fixed for
any mandatory prepayment of the Loans pursuant to subsection 1.8(c) or
1.8(d));


 


(c)                                  reduce
the principal of, or the rate of interest specified herein or the amount of
interest payable in cash specified herein on any Loan, or of any fees or other
amounts payable hereunder or under any other Loan Document;


 


(d)                                 change
the percentage of the Commitments or of the aggregate unpaid principal amount
of the Loans which shall be required for the Lenders or any of them to take any
action hereunder;


 


(e)                                  amend
this Section 9.1 or the definition of “Required Lenders” or any provision
providing for consent or other action by all Lenders; or


 


(f)                                    discharge
the Borrower or any of its Subsidiaries from their respective payment
Obligations under the Loan Documents, or release all or substantially all of
the Collateral, except as otherwise may be provided in this Agreement or the
other Loan Documents;


 


59





















 


and, provided  further, that no
amendment, waiver or consent shall, unless in writing and signed by the Agent
in addition to the Required Lenders or all the Lenders, as the case may be,
affect the rights or duties of the Agent under this Agreement or any other Loan
Document.


 


9.2                                 Notices.


 


(a)                                  All
notices, requests and other communications provided for hereunder shall be in
writing (including, unless the context expressly otherwise provides, by
facsimile transmission) and mailed by certified or registered mail, faxed or
delivered by personal or overnight delivery, to the address or facsimile number
specified for notices on the applicable signature page hereof; or, if
directed to the Borrower or the Agent, to such other address as shall be
designated by such party in a written notice to each of the other parties
hereto given in compliance herewith, or, if directed to any other party hereto,
to such other address as shall be designated by such party in a written notice
given in compliance herewith to the Borrower and the Agent.


 


(b)                                 All
such notices, requests and communications shall be effective (i) if
delivered in person, when delivered, (ii) if delivered by facsimile
transmission on the date of transmission if transmitted on a Business Day
before 4:00 p.m. Chicago time, otherwise on the next Business Day, (iii) if
delivered by overnight courier, one (1) Business Day after delivery to the
courier properly addressed and (iv) if mailed, upon the third (3rd)
Business Day after the date deposited into the U.S. Mail, certified or
registered; except that notices pursuant to Article I shall not be
effective until actually received by the Agent.


 


(c)                                  The
Borrower acknowledges and agrees that any agreement of the Agent and the
Lenders in Article I hereof to receive certain notices by telephone and
facsimile transmission is solely for the convenience and at the request of the
Borrower.  The Agent and the Lenders
shall be entitled to rely on the authority of any Person purporting to be a
Person authorized by the Borrower to give such notice and the Agent and the
Lenders shall not have any liability to the Borrower or other Persons on
account of any action taken or not taken by the Agent or the Lenders in
reliance upon such telephonic or facsimile notice.  The obligation of the Borrower to repay the
Loans shall not be affected in any way or to any extent by any failure by the
Agent and the Lenders to receive written confirmation of any telephonic or
facsimile notice or the receipt by the Agent and the Lenders of a confirmation
which is at variance with the terms understood by the Agent and the Lenders to
be contained in the telephonic or facsimile notice.


 


9.3                                 No
Waiver; Cumulative Remedies.  No failure to exercise and no delay in
exercising, on the part of the Agent or any Lender, any right, remedy, power or
privilege hereunder, shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right, remedy,
power or privilege.  No course of dealing
between the Borrower, any Affiliate of the Borrower, Agent or any Lender shall
be effective to amend, modify or discharge any provision of this Agreement or
any of the other Loan Documents.


 


9.4                                 Costs
and Expenses. 
Whether or not the transactions contemplated hereby shall be
consummated, the Borrower shall pay or reimburse:


 


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(a)                                  Antares
(including in its capacity as Agent) within five (5) Business Days after demand
(except as otherwise provided in subsection 2.1(f)) for all reasonable
out-of-pocket costs and expenses incurred by Antares (including in its capacity
as Agent) in connection with the development, preparation, syndication,
delivery, administration and execution of, and any amendment, supplement,
waiver or modification to (in each case, whether or not consummated), this
Agreement, any other Loan Document and any other documents prepared in
connection herewith or therewith, and the consummation of the transactions
contemplated hereby and thereby, including the Attorney Costs incurred by
Antares (including in its capacity as Agent) with respect thereto and for all
out-of-pocket costs and expenses incurred by it in connection with the
enforcement, attempted enforcement, or preservation of any rights or remedies
during the existence of an Event of Default (including in connection with any “workout”
or restructuring regarding the Loans, and including in any Insolvency
Proceeding or appellate proceeding) under this Agreement, any other Loan
Document, and any such other documents;


 


(b)                                 pay
or reimburse Lenders within five (5) Business Days after demand for all
Attorney Costs of one law firm, on behalf of all Lenders (other than Antares)
incurred by them in connection with the enforcement, attempted enforcement, or preservation
of any rights or remedies during the existence of an Event of Default
(including in connection with any “workout” or restructuring regarding the
Loans, and including in any Insolvency Proceeding or appellate proceeding)
under this Agreement, any other Loan Document; and


 


(c)                                  pay
or reimburse Agent within five (5) Business Days after demand for all
out-of-pocket appraisal, audit, environmental inspection and review (including
the allocated cost of such internal services), search and filing costs, fees
and expenses, incurred or sustained by Agent in connection with the matters
referred to under clause (a) of this Section 9.4.


 


The obligations of this Section 9.4 shall survive
payment of all other Obligations.


 


9.5                                 Indemnity.  The Borrower shall
indemnify, defend and hold harmless each Lender, the Agent and each of their
respective officers, directors, employees, counsel, agents and
attorneys-in-fact (each, an “Indemnified Person”) from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, charges, expenses or disbursements (including Attorney Costs):


 


(a)                                  of
any kind or nature whatsoever with respect to the enforcement of this Agreement
and any other Loan Documents, or the transactions contemplated hereby and
thereby, and with respect to any investigation, litigation or proceeding
(including any Insolvency Proceeding or appellate proceeding) related to this
Agreement or the Loans or the transactions contemplated hereby or the use of
the proceeds thereof, whether or not any Indemnified Person is a party thereto;
and


 


(b)                                 which
may be incurred by or asserted against such Indemnified Person in connection
with or arising out of any pending or threatened investigation, litigation or
proceeding, or any action taken by any Person, with respect to any
Environmental Claim arising out of or related to any Property of the Borrower
or any of its Subsidiaries;


 


61





















 


(all the foregoing, collectively, the “Indemnified
Liabilities”); provided, that the Borrower shall have no obligation
hereunder to any Indemnified Person with respect to Indemnified Liabilities to
the extent arising from the gross negligence or willful misconduct of such
Indemnified Person as determined by a court of competent jurisdiction.


 


No action taken by legal counsel chosen by
the Agent or any Lender in defending against any investigation, litigation or
proceeding or requested remedial, removal or response action shall vitiate or
any way impair the Borrower’s obligation and duty hereunder to indemnify and
hold harmless the Agent and each Lender. 
In no event shall any site visit, observation, or testing by the Agent
or any Lender (or any contractee of the Agent or any Lender) be deemed a
representation or warranty that Hazardous Materials are or are not present in,
on, or under, the site, or that there has been or shall be compliance with any
Environmental Law.  Neither the Borrower
nor any other Person is entitled to rely on any site visit, observation, or
testing by the Agent or any Lender. 
Neither the Agent nor any Lender owes any duty of care to protect the
Borrower or any other Person against, or to inform the Borrower or any other
Person of, any Hazardous Materials or any other adverse condition affecting any
site or Property.  Neither the Agent nor
any Lender shall be obligated to disclose to the Borrower or any other Person
any report or findings made as a result of, or in connection with, any site
visit, observation, or testing by the Agent or any Lender.


 


The obligations in this Section 9.5
shall survive payment of all other Obligations. 
At the election of any Indemnified Person, the Borrower shall defend
such Indemnified Person using legal counsel satisfactory to such Indemnified
Person in such Person’s sole discretion, at the sole cost and expense of the
Borrower.  All amounts owing under this Section 9.5
shall be paid within thirty (30) days after demand.


 


9.6                                 Marshaling;
Payments Set Aside. 
Neither the Agent nor any Lender shall be under any obligation to
marshal any assets in favor of the Borrower or any other Person or against or
in payment of any or all of the Obligations. 
To the extent that the Borrower makes a payment or payments to the Agent
or any Lender, or the Agent or any Lender enforces its Liens or exercises its
rights of setoff, and such payment or payments or the proceeds of such
enforcement or setoff or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required (including
pursuant to any settlement entered into by the Agent in its discretion) to be
repaid to a trustee, receiver or any other party in connection with any
Insolvency Proceeding, or otherwise, then:


 


(a)                                  to
the extent of such recovery the Obligation or part thereof originally intended
to be satisfied shall be revived and continued in full force and effect as if
such payment had not been made or such enforcement or setoff had not occurred;
and


 


(b)                                 each
Lender severally agrees to pay to the Agent upon demand its ratable share of
the total amount so recovered from or repaid by the Agent.


 


9.7                                 Successors
and Assigns. 
The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns; provided
that any assignment by any Lender shall be subject to the provisions of Section 9.8
hereof, and


 


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provided further that the Borrower may not assign or transfer any of its rights
or obligations under this Agreement without the prior written consent of the
Agent and each Lender.


 


9.8                                 Assignments,
Participations, etc.


 


(a)                                  Any
Lender may, with the written consent of Borrower, which consent shall not be
unreasonably withheld (provided that such consent of Borrower shall not be
required at any time that a Default or an Event of Default exists or in connection with any assignment by a
Lender to another Lender, an Affiliate of a Lender or a Related Fund of a
Lender), and Agent (provided that such consent of the Agent shall not be
required in connection with any assignment and delegation by a Lender to an
Eligible Assignee that is an Affiliate of such Lender), at any time assign and
delegate to one or more Eligible Assignees (each an “Assignee”) all, or any
part of, the Loans, the Commitments and the other rights and obligations of
such Lender hereunder, in a minimum amount of $5,000,000 (or such lesser amount
to which Agent, in its sole discretion, may agree) or, if less, the entire
Commitment or Loan(s) of such Lender; provided, that, the
Borrower and the Agent may continue to deal solely and directly with such
Lender in connection with the interest so assigned to an Assignee until:


 


(i)                                     written notice of such assignment, together with payment
instructions, addresses and related information with respect to the Assignee,
shall have been given to the Borrower and the Agent by such Lender and the
Assignee;


 


(ii)                                  such Lender and its Assignee shall have delivered to the Borrower
and the Agent an Assignment and Acceptance in form and substance reasonably
satisfactory to Agent, such Lender and its Assignee (an “Assignment and
Acceptance”); and


 


(iii)                               the assignor Lender or the Assignee has paid to the Agent a processing
fee in the amount of $3,500; provided no processing fee shall be
required to be paid in connection with an assignment by a Lender to an Eligible
Assignee that is an Affiliate of such Lender or a Related Fund of such Lender.


 


(b)                                 Subject
to the provisions of subsection 9.8(f) below, from and after the date
that the Agent notifies the assignor Lender that the Agent has received and
provided its consent with respect to an executed Assignment and Acceptance and
payment of the above-referenced processing fee (if applicable):


 


(i)                                     the Assignee thereunder shall be a party hereto and, to the extent
that rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, shall have the rights and obligations of a Lender
under this Agreement and the other Loan Documents; and


 


(ii)                                  the assignor Lender shall, to the extent that rights and obligations
hereunder and under the other Loan Documents have been assigned by it pursuant
to such Assignment and Acceptance, relinquish its rights and be released from
its obligations under the Loan Documents.


 


(c)                                  Subject
to the provisions of subsection 9.8(f) below, immediately upon the
making of the processing fee payment to the Agent in respect of the Assignment
and Acceptance,


 


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if
applicable, this Agreement shall be deemed to be amended to the extent, but
only to the extent, necessary to reflect the addition of the Assignee and the
resulting adjustment of the Commitments arising therefrom.  The Commitment allocated to each Assignee
shall reduce such Commitment of the assigning Lender to the same extent.


 


(d)                                 Any
Lender may at any time sell to one or more commercial banks or other Persons
not Affiliates of the Borrower (a “Participant”) participating interests in any
Loans, the Commitment of that Lender and the other interests of that Lender
(the “Originating Lender”) hereunder and under the other Loan Documents; provided,
however, that:


 


(i)                                     the Originating Lender’s obligations under this Agreement shall
remain unchanged;


 


(ii)                                  the Originating Lender shall remain solely responsible for the
performance of such obligations;


 


(iii)                               the Borrower and the Agent shall continue to deal solely and
directly with the Originating Lender in connection with the Originating Lender’s
rights and obligations under this Agreement and the other Loan Documents; and


 


(iv)                              no Lender shall transfer or grant any participating interest under
which the Participant shall have rights to approve any amendment to, or any consent
or waiver with respect to, this Agreement or any other Loan Document, except to
the extent such amendment, consent or waiver would require unanimous consent of
the Lenders as described in the first  proviso to Section 9.1.


 


In the case of any such participation, the
Participant shall not have any rights under this Agreement, or any of the other
Loan Documents, and all amounts payable by the Borrower hereunder shall be
determined as if such Lender had not sold such participation.


 


(e)                                  Notwithstanding
any other provision contained in this Agreement or any other Loan Document to
the contrary, any Lender may (i) assign all or any portion of the Loans
held by it to any Federal Reserve Bank or the United States Treasury as collateral
security pursuant to Regulation A of the Federal Reserve Board and any
Operating Circular issued by such Federal Reserve Bank, or (ii) pledge all
or any portion of the Loans held by it (and Notes evidencing such Loans) to its
unaffiliated lenders for collateral security purposes; provided, that
any payment in respect of such assigned Loans made by the Borrower to or for
the account of the assigning or pledging Lender in accordance with the terms of
this Agreement shall satisfy the Borrower’s obligations hereunder in respect to
such assigned or pledged Loans to the extent of such payment.  No such assignment or pledge shall release
the assigning Lender from its obligations hereunder.


 


(f)                                    The
Agent shall, on behalf of the Borrower, maintain at its address referred to in Section 9.2
a copy of each Assignment and Acceptance delivered to it and a register (the “Register”)
for the recordation of the names and addresses of the Lenders and the
Commitment of, and principal amount of the Loans owing to, each Lender from
time to time.  The entries in the
Register shall be conclusive, in the absence of demonstrable error, and the
Borrower, the Agent and the Lenders shall treat each Person whose name is
recorded in the Register as the


 


64





















 


owner
of the Commitments, Loans and any Notes evidencing such Loans recorded therein
for all purposes of this Agreement.  Any
assignment of any Commitment and/or Loan, whether or not evidenced by a Note,
shall be effective only upon appropriate entries with respect thereto being
made in the Register.  Any assignment or
transfer of all or part of a Commitment and/or Loan evidenced by a Note shall
be registered on the Register only upon a surrender or registration of
assignment or transfer of the Note evidencing such Loan, accompanied by a duly
executed Assignment and Acceptance; thereupon one or more new Notes in the same
aggregate principal amount shall be issued to the designated assignee and, if
applicable, assignor, and the old Notes shall be returned by the Agent to the
Borrower marked “cancelled.”  The
Register shall be available for inspection by the Borrower or any Lender (with
respect to any entry relating to such Lender’s Commitments and Loans) at any
reasonable time and from time to time upon reasonable prior notice.


 


9.9                                 Confidentiality.  Each of the Agent and the
Lenders shall maintain and hold in confidence in accordance with its customary
procedures for handling confidential information and in accordance with safe
and sound banking practices, all nonpublic information that the Borrower or any
of its Subsidiaries, or any of their authorized representatives, furnishes to
the Agent or any Lender pursuant to the requirements of this Agreement (“Confidential
Information”), other than any such Confidential Information that becomes
generally available to the public other than as a result of a breach by the
Agent or any Lender of its obligations hereunder or that is or becomes
available to the Agent or such Lender from a source other than the Borrower or
any of its Subsidiaries, or any of their authorized representatives, and that
is not, to the actual knowledge of the recipient thereof, subject to
obligations of confidentiality with respect thereto; provided, however,
that the Agent and each Lender shall in any event have the right to deliver
copies of any such documents, and to disclose any such information, to:


 


(a)                                  its
directors, officers, trustees, partners, employees, agents, attorneys,
professional consultants, portfolio management services and rating agencies; provided,
that such information shall be disclosed to the extent a legitimate business
purpose exists for doing so and such purpose relates to the existing
relationship among the Borrower, the Agent and the Lenders evidenced by this
Agreement, the credit facility evidenced hereby or the loan portfolio of the
Agent or such Lender containing the credit evidenced hereby;


 


(b)                                 any
other Lender and any successor Agent;


 


(c)                                  any
potential Assignee or potential Participant to which such Lender offers to sell
any Loan or any part thereof or interest or participation therein or any other
Person necessary for purposes of effectuating any transaction contemplated by
subsection 9.8(e) (provided such Person agrees to keep such
information confidential on the terms set forth in this Section 9.9);


 


(d)                                 any
federal or state regulatory authority or examiner, or any insurance industry
association or any stock exchange, regulating or having jurisdiction over the
Agent or such Lender or any of their respective Affiliates; and


 


(e)                                  any
other Person to which such delivery or disclosure may be necessary or
appropriate (i) in compliance with any applicable law, rule, regulation or
order, (ii) in response to any subpoena or other legal process or informal
investigative demand, (iii) in connection with


 


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any
litigation to which the Agent or such Lender is a party, or (iv) in
connection with the enforcement of the rights and remedies of the Agent or the
Lenders under this Agreement and the other Loan Documents at any time when an
Event of Default shall have occurred and be continuing.


 


9.10                           Set-off;
Sharing of Payments.  In addition to any rights and remedies now or
hereafter granted under applicable law, and not by way of limitation of any
such rights or remedies at any time and from time to time, upon the occurrence
and during the continuation of any Event of Default, each Lender is hereby
authorized by the Borrower, with reasonably prompt subsequent notice to the
Borrower or to any other Person (any prior or contemporaneous notice being
hereby expressly waived by the Borrower) to set off and to appropriate and to
apply any and all:


 


(a)                                  balances
held by such Lender at any of its offices for the account of the Borrower or
any of its Subsidiaries (regardless of whether such balances are then due to
the Borrower or any of its Subsidiaries); and


 


(b)                                 other
Property at any time held or owing by such Lender to or for the credit or for
the account of the Borrower or any of its Subsidiaries;


 


against and on account of any and all
Obligations which are not paid when due; except that no Lender shall exercise
such right without the prior written consent of the Agent.  Any Lender having a right to set off shall
purchase for cash (and the other Lenders shall sell) participations in each
such other Lender’s pro rata share of the Obligations as would be necessary to
cause such Lender to share the benefit of such right of set-off with each other
Lender in accordance with their respective pro rata shares of the
Obligations.  The Borrower agrees, to the
fullest extent permitted by law, that (i) any Lender may exercise its
right to set off with respect to amounts in excess of its pro rata share of the
Obligations and may sell participations to other Lenders, and (ii) any
Lender so purchasing a participation in the Obligations held by other Lenders
may exercise all rights of setoff, bankers’ lien, counterclaim or similar
rights with respect to such participation as fully as if such Lender were a
direct holder of Obligations in the amount of such participation.  The Borrower hereby grants to each Lender a
security interest in all such deposits and other Property, whether now existing
or hereafter arising, held by each Lender for the purposes set forth herein.


 


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


 


9.12                           Counterparts.  This Agreement may be
executed by one or more of the parties to this Agreement in any number of
separate counterparts, each of which, when so executed, shall be deemed an
original, and all of said counterparts taken together shall be deemed to
constitute but one and the same instrument. 
A set of the copies of this Agreement signed by all the parties shall be
lodged with each of the Borrower and the Agent.


 


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9.13                           Severability;
Facsimile Signature.  The illegality or unenforceability of any
provision of this Agreement or any instrument or agreement required hereunder
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument or agreement required
hereunder.  Any Loan Document, or other
agreement, document or instrument, delivered by facsimile transmission shall
have the same force and effect as if the original thereof had been delivered.


 


9.14                           Captions.  The captions and headings
of this Agreement are for convenience of reference only and shall not affect
the interpretation of this Agreement.


 


9.15                           Independence
of Provisions. 
The parties hereto acknowledge that this Agreement and other Loan
Documents may use several different limitations, tests or measurements to
regulate the same or similar matters, and that such limitations, tests and
measurements are cumulative and must each be performed, except as expressly
stated to the contrary in this Agreement.


 


9.16                           Interpretation.  This Agreement is the
result of negotiations among and has been reviewed by counsel to the Agent, the
Borrower and other parties hereto, and is the product of all parties
hereto.  Accordingly, this Agreement and
the other Loan Documents shall not be construed against the Lenders or the
Agent merely because of the Agent’s or Lenders’ involvement in the preparation
of such documents and agreements.


 


9.17                           No Third
Parties Benefited. 
This Agreement is made and entered into for the sole protection and
legal benefit of the Borrower, the Lenders and the Agent, and their permitted
successors and assigns, and no other Person shall be a direct or indirect legal
beneficiary of, or have any direct or indirect cause of action or claim in
connection with, this Agreement or any of the other Loan Documents.  Neither the Agent nor any Lender shall have
any obligation to any Person not a party to this Agreement or the other Loan
Documents.


 


9.18                           Governing
Law and Jurisdiction.


 


(A)                               THIS AGREEMENT AND EACH NOTE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS AND DECISIONS OF THE STATE OF
ILLINOIS, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES; PROVIDED, THAT
THE AGENT AND THE LENDERS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.


 


(B)                               THE BORROWER HEREBY IRREVOCABLY SUBMITS TO THE
NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR ILLINOIS STATE COURT
SITTING IN CHICAGO, ILLINOIS IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO ANY LOAN DOCUMENT AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT
ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW
OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM.  NOTHING HEREIN SHALL LIMIT


 


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THE RIGHT OF AGENT OR ANY
LENDER TO BRING PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF ANY OTHER
JURISDICTION.  ANY JUDICIAL PROCEEDING BY
THE BORROWER AGAINST AGENT OR ANY LENDER OR ANY AFFILIATE THEREOF INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR
CONNECTED WITH ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO,
ILLINOIS.


 


(C)                               THE BORROWER DESIGNATES AND APPOINTS CT CORPORATION SYSTEM
AND SUCH OTHER PERSONS AS MAY HEREAFTER BE SELECTED BY THE BORROWER WHICH
IRREVOCABLY AGREE IN WRITING TO SO SERVE AS ITS AGENT TO RECEIVE ON ITS BEHALF
SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDINGS IN ANY SUCH COURT, SUCH SERVICE
BEING HEREBY ACKNOWLEDGED BY THE BORROWER TO BE EFFECTIVE AND BINDING SERVICE
IN EVERY RESPECT.  A COPY OF ANY SUCH
PROCESS SO SERVED SHALL BE MAILED BY REGISTERED MAIL TO THE BORROWER AT ITS
ADDRESS PROVIDED IN SECTION 9.2 EXCEPT THAT UNLESS OTHERWISE PROVIDED BY
APPLICABLE LAW, ANY FAILURE TO MAIL SUCH COPY SHALL NOT AFFECT THE VALIDITY OF
SERVICE OF PROCESS.  IF ANY AGENT
APPOINTED BY THE BORROWER REFUSES TO ACCEPT SERVICE, THE BORROWER HEREBY AGREES
THAT SERVICE UPON IT BY MAIL SHALL CONSTITUTE SUFFICIENT NOTICE.  NOTHING HEREIN SHALL AFFECT THE RIGHT TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.


 


9.19                           Waiver
of Jury Trial.  THE BORROWER, THE LENDERS AND THE AGENT EACH
WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER
LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY
ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE
PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO CONTRACT
CLAIMS, TORT CLAIMS, OR OTHERWISE.  THE
BORROWER, THE LENDERS AND THE AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF
ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY.  WITHOUT LIMITING THE FOREGOING, THE PARTIES
FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY
OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER
PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR
ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION
HEREOF OR THEREOF.  THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.


 


9.20                           Entire
Agreement; Release. 
This Agreement, together with the other Loan Documents, embodies the
entire agreement and understanding among the Borrower, the Lenders and the
Agent, and supersedes all prior or contemporaneous Agreements and
understandings of


 


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such
Persons, oral or written, relating to the subject matter hereof and thereof,
and any prior arrangements made with respect to the payment by the Borrower of
(or any indemnification for) any fees, costs or expenses payable to or incurred
(or to be incurred) by or on behalf of the Agent or the Lenders.  The Borrower has relied exclusively on the
terms and provisions contained in this Agreement and the other Loan Documents in
its execution and delivery hereof and thereof and entering into the
transactions which are the subject hereof and thereof.  Execution of this Agreement by the Borrower
constitutes a full, complete and irrevocable release of any and all claims
which the Borrower may have at law or in equity in respect of all prior
discussions and understandings, oral or written, relating to the subject matter
of this Agreement and the other Loan Documents as of the date hereof.  Neither Agent nor any Lender shall be liable
to the Borrower or any other Person on any theory of liability for any special,
indirect, consequential or punitive damages.


 


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


 


9.22                           Replacement
of Lender. 
Within forty-five days after: (i) receipt by the Borrower of
written notice and demand from any Lender (an “Affected Lender”) for payment of
additional costs as provided in Sections 10.1, 10.3 and/or 10.6; (ii) any
default by a Lender in its obligation to make Loans hereunder after all
conditions thereto have been satisfied, provided such default shall not have
been cured; or (iii) any failure by any Lender to consent to a requested
amendment, waiver or modification to any Loan Document in which Required
Lenders have already consented to such amendment, waiver or modification but
the consent of each Lender (or each Lender having Revolving Loans, Term Loans
or CapEx Loans, or each Lender directly affected thereby, as applicable) is
required with respect thereto, the Borrower may, at its option, notify the
Agent and such Affected Lender (or such defaulting or non-consenting Lender, as
the case may be) of the Borrower’s intention to obtain, at the Borrower’s
expense, a replacement Lender (“Replacement Lender”) for such Affected Lender
(or such defaulting or non-consenting Lender, as the case may be), which
Replacement Lender shall be reasonably satisfactory to the Agent.  In the event the Borrower obtains a
Replacement Lender within forty-five (45) days following notice of its
intention to do so, the Affected Lender (or defaulting or non-consenting
Lender, as the case may be) shall sell and assign its Loans and Commitments to
such Replacement Lender, at par, provided that the Borrower has reimbursed such
Affected Lender for its increased costs for which it is entitled to
reimbursement under this Agreement through the date of such sale and
assignment.  In the event that a replaced
Lender does not execute an Assignment and Acceptance pursuant to Section 9.8
within five (5) Business Days after receipt by such replaced Lender of
notice of replacement pursuant to this Section 9.22 and presentation to
such replaced Lender of an Assignment and Acceptance evidencing an assignment
pursuant to this Section 9.22, the Borrower shall be entitled (but not
obligated) to execute such an Assignment and Acceptance on behalf of such replaced
Lender, and any such Assignment and Acceptance so executed by the Borrower, the
Replacement Lender and the Agent, shall be effective for purposes of this Section 9.22
and Section 9.8.  Upon any such
assignment and payment and compliance with the other provisions of Section 9.8,
such replaced Lender shall no


 


69





















 


longer
constitute a “Lender” for purposes hereof; provided, any rights of such
replaced Lender to indemnification hereunder shall survive as to such replaced
Lender.


 


9.23                           Continued
Effectiveness; No Novation.  Anything contained herein to the contrary
notwithstanding, this Agreement is not intended to and shall not serve to
effect a novation of the Obligations under the Original Credit Agreement.  Instead, it is the express intention of the
parties hereto to reaffirm the indebtedness created under the Original Credit
Agreement which is evidenced by the notes provided for therein and secured by
the Collateral.  The Borrower
acknowledges and confirms that the liens and security interests granted
pursuant to the Loan Documents secure the indebtedness, liabilities and
obligations of the Borrower to the Agent and the Lenders under the Original
Credit Agreement, as amended and restated hereby, and that the term “Obligations”
as used in the Loan Documents (or any other term used therein to describe or
refer to the indebtedness, liabilities and obligations of the Borrower to the
Agent and the Lenders) includes, without limitation, the indebtedness,
liabilities and obligations of the Borrower under the Notes to be delivered
hereunder, and under the Original Credit Agreement, as amended and restated
hereby, as the same further may be amended, modified, supplemented and/or
restated from time to time.  The Loan
Documents and all agreements, instruments and documents executed or delivered
in connection with any of the foregoing shall each be deemed to be amended to
the extent necessary to give effect to the provisions of this Agreement.  Cross-references in the Loan Documents to
particular section numbers in the Original Credit Agreement shall be
deemed to be cross-references to the corresponding sections, as applicable, of
this Agreement.


 


ARTICLE X - TAXES, YIELD PROTECTION AND ILLEGALITY


 


10.1                           Taxes.


 


(a)                                  Subject
to subsection 10.1(g), any and all payments by the Borrower to each Lender
or the Agent under this Agreement shall be made free and clear of, and without
deduction or withholding for, any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding, in the case of each Lender and the Agent, such taxes
(including income taxes or franchise taxes) as are imposed on or measured by
each Lender’s net income by the jurisdiction under the laws of which such
Lender or the Agent, as the case may be, is organized or maintains a Lending
Office, or any political subdivision thereof (all such non-excluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as “Taxes”).


 


(b)                                 In
addition, the Borrower shall pay any present or future stamp or documentary taxes
or any other excise or property taxes, charges or similar levies which arise
from any payment made hereunder or from the execution, delivery or registration
of, or otherwise with respect to, this Agreement or any other Loan Document
(hereinafter referred to as “Other Taxes”).


 


(c)                                  Subject
to subsection 10.1(g), the Borrower shall indemnify and hold harmless each
Lender and the Agent for the full amount of Taxes or Other Taxes (including any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section 10.1)
paid by


 


70





















 


such
Lender or the Agent and any liability (including penalties, interest, additions
to tax and expenses) arising therefrom or with respect thereto, whether or not such
Taxes or Other Taxes were correctly or legally asserted; provided, that
each Lender or the Agent, as the case may be, making demand for such indemnity
payment shall provide the Borrower with evidence that such Lender or the Agent,
as the case may be, has made payment of such Taxes or Other Taxes.  Payment under this indemnification shall be
made within thirty (30) days from the date any Lender or the Agent makes
written demand therefor.


 


(d)                                 If
the Borrower shall be required by law to deduct or withhold any Taxes or Other
Taxes from or in respect of any sum payable hereunder to any Lender or the
Agent, then, subject to subsection 10.1(g):


 


(i)                                     the sum payable shall be increased as necessary so that after making
all required deductions (including deductions applicable to additional sums
payable under this Section 10.1) such Lender or the Agent, as the case may
be, receives an amount equal to the sum it would have received had no such
deductions been made;


 


(ii)                                  the Borrower shall make such deductions; and


 


(iii)                               the Borrower shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance with applicable law;


 


provided, that, if any additional payment is made by the Borrower under this
clause (d) for the benefit of the Agent or any Lender and the Agent or
such Lender, as applicable, determines that it has obtained a credit against, a
relief or remission for, or repayment of, the underlying Tax or Other Tax from
the appropriate taxing authority, then, to the extent the Agent or such Lender,
as applicable, determines that such credit, relief, remission or repayment is
in respect of, or calculated or determined with reference to, and retroactively
applies to, such additional payment made by the Borrower for the benefit of the
Agent or such Lender pursuant to this clause (d), the Agent or such Lender, as
applicable, shall, to the extent that it can do so without prejudice to the
retention of the amount of such credit, relief, remission or repayment, pay to
the Borrower such amount as the Agent or such Lender, as applicable, shall
determine to be the amount which shall leave it (after such payment to the
Borrower) in no better or worse after-tax position that it would have been in
had the respective withholding or deduction not been required.


 


(e)                                  Within
thirty (30) days after the date of any payment by the Borrower of Taxes or
Other Taxes, the Borrower shall furnish to the Agent the original or a
certified copy of a receipt evidencing payment thereof, or other evidence of
payment satisfactory to the Agent.


 


(f)                                    Each
Lender that is not a citizen or resident of the United States of America, a
corporation, partnership or other entity created or organized in or under the
laws of the United States (or any jurisdiction thereof), or any estate or trust
that is subject to federal income taxation regardless of the source of its
income (a ”Non-U.S. Lender”) shall deliver to the Borrower and the Agent
two copies of each U.S. Internal Revenue Service Form W-8BEN or Form W-8ECI,
or any subsequent versions thereof or successors thereto, or, in the case of a
Non-U.S. Lender claiming exemption from U.S. federal withholding tax under Section 871(h) or
881(c) of the Code with respect to payments of “portfolio interest,” a Form W-8BEN,
or any subsequent


 


71





















 


versions
thereof or successors thereto (and, if such Non-U.S. Lender delivers a Form W-8BEN,
a certificate representing that such Non-U.S. Lender is not a “bank” for
purposes of Section 881(c) of the Code, is not a ten percent (10%)
shareholder (within the meaning of Section 871(h)(3)(B) of the Code)
of the Borrower and is not a controlled foreign corporation related to the
Borrower (within the meaning of Section 864(d)(4) of the Code)),
properly completed and duly executed by such Non-U.S. Lender claiming complete
exemption from, or a reduced rate of, U.S. federal withholding tax on all
payments by the Borrower and its Subsidiaries under this Agreement and the
other Loan Documents.  Such forms shall be
delivered by each Non-U.S. Lender on or before the date it becomes a party to
this Agreement.  In addition, each
Non-U.S. Lender shall deliver such forms promptly upon the obsolescence or
invalidity of any form previously delivered by such Non-U.S. Lender.  Each Non-U.S. Lender shall promptly notify
the Borrower at any time it determines that it is no longer in a position to
provide any previously delivered certificate to the Borrower (or any other form
of certification adopted by the U.S. taxing authorities for such purpose).  Notwithstanding any other provision of this
subsection, a Non-U.S. Lender shall not be required to deliver any form
pursuant to this subsection that such Non-U.S. Lender is not legally able
to deliver.


 


(g)                                 The
Borrower will not be required to pay any additional amounts in respect of
United States Federal income tax pursuant to subsection 10.1(d) to
any Lender for the account of any Lending Office of such Lender:


 


(i)                                     if the obligation to pay such additional amounts would not have arisen
but for a failure by such Lender to comply with its obligations under subsection 10.1(f) in
respect of such Lending Office; or


 


(ii)                                  if such Lender shall have delivered to the Borrower a Form W-8BEN
and/or Form W-8ECI (or any subsequent versions thereof or successors
thereto) in respect of such Lending Office pursuant to subsection 10.1(f),
and such Lender shall not at any time be entitled to exemption from deduction
or withholding of United States Federal income tax in respect of payments by
the Borrower hereunder for the account of such Lending Office for any reason
other than a change in United States law, treaty or regulations or in the
official interpretation of such law or regulations by any Governmental
Authority charged with the interpretation or administration thereof (whether or
not having the force of law) after the date of delivery of such Form W-8BEN
and/or Form W-8ECI (or any subsequent versions thereof or successors
thereto); or


 


(iii)                               if such Lender has been notified by the Internal Revenue Service
that such Lender is subject to backup withholding for failing to report
interest and dividends received, unless and except to the extent such notice is
revoked, terminated or otherwise overturned or vacated.


 


(h)                                 If,
at any time, the Borrower requests any Lender to deliver any forms or other
documentation pursuant to subsection 10.1(f), then the Borrower shall, on
demand of such Lender through the Agent, reimburse such Lender for any costs
and expenses (including Attorney Costs) reasonably incurred by such Lender in
the preparation or delivery of such forms or other documentation.


 


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(i)                                     If
the Borrower is required to pay additional amounts to any Lender or the Agent
pursuant to subsection 10.1(d), then such Lender shall use its reasonable
best efforts (consistent with legal and regulatory restrictions) to change the
jurisdiction of its Lending Office so as to eliminate any such additional
payment by the Borrower which may thereafter accrue if such change in the
judgment of such Lender is not otherwise disadvantageous to such Lender.  Further, within thirty (30) days of written
request of the Borrower therefor, the Agent or the applicable Lender, as the
case may be, shall execute and deliver to the Borrower, at the sole cost of the
Borrower, such certificates, forms or other documents reasonably requested by
the Borrower that can be furnished consistent with the facts and which are
reasonably necessary to assist the Borrower in applying for refunds of those
taxes remitted hereunder.


 


10.2                           Illegality.  (a)  If after the date
hereof any Lender shall determine in good faith that the introduction of any
Requirement of Law, or any change in any Requirement of Law or in the
interpretation or administration thereof, has made it unlawful, or that any
central bank or other Governmental Authority has asserted that it is unlawful,
for any Lender or its Lending Office to make LIBOR Rate Loans, then, on notice
thereof by such Lender to the Borrower through the Agent, the obligation of
that Lender to make LIBOR Rate Loans shall be suspended until such Lender shall
have notified the Agent and the Borrower that the circumstances giving rise to
such determination no longer exists.


 


(a)                                  Subject
to clause (c) below, if any Lender shall determine that it is unlawful to
maintain any LIBOR Rate Loan, the Borrower shall prepay in full all LIBOR Rate
Loans of such Lender then outstanding, together with interest accrued thereon,
either on the last day of the Interest Period thereof if such Lender may
lawfully continue to maintain such LIBOR Rate Loans to such day, or
immediately, if such Lender may not lawfully continue to maintain such LIBOR
Rate Loans, together with any amounts required to be paid in connection
therewith pursuant to Section 10.4.


 


(b)                                 If
the obligation of any Lender to make or maintain LIBOR Rate Loans has been
terminated, the Borrower may elect, by giving notice to such Lender through the
Agent that all Loans which would otherwise be made by any such Lender as LIBOR
Rate Loans shall be instead Base Rate Loans.


 


(c)                                  Before
giving any notice to the Agent pursuant to this Section 10.2, the affected
Lender shall designate a different Lending Office with respect to its LIBOR
Rate Loans if such designation will avoid the need for giving such notice or
making such demand and will not, in the judgment of the Lender, be illegal or
otherwise disadvantageous to the Lender.


 


10.3                           Increased
Costs and Reduction of Return.


 


(a)                                  If
any Lender shall determine in good faith that, due to either (i) the
introduction of, or any change in, or in the interpretation of, any law or
regulation 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 the case of either clause (i) or (ii) subsequent to the
date hereof, there shall be any increase in the cost to such Lender of agreeing
to make or making, funding or maintaining any LIBOR Rate Loans, then the
Borrower shall be liable for, and shall from time to time, within thirty (30)
days of demand therefor by such Lender (with a copy of such demand to


 


73





















 


the
Agent), pay to the Agent for the account of such Lender, additional amounts as
are sufficient to compensate such Lender for such increased costs.


 


(b)                                 If
any Lender shall have determined in good faith that:


 


(i)                                     the introduction of any Capital Adequacy Regulation;


 


(ii)                                  any change in any Capital Adequacy Regulation;


 


(iii)                               any change in the interpretation or administration of any Capital
Adequacy Regulation by any central bank or other Governmental Authority charged
with the interpretation or administration thereof; or


 


(iv)                              compliance by such Lender (or its Lending Office) or any entity
controlling the Lender, with any Capital Adequacy Regulation;


 


affects the amount of capital required or
expected to be maintained by such Lender or any corporation controlling such
Lender and (taking into consideration such Lender’s or such corporation’s
policies with respect to capital adequacy and such Lender’s desired return on
capital) determines that the amount of such capital is increased as a
consequence of its Commitment(s), loans, credits or obligations under this
Agreement, then, within thirty (30) days of demand of such Lender (with a copy
to the Agent), the Borrower shall pay to such Lender, from time to time as
specified by such Lender, additional amounts sufficient to compensate such
Lender (or the entity controlling the Lender) for such increase.


 


10.4                           Funding
Losses.  The
Borrower agrees to reimburse each Lender and to hold each Lender harmless from
any loss or expense which such Lender may sustain or incur as a consequence of:


 


(a)                                  the
failure of the Borrower to make any payment or mandatory prepayment of
principal of any LIBOR Rate Loan (including payments made after any
acceleration thereof);


 


(b)                                 the
failure of the Borrower to borrow, continue or convert a Loan after the
Borrower has given (or is deemed to have given) a Notice of Borrowing or a
Notice of Continuation/Conversion;


 


(c)                                  the
failure of the Borrower to make any prepayment after the Borrower has given a
notice in accordance with Section 1.7;


 


(d)                                 the
prepayment (including pursuant to Section 1.8 or as a result of an
acceleration) of a LIBOR Rate Loan on a day which is not the last day of the
Interest Period with respect thereto; or


 


(e)                                  the
conversion pursuant to Section 1.6 of any LIBOR Rate Loan to a Base Rate
Loan on a day that is not the last day of the applicable Interest Period;


 


including any such loss or expense arising
from the liquidation or reemployment of funds obtained by it to maintain its
LIBOR Rate Loans hereunder or from fees payable to terminate the


 


74





















 


deposits from which such funds were
obtained.  Solely for purposes of
calculating amounts payable by the Borrower to the Lenders under this Section 10.4
and under subsection 10.3(a): each LIBOR Rate Loan made by a Lender (and
each related reserve, special deposit or similar requirement) shall be
conclusively deemed to have been funded at the LIBOR used in determining the
interest rate for such LIBOR Rate Loan by a matching deposit or other borrowing
in the interbank eurodollar market for a comparable amount and for a comparable
period, whether or not such LIBOR Rate Loan is in fact so funded.


 


10.5                           Inability
to Determine Rates. 
If the Agent shall have determined in good faith that for any reason
adequate and reasonable means do not exist for ascertaining the LIBOR for any
requested Interest Period with respect to a proposed LIBOR Rate Loan or that
the LIBOR applicable pursuant to subsection 1.3(a) for any requested
Interest Period with respect to a proposed LIBOR Rate Loan does not adequately
and fairly reflect the cost to the Lenders of funding such Loan, the Agent will
forthwith give notice of such determination to the Borrower and each
Lender.  Thereafter, the obligation of
the Lenders to make or maintain LIBOR Rate Loans hereunder shall be suspended
until the Agent revokes such notice in writing. 
Upon receipt of such notice, the Borrower may revoke any Notice of
Borrowing or Notice of Continuation/ Conversion then submitted by the
Borrower.  If the Borrower does not
revoke such notice, the Lenders shall make, convert or continue the Loans, as
proposed by the Borrower, in the amount specified in the applicable notice
submitted by the Borrower, but such Loans shall be made, converted or continued
as Base Rate Loans.


 


10.6                           Reserves
on LIBOR Rate Loans.  The Borrower shall pay to each Lender, as
long as such Lender shall be required under regulations of the Federal Reserve
Board to maintain reserves with respect to liabilities or assets consisting of
or including Eurocurrency funds or deposits (currently known as “Eurocurrency
liabilities”), additional costs on the unpaid principal amount of each LIBOR
Rate Loan equal to actual costs of such reserves allocated to such Loan by such
Lender (as determined by such Lender in good faith, which determination shall
be conclusive absent demonstrable error), payable on each date on which
interest is payable on such Loan; provided the Borrower shall have
received at least fifteen (15) days’ prior written notice (with a copy to the
Agent) of such additional interest from the Lender.  If a Lender fails to give notice fifteen (15)
days prior to the relevant Interest Payment Date, such additional interest
shall be payable fifteen (15) days from receipt of such notice.


 


10.7                           Certificates
of Lenders. 
Any Lender claiming reimbursement or compensation pursuant to this Article X
shall deliver to the Borrower (with a copy to the Agent) a certificate setting
forth in reasonable detail the amount payable to such Lender hereunder and such
certificate shall be conclusive and binding on the Borrower in the absence of
manifest error.


 


10.8                           Survival.  The agreements and
obligations of the Borrower in this Article X shall survive the payment of
all other Obligations.


 


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ARTICLE XI - RESERVED


 


 


ARTICLE XII - DEFINITIONS


 


12.1                           Defined
Terms.  The
following terms are defined in the Sections or subsections referenced opposite
such terms:


 


	
  “Accrual
  Period”

  	
  1.3(b)

  
	
  “Affected
  Lender”

  	
  9.22

  
	
  “Assignee”

  	
  9.8(a)

  
	
  “Assignment
  and Acceptance”

  	
  9.8(a)(ii)

  
	
  “Borrower”

  	
  Preamble

  
	
  “Borrowing
  Base”

  	
  1.1(b)

  
	
  “CapEx
  Commitment Fee”

  	
  1.9(d)

  
	
  “CapEx Loan”

  	
  1.1(a)

  
	
  “CapEx Loan
  Commitment”

  	
  1.1(a)

  
	
  “Cash
  Contribution”

  	
  6.6(b)

  
	
  “Commitment
  Fee”

  	
  1.9(b)

  
	
  “Confidential
  Information”

  	
  9.9

  
	
  “EBITDA”

  	
  Exhibit 4.2(b)

  
	
  “Event of
  Default”

  	
  7.1

  
	
  “Existing
  Lender”

  	
  1.3(a)

  
	
  “Fee Letter”

  	
  1.9(a)

  
	
  “Fixed
  Charge Coverage Ratio”

  	
  Exhibit 4.2(b)

  
	
  “First
  Amendment”

  	
  Recitals

  
	
  “Indemnified
  Person”

  	
  9.5

  
	
  “Indemnified
  Liabilities”

  	
  9.5

  
	
  “Lender”

  	
  Preamble

  
	
  “Lender
  Letter of Credit”

  	
  1.1(c)

  
	
  “Letter of
  Credit Participation Agreement”

  	
  1.1(c)

  
	
  “Letter of
  Credit Participation Fee”

  	
  1.9(c)

  
	
  “Leverage
  Ratio”

  	
  Exhibit 4.2(b)

  
	
  “Maximum
  Revolving Loan Balance”

  	
  1.1(b)

  
	
  “Original
  Credit Agreement”

  	
  Recitals

  
	
  “Originating
  Lender”

  	
  9.8(d)

  
	
  “Other
  Taxes”

  	
  10.1(b)

  
	
  “Participant”

  	
  9.8(d)

  
	
  “Permitted
  Liens”

  	
  5.1

  
	
  “Restricted
  Payments”

  	
  5.11

  
	
  “Replacement
  Lender”

  	
  9.22

  
	
  “Revolving
  Loan Commitment”

  	
  1.1(b)

  
	
  “Revolving
  Loan”

  	
  1.1(b)

  
	
  “Second
  Amendment”

  	
  Recitals

  
	
  “Taxes”

  	
  10.1(a)

  
	
  “Term Loan”

  	
  1.1(a)

  
	
  “Term Loan
  Commitment”

  	
  1.1(a)

  
	
  “Transaction”

  	
  5.7(f)

  



 


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In addition to the terms defined elsewhere in
this Agreement, the following terms have the following meanings:


 


“Account” means, as at any date of
determination, all “accounts” (as such term is defined in the UCC) of the
Borrower and its Subsidiaries, including, without limitation, the unpaid
portion of the obligation of a customer of the Borrower and its Subsidiaries in
respect of Inventory purchased by and shipped to such customer and/or the
rendition of services by the Borrower and its Subsidiaries, as stated on the
respective invoices of the Borrower and its Subsidiaries, net of any credits,
rebates or offsets owed to such customer.


 


“Account Debtor” means the customer of a
Borrower and its Subsidiaries who is obligated on or under an Account.


 


“Acquisition” means any transaction or series
of related transactions for the purpose of or resulting, directly or
indirectly, in (a) the acquisition of all or substantially all of the
assets of a Person, or of any business or division of a Person, (b) the
acquisition of in excess of fifty percent (50%) of the capital stock,
partnership interests or equity of any Person or otherwise causing any Person
to become a Subsidiary of the Borrower, or (c) a merger or consolidation
or any other combination with another Person.


 


“Acquisition Documents” means all documents,
agreements and instruments executed by the Borrower and/or its Subsidiaries in
connection with the consummation of an Acquisition and shall include, without
limitation, the Grand Valley Purchase Documents and the Dimension Purchase
Documents.


 


“Affiliate” means, as to any Person, any
other Person which, directly or indirectly, is in control of, is controlled by,
or is under common control with, such Person. 
A Person shall be deemed to control another Person if the controlling
Person possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies of the other Person, whether through
the ownership of voting securities, by contract or otherwise.  Without limitation, any director, executive
officer or beneficial owner of five percent (5%) or more of the equity of a
Person shall for the purposes of this Agreement, be deemed to control the other
Person.  Notwithstanding the foregoing, neither
the Agent nor any Lender shall be deemed an “Affiliate” of the Borrower or of
any of its Subsidiaries.


 


“Agent” means Antares in its capacity as
administrative agent for the Lenders hereunder, and any successor agent.


 


“Agent-Related Persons” means Antares and any
successor agent arising under Section 8.9, together with their respective
Affiliates, and the officers, directors, employees, agents and
attorneys-in-fact of such Persons and Affiliates.


 


“Aggregate CapEx Loan Commitment” means the
combined CapEx Loan Commitments of the Lenders, which shall initially be in the
amount of $7,500,000, as such amount may be reduced from time to time pursuant
to this Agreement.


 


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“Aggregate Revolving Loan Commitment” means
the combined Revolving Loan Commitments of the Lenders, which shall initially
be in the amount of $40,000,000, as such amount may be reduced from time to
time pursuant to this Agreement.


 


“Aggregate Term Loan Commitment” means the
combined Term Loan Commitments of the Lenders, which shall initially be in the
amount of $7,500,000, as such amount may be reduced from time to time pursuant
to this Agreement.


 


“Antares” means Antares Capital Corporation,
a Delaware corporation, acting in its capacity as agent for the Lenders
hereunder.


 


“Applicable
Margin” means (i) if a Base Rate Loan, one and three-quarters percent
(1.75%) per annum and (ii) if a LIBOR Rate Loan, three percent (3.00%) per
annum.


 


“Attorney Costs” means and includes all
reasonable fees and disbursements of any law firm or other external counsel,
the allocated cost of internal legal services and all disbursements of internal
counsel.


 


“Bankruptcy Code” means the Federal
Bankruptcy Reform Act of 1978 (11 U.S.C. §101, et seq.), as
amended and in effect from time to time and the regulations issued from time to
time thereunder.


 


“Base Rate” means, for any day, a rate of
interest equal to the greater of (a) the rate of interest which is
identified as the “Prime Rate” and normally published in the Money Rates section of
The Wall Street Journal
(or, if such rate ceases to be so published, as quoted from such other
generally available and recognizable source as the Agent may select) and (b) the
sum of the Federal Funds Rate plus one half of one percent (0.5%).  Any change in the Base Rate due to a change
in the “Prime Rate” or the Federal Funds Rate shall be effective on the
effective date of such change in the “Prime Rate” or the Federal Funds Rate.


 


“Base Rate Loan” means a Loan that bears interest
based on the Base Rate.


 


“Borrower Pledge Agreement” means that
certain Pledge Agreement dated as of the Original Closing Date, by and between
Borrower and the Agent, for the benefit of the Lenders, pursuant to which
Borrower has pledged one hundred percent (100%) of the issued and outstanding
capital stock of its directly-owned Subsidiaries.


 


“Borrower Security Agreement” means that
certain Security Agreement dated as of the Original Closing Date, by and
between Borrower and the Agent, for the benefit of the Lenders.


 


“Borrowing” means a borrowing hereunder
consisting of Loans made to the Borrower on the same day by the Lenders
pursuant to Article I.


 


“Borrowing Base Certificate” means a
certificate of the Borrower, in substantially the form of Exhibit 12.1(a) hereto,
duly completed as of a date acceptable to the Agent in its reasonable
discretion.


 


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“Brentwood” means Brentwood Acquisition
Corp., a Minnesota corporation and wholly-owned subsidiary of Woodcraft.


 


“Business Day” means any day other than a
Saturday, Sunday or other day on which commercial banks in Chicago, Illinois or
New York, New York are authorized or required by law to close and, if
the applicable Business Day relates to any LIBOR Rate Loan, a day on which
dealings are carried on in the London interbank market.


 


“CapEx Line
Termination Date” shall mean June 30, 2006.


 


“CapEx Note” means a promissory note of the
Borrower payable to the order of a Lender, in substantially the form of Exhibit 11.1(e)-2
hereto, evidencing the Indebtedness of the Borrower under the CapEx Loan
Commitment of such Lender (and, after the CapEx Line Termination Date, all
CapEx Loans held by such Lender).


 


“Capital Adequacy Regulation” means any
guideline, request or directive of any central bank or other Governmental
Authority, or any other law, rule or regulation, whether or not having the
force of law, in each case, regarding capital adequacy of any Lender or of any
corporation controlling a Lender.


 


“Capital Expenditure” means an expenditure of
the Borrower or its Subsidiaries which should be capitalized under GAAP.


 


“Capital Lease” means any leasing or similar
arrangement which, in accordance with GAAP, is classified as a capital lease.


 


“Capital Lease Obligations” means all
monetary obligations of the Borrower and its Subsidiaries under any Capital
Leases.


 


“Cash Equivalents” means: (a) securities
issued or fully guaranteed or insured by the United States Government or any
agency thereof having maturities of not more than six (6) months from the
date of acquisition; (b) certificates of deposit, time deposits,
repurchase agreements, reverse repurchase agreements, or bankers’ acceptances,
having in each case a tenor of not more than six (6) months, issued by any
Lender, or by any U.S. commercial bank or any branch or agency of a non-U.S.
bank licensed to conduct business in the U.S. having combined capital and
surplus of not less than $250,000,000; (c) commercial paper of an issuer
rated at least A-1 by Standard & Poor’s Corporation or P-1 by Moody’s
Investors Service Inc. and in either case having a tenor of not more than three
(3) months and (d) money market funds; provided, that
substantially all of the assets of such fund are comprised of securities of the
type described in clauses (a) through (c).


 


“Code” means the Internal Revenue Code of
1986, and regulations promulgated thereunder.


 


“Collateral” means all Property and interests
in Property and proceeds thereof now owned or hereafter acquired by the
Borrower and its Subsidiaries or any other Person as debtor and any other
Person who has granted a Lien to Agent, in or upon which a Lien now or
hereafter exists in favor of any Lender or the Agent for the benefit of the
Agent and Lenders, whether


 


79





















 


under
this Agreement or under any other documents executed by any such Persons and
delivered to the Agent.


 


“Collateral Documents” means, collectively,
the Master Reaffirmation Agreement, the Security Agreements, the Mortgages, the
Guaranty, the Grand Valley Guaranty, the Pledge Agreements, the Grand Valley
Collateral Assignment of Asset Purchase Agreement, the Grand Valley Collateral
Assignment of Real Property Purchase Agreement, the Dimension Collateral
Assignment of Asset Purchase Agreement and all other security agreements,
patent and trademark assignments, lease assignments, deposit account control
agreements, guarantees and other similar agreements, and all amendments,
restatements, modifications or supplements thereof or thereto, by or between
any one or more of the Borrower, its Subsidiaries or any other Person pledging
or granting a lien on Collateral and any Lender or the Agent for the benefit of
Agent and the Lenders now or hereafter delivered to the Lenders or the Agent
pursuant to or in connection with the transactions contemplated hereby, and all
financing statements (or comparable documents now or hereafter filed in
accordance with the UCC or comparable law) against the Borrower or its
Subsidiaries as debtor in favor of any Lender or the Agent for the benefit of
Agent and the Lenders, as secured party.


 


“Commitment” means, for each Lender, the sum
of its Revolving Loan Commitment, Term Loan Commitment and CapEx Loan
Commitment.


 


“Commitment Percentage” means, as to any
Lender, the percentage equivalent of such Lender’s Revolving Loan Commitment,
Term Loan Commitment or CapEx Loan Commitment divided by the Aggregate
Revolving Loan Commitment, Aggregate Term Loan Commitment or CapEx Loan
Commitment, as applicable.


 


“Contingent Obligation” means, as to any
Person, any direct or indirect liability, contingent or otherwise, of that
Person:  (i) with respect to any
Indebtedness, lease, dividend or other obligation of another Person if the
primary purpose or intent of the Person incurring such liability, or the
primary effect thereof, is to provide assurance to the obligee of such
liability that such liability will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders of such
liability will be protected (in whole or in part) against loss with respect
thereto; (ii) with respect to any letter of credit issued for the account
of that Person or as to which that Person is otherwise liable for reimbursement
of drawings; (iii) under any Rate Contracts; (iv) to make take-or-pay
or similar payments if required regardless of nonperformance by any other party
or parties to an agreement; or (v) for the obligations of another through
any agreement to purchase, repurchase or otherwise acquire such obligation or
any Property constituting security therefor, to provide funds for the payment
or discharge of such obligation or to maintain the solvency, financial
condition or any balance sheet item or level of income of another Person.  The amount of any Contingent Obligation shall
be equal to the amount of the obligation so guaranteed or otherwise supported
or, if not a fixed and determined amount, the maximum amount so guaranteed or
supported.


 


“Contractual Obligations” means, as to any
Person, any provision of any security issued by such Person or of any
agreement, undertaking, contract, indenture, mortgage, deed of trust or other
instrument, document or agreement to which such Person is a party or by which
it or any of its Property is bound.


 


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“Controlled Group” means the Borrower and all
Persons (whether or not incorporated) under common control or treated as a
single employer with the Borrower pursuant to Section 414(b), (c), (m) or
(o) of the Code or Section 4001 of ERISA.


 


“Conversion Date” means any date on which the
Borrower converts a Base Rate Loan to a LIBOR Rate Loan or a LIBOR Rate Loan to
a Base Rate Loan.


 


“Default” means any event or circumstance
which, with the giving of notice, the lapse of time, or both, would (if not
cured or otherwise remedied or waived in writing during such time) constitute
an Event of Default.


 


“Dimension” means Dimension Moldings, Inc., an Ohio corporation.


 


“Dimension Acquisition” means the acquisition by Woodcraft of
substantially all of the assets of Dimension from Dimension pursuant to the
Dimension Purchase Agreement.


 


“Dimension Collateral Assignment of Asset Purchase Agreement” means
that certain Collateral Assignment of Asset Purchase Agreement dated as of the
Second Amendment Closing Date by Woodcraft in favor of Agent, for the benefit
of the Lenders, pursuant to which Woodcraft collaterally assigned all of its
rights under the Dimension Purchase Agreement to Agent, for the benefit of the
Lenders.


 


“Dimension Earn-Out Obligation” means all obligations in respect of the
“Earnout Payments” pursuant to Section 1.6 of the Dimension
Purchase Agreement as in effect on the Second Amendment Closing Date,
contingent or otherwise.


 


“Dimension Purchase Agreement” means that certain Asset Purchase
Agreement among Woodcraft, Dimension, each of Rhine Blake and Jim Herchek, as
the founders of Dimension, and RBJ Holdings, Inc., dated as of July 28,
2005, a copy of which is annexed as Exhibit A to the Second
Amendment.


 


“Dimension Purchase Documents”
means the Dimension Purchase Agreement, together with each other document,
agreement and instrument executed in connection therewith.


 


“Disposition” means (a) the sale, lease
(other than the lease of real Property or fixtures resulting in lease payments
received by the Borrower and its Subsidiaries, either individually or in the
aggregate, of less than $50,000), conveyance or other disposition of Property,
other than sales or other dispositions expressly permitted under subsection 5.2(a),
and (b) the sale or transfer by the Borrower or any of its Subsidiaries of
any equity securities issued by any of its Subsidiaries and held by such
transferor Person.


 


“Dollars,” “dollars” and “$” each mean lawful
money of the United States of America.


 


“EBITDA Plug Amount” means, if the Borrower
violated any financial covenants contained in Sections 6.2, 6.3 and/or 6.5 for
any test period, an amount which, when added to actual EBITDA (or, with respect
to Section 6.3, Cash Flow) of the Borrower for such test period (and
treating such amount as additional EBITDA (or Cash Flow, as applicable) for
such


 


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purposes),
and, solely for the Leverage Ratio contained in Section 6.2, when also
deducted from the then outstanding principal amount of the Obligations (which
deduction assumes compliance by the Borrower with subsection 1.8(g)),
would cause the Borrower to be in compliance with such financial covenants for
such test period; provided, that if the Borrower violated more than one
such financial covenant for any test period, the EBITDA Plug Amount applicable
for such test period for purposes of Sections 6.2, 6.3 and/or 6.5 shall be the
greatest of the amounts that so cause the Borrower to be in compliance with
each such financial covenant in accordance with the foregoing.


 


“Eligible Assignee” means any of: (a) a
commercial bank organized under the laws of the United States, or any state
thereof; (b) a commercial bank organized under the laws of any other
country; (c) a finance company, insurance company or other financial
institution or fund which is engaged in making, purchasing or otherwise
investing in commercial loans for its own account in the ordinary course of its
business; or (d) a Related Fund.


 


“Environmental Claims” means all claims,
however asserted, by any Governmental Authority or other Person alleging
potential liability or responsibility for violation of any Environmental Law,
or for release or injury to the environment or threat to public health,
personal injury (including sickness, disease or death), property damage,
natural resources damage, or otherwise alleging liability or responsibility for
damages (punitive or otherwise), cleanup, removal, remedial or response costs,
restitution, civil or criminal penalties, injunctive relief, or other type of
relief, resulting from or based upon the presence, placement, discharge,
emission or release (including intentional and unintentional, negligent and
non-negligent, sudden or non-sudden, accidental or non-accidental, placement,
spills, leaks, discharges, emissions or releases) of any Hazardous Material at,
in, or from Property, whether or not owned by the Borrower.


 


“Environmental Laws” means all foreign,
federal, state or local laws, statutes, common law duties, rules, regulations,
ordinances and codes, together with all administrative orders, directed duties,
requests, licenses, authorizations and permits of, and agreements with, any
Governmental Authorities, in each case relating to environmental, health,
safety and land use matters; including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Clean Air
Act, the Federal Water Pollution Control Act of 1972, the Solid Waste Disposal
Act, the Federal Resource Conservation and Recovery Act, the Toxic Substances
Control Act, the Emergency Planning and Community Right-to-Know Act.


 


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


 


“ERISA Affiliate” means any trade or business
(whether or not incorporated) under common control with the Borrower within the
meaning of Section 414(b), 414(c), 414(m) or 414(o) of the Code or Section 4001
of ERISA.


 


“ERISA Event” means (a) a Reportable
Event with respect to a Qualified Plan or a Multiemployer Plan; (b) a
withdrawal by the Borrower or any ERISA Affiliate from a Qualified 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) a
complete or partial withdrawal by the


 


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Borrower
or any ERISA Affiliate from a Multiemployer Plan; (d) the filing of a
notice of intent to terminate, the treatment of a plan amendment as a
termination under Section 4041 or 4041A of ERISA or the commencement of
proceedings by the PBGC to terminate a Qualified Plan or Multiemployer Plan
subject to Title IV of ERISA; (e) a failure by the Borrower or any member
of the Controlled Group to make required contributions to a Qualified Plan or
Multiemployer Plan subject to Title IV of ERISA; (f) an event or condition
which might reasonably be expected to constitute grounds under Section 4042
of ERISA for the termination of, or the appointment of a trustee to administer,
any Qualified Plan or Multiemployer Plan; (g) the imposition of any
liability under Title IV of ERISA, other than PBGC premiums due but not
delinquent under Section 4007 of ERISA, upon the Borrower or any ERISA
Affiliate; (h) an application for a funding waiver or an extension of any
amortization period pursuant to Section 412 of the Code with respect to
any Plan; (i) a non-exempt prohibited transaction occurs with respect to
any Plan for which the Borrower or any of its Subsidiaries may be directly or
indirectly liable; or (j) a violation of the applicable requirements of Section 404
or 405 of ERISA or the exclusive benefit rule under Section 401(a) of
the Code by any fiduciary or disqualified person with respect to any Plan for
which the Borrower or any member of the Controlled Group may be directly or
indirectly liable.


 


“Event of Loss” means, with respect to any
Property, any of the following: (a) any loss, destruction or damage of
such Property; (b) any pending proceedings for the condemnation or seizure
of such Property or for the exercise of any right of eminent domain; or (c) any
actual condemnation, seizure or taking, by exercise of the power of eminent
domain or otherwise, of such Property, or confiscation of such Property or the
requisition of the use of such Property.


 


“Federal Funds Rate” means, for any day, the
rate per annum (rounded upward to the nearest 1/100th of 1%) equal to the
weighted average of the rates on overnight Federal Funds transactions with
members of the Federal Reserve System arranged by Federal Funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day; provided, that if no such rate is so published
on such next succeeding Business Day, the Federal Funds Rate for such day shall
be the average rate quoted to the Agent on such day on such transactions as
determined by the Agent in a commercially reasonable manner.


 


“Federal Reserve Board” means the Board of
Governors of the Federal Reserve System, or any entity succeeding to any of its
principal functions.


 


“First Amendment Closing Date”
means April 30, 2004.


 


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


 


“Governmental Authority” means any nation or
government, any state or other political subdivision thereof, any central bank
(or similar monetary or regulatory authority) thereof, any


 


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entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, and any corporation or other entity
owned or controlled, through stock or capital ownership or otherwise, by any of
the foregoing.


 


“Grand Valley Acquisition” means, collectively, the Grand Valley Asset
Acquisition and the Grand Valley Real Property Acquisition.


 


“Grand Valley Acquisition Sub” means Grand Valley Acquisition, Inc.,
a Delaware corporation and wholly-owned subsidiary of Woodcraft.


 


“Grand Valley Asset Acquisition” means the acquisition by Grand Valley
Acquisition Sub of substantially all of the assets of GVDC from GVDC pursuant
to the Grand Valley Asset Purchase Agreement.


 


“Grand Valley Asset Purchase Agreement” means that certain Asset
Purchase Agreement among Woodcraft, Grand Valley Acquisition Sub, GVDC, HBG
Holding Co., as sole stockholder of GVDC, and each of Rhine Blake and Jack Smigel,
as the founders of GVDC, dated as of April 19, 2004, a copy of which is
annexed as Exhibit A to the First Amendment.


 


“Grand Valley Asset Purchase Documents” means the Grand Valley Asset
Purchase Agreement, together with each other document, agreement and instrument
executed in connection therewith.


 


“Grand Valley Collateral Assignment of Asset Purchase Agreement” means
that certain Collateral Assignment of Asset Purchase Agreement dated as of the
First Amendment Closing Date by Grand Valley Acquisition Sub and Woodcraft in
favor of Agent, for the benefit of the Lenders, pursuant to which Grand Valley
Acquisition Sub and Woodcraft collaterally assigned all of their respective
rights under the Grand Valley Asset Purchase Agreement to Agent, for the benefit
of the Lenders.


 


“Grand Valley Collateral Assignment of Real Property Purchase Agreement”
means that certain Collateral Assignment of Purchase and Sale Agreement dated
as of the First Amendment Closing Date by Grand Valley Acquisition Sub, in
favor of Agent, for the benefit of the Lenders, pursuant to which Grand Valley
Acquisition Sub collaterally assigned all of its rights under the Grand Valley
Real Property Purchase Agreement to Agent, for the benefit of the Lenders.


 


“Grand Valley Earn-Out Obligation” means all obligations in respect of
the “Earn-Out” pursuant to Section 1.4(b) of the Grand Valley
Asset Purchase Agreement as in effect on the First Amendment Closing Date,
contingent or otherwise.


 


“Grand Valley Guaranty” means that certain Guaranty, dated as of the
First Amendment Closing Date, made by Grand Valley Acquisition Sub in favor of
the Agent, for the benefit of Agent and Lenders.


 


“Grand Valley Mortgage” means that certain Open-End Mortgage,
Assignment of Leases and Rents, Security Agreement and Fixture Filing dated as
of the First Amendment Closing Date


 


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executed and
delivered by Grand Valley Acquisition Sub in favor of Agent, for the benefit of
the Lenders.


 


“Grand Valley Purchase Documents” means, collectively, the Grand Valley
Asset Purchase Documents and the Grand Valley Real Property Purchase Documents.


 


“Grand Valley Real Property Acquisition” means the acquisition by Grand
Valley Acquisition Sub of certain real property and other assets of GVILLC
located at 131 Grand Valley Avenue, Orwell, Ohio from GVILLC pursuant to the
Grand Valley Real Property Purchase Agreement.


 


“Grand Valley Real Property Purchase Agreement” means that certain
Purchase and Sale Agreement among Grand Valley Acquisition Sub, GVILLC, and
each of JSRB Investment LLC, a Pennsylvania limited liability company, The
Mullett Company, an Ohio corporation, and 1167 LLC, an Ohio limited liability
company, dated as of April 19, 2004, a copy of which is annexed as Exhibit B
to the First Amendment.


 


“Grand Valley Real Property Purchase Documents” means, collectively,
the Grand Valley Real Property Purchase Agreement, together with each other
document, agreement and instrument executed in connection therewith.


 


“Guaranty” means that certain Guaranty, dated as of the Original Closing Date, as
amended on the First Amendment Closing Date pursuant to the First Amendment,
made by each of the Subsidiaries of the Borrower (other than Grand Valley
Acquisition Sub) in favor of the Agent, for the benefit of Agent and Lenders.


 


“GVDC” means Ohio Door Co., a Pennsylvania corporation d/b/a Grand
Valley Door Co.


 


“GVILLC” means Grand Valley
Investment LLC, an Ohio limited liability company.


 


“Hazardous Materials” means all those
substances which are regulated by, or which may form the basis of liability
under, any Environmental Law.


 


“High Yield Unsecured Documents” means,
collectively, the High Yield Unsecured Indenture, the High Yield Unsecured
Notes and all related agreements, documents and instruments evidencing or
relating to the High Yield Unsecured Indebtedness.


 


“High Yield Unsecured Indebtedness” means the
unsecured Indebtedness of the Borrower which is incurred pursuant to the High
Yield Unsecured Offering.


 


“High Yield Unsecured Indenture” means that
certain Indenture dated as of February 18, 2004 between Trustee and
Borrower, as the same may be amended, modified and/or supplemented from time to
time as permitted herein and including any other indenture pursuant to which
any High Yield Unsecured Notes are issued.


 


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“High Yield Unsecured Notes” means those
certain 10.0% Senior Unsecured Notes due 2012 in the aggregate principal amount
of up to $120,000,000 issued by Borrower pursuant to the High Yield Unsecured
Indenture, including all notes issued in exchange or substitution therefor.


 


“High Yield Unsecured Offering” means the
offering by Borrower of up to an aggregate of $120,000,000.00 in principal
amount of High Yield Unsecured Indebtedness upon the terms and conditions set
forth in that certain Confidential Offering Circular of the Borrower dated as
of February 18, 2004.


 


“Indebtedness” of any Person means, without duplication: (a) all indebtedness for
borrowed money; (b) all obligations issued, undertaken or assumed as the
deferred purchase price of Property or services (other than trade payables
entered into in the Ordinary Course of Business); (c) the face amount of
all letters of credit issued for the account of such Person and without
duplication, all drafts drawn thereunder and all reimbursement or payment
obligations with respect to letters of credit, surety bonds and other similar
instruments issued by such Person; (d) all obligations evidenced by notes,
bonds, debentures or similar instruments, including obligations so evidenced
incurred in connection with the acquisition of Property, assets or businesses; (e) all
indebtedness created or arising under any conditional sale or other title
retention agreement, or incurred as financing, in either case with respect to
Property acquired by the Person (even though the rights and remedies of the
seller or bank under such agreement in the event of default are limited to
repossession or sale of such Property); (f) all Capital Lease Obligations;
(g) the principal balance outstanding under any synthetic lease,
off-balance sheet loan or similar off balance sheet financing product; (h) the
amount of the Grand Valley Earn-Out Obligation then due and payable under the
terms of the Grand Valley Asset Purchase Agreement; (i) the amount of the
Dimension Earn-Out Obligation then due and payable under the terms of the
Dimension Purchase Agreement; (j) all indebtedness referred to in clauses (a) through
(i) 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 (including accounts and contracts rights) owned by such Person, even
though such Person has not assumed or become liable for the payment of such
indebtedness; (k) all Contingent Obligations described in clause (i) of
the definition thereof in respect of indebtedness or obligations of others of
the kinds referred to in clauses (a) through (j) above; and (l) all “Disqualified
Stock” (as defined in the High Yield Unsecured Indenture).


 


“Insolvency Proceeding” means (a) any
case, action or proceeding before any court or other Governmental Authority
relating to bankruptcy, reorganization, insolvency, liquidation, receivership,
dissolution, winding-up or relief of debtors, or (b) any general
assignment for the benefit of creditors, composition, marshaling of assets for
creditors, or other, similar arrangement in respect of its creditors generally
or any substantial portion of its creditors; in each case in (a) and (b) above,
undertaken under U.S. Federal, state or foreign law, including the Bankruptcy
Code.


 


“Interest Payment Date” means, (a) with
respect to any LIBOR Rate Loan (other than a LIBOR Rate Loan having an Interest
Period of six (6) months) the last day of each Interest Period applicable
to such Loan, (b) with respect to any LIBOR Rate Loan having an Interest


 


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Period
of six (6) months, the last day of each three (3) month interval
during such Interest Period, and (c) with respect to Base Rate Loans, the
first day of each calendar month.


 


“Interest Period” means, with respect to any
LIBOR Rate Loan, the period commencing on the Business Day such Loan is
disbursed or continued or on the Conversion Date on which a Base Rate Loan is
converted to the LIBOR Rate Loan and ending on the date one, two, three or six (6) months
thereafter, as selected by the Borrower in its Notice of Borrowing or Notice of
Conversion/Continuation; provided, that:


 


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


 


(b)                                 any Interest Period pertaining to a LIBOR Rate Loan that begins on
the last 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
Interest Period) shall end on the last Business Day of the calendar month at
the end of such Interest Period;


 


(c)                                  no Interest Period for the Term Loan or any CapEx Loan shall extend
beyond the last scheduled payment date therefor and no Interest Period for any
Revolving Loan shall extend beyond the Revolving Termination Date; and


 


(d)                                 no Interest Period applicable to the Term Loan, any CapEx Loan or
portion thereof shall extend beyond any date upon which is due any scheduled
principal payment in respect of the Term Loan or a CapEx Loan, as applicable,
unless the aggregate principal amount of the Term Loan or a CapEx Loan, as
applicable, represented by Base Rate Loans or by LIBOR Rate Loans having
Interest Periods that will expire on or before such date is equal to or in
excess of the amount of such principal payment.


 


“Inventory” means all of the “inventory” (as
such term is defined in the UCC) of the Borrower and its Subsidiaries,
including, but not limited to, all merchandise, raw materials, parts, supplies,
work-in-process and finished goods intended for sale, together with all the
containers, packing, packaging, shipping and similar materials related thereto,
and including such inventory as is temporarily out of the Borrower’s or such
Subsidiary’s custody or possession, including inventory on the premises of
others and items in transit.


 


“Lending Office” means, with respect to any
Lender, the office or offices of such Lender specified as its “Lending Office”
opposite its name on the applicable signature page hereto, or such other
office or offices of such Lender as it may from time to time notify the
Borrower and the Agent.


 


“Letter of Credit Participation Liability”
means, as to each Lender Letter of Credit and each Letter of Credit
Participation Agreement, all reimbursement obligations and all other
liabilities of the Borrower or any of its Subsidiaries to Agent and the Lenders
in connection with the Lender Letter of Credit or to the obligee with respect
to the transaction for which the Letter of Credit Participation Agreement was
issued, whether contingent or otherwise, including with


 


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respect
to any letter of credit: (a) the amount available to be drawn or which may
become available to be drawn; (b) without duplication, all amounts which
have been paid or made available by the issuing bank or by the Agent under such
Lender Letters of Credit or Letter of Credit Participation Agreement, in each
instance, to the extent not reimbursed; and (c) all unpaid interest, fees
and expenses.


 


“LIBOR” means, for each Interest Period, the
offered rate per annum for deposits of Dollars for the applicable Interest
Period that appears on Telerate Page 3750 as of 11:00 A.M. (London,
England time) two (2) Business Days prior to the first day in such
Interest Period.  If no such offered rate
exists, such rate will be the rate of interest per annum, as determined by the
Agent (rounded upwards, if necessary, to the nearest 1/100th of 1%) 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 Interest Period by major financial institutions reasonably satisfactory to
the Agent in the London interbank market for such Interest Period for the
applicable principal amount on such date of determination.


 


“LIBOR Rate Loan”  means a Loan that bears interest based on
LIBOR.


 


“Lien” means any mortgage, deed of trust,
pledge, hypothecation, assignment, charge or deposit arrangement, encumbrance,
lien (statutory or otherwise) or preference, priority or other security
interest or preferential arrangement of any kind or nature whatsoever
(including those created by, arising under or evidenced by any conditional sale
or other title retention agreement, the interest of a lessor under a Capital
Lease, any financing lease having substantially the same economic effect as any
of the foregoing, or the filing of any financing statement naming the owner of
the asset to which such lien relates as debtor, under the UCC or any comparable
law) and any contingent or other agreement to provide any of the foregoing, but
not including the interest of a lessor under a lease which is not a Capital
Lease.


 


“Loan” means an extension of credit by a
Lender to the Borrower pursuant to Article I hereof, and may be a Base
Rate Loan or a LIBOR Rate Loan.


 


“Loan Documents” means this Agreement, the
Notes, the Collateral Documents and all documents delivered to the Agent and/or
any Lender in connection with any of the foregoing (including the Fee Letter).


 


“Margin Stock” means “margin stock” as such
term is defined in Regulation T, U or X of the Federal Reserve Board.


 


“Master Reaffirmation Agreement” means that
certain Master Reaffirmation Agreement dated of even date herewith by and among
the Borrower, each of its Subsidiaries and the Agent, to be in form and
substance acceptable to the Agent.


 


“Material Adverse Effect” means (a) a
material adverse change in, or a material adverse effect upon, the operations,
business, Property, or condition (financial or otherwise) of the Borrower, any
of its Subsidiaries, or the Borrower and its Subsidiaries taken as a whole; (b) a
material impairment of the ability of the Borrower, any of its Subsidiaries or
any other Person (other than the 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


 


88





















 


enforceability
of any Loan Document as against the Borrower or any Subsidiary, or (ii) the
perfection or priority of any Lien granted to the Lenders or to the Agent for
the benefit of the Lenders under any of the Collateral Documents.


 


“Mortgage” means any deed of trust, leasehold
deed of trust, mortgage, leasehold mortgage, deed to secure debt, leasehold
deed to secure debt or other document creating a Lien on real Property or any
interest in real Property.


 


“Multiemployer Plan” means a “multiemployer
plan” (within the meaning of Section 4001(a)(3) of ERISA) and to
which the Borrower or any member of the Controlled Group may have any
liability.


 


“Net Issuance Proceeds” means, in respect of
any issuance of debt or equity, cash proceeds (including cash proceeds as and
when received in respect of non-cash proceeds received or receivable in
connection with such issuance), net of reasonable out-of-pocket costs and
expenses paid or incurred in connection therewith in favor of any Person not an
Affiliate of the Borrower.


 


“Net Proceeds” means proceeds in cash, checks
or other cash equivalent financial instruments (including Cash Equivalents) as
and when received by the Person making a Disposition and insurance proceeds
received on account of an Event of Loss, net of: (a) in the event of a
Disposition (i) the direct costs relating to such Disposition excluding
amounts payable to the Borrower or any Affiliate of the Borrower, (ii) sale,
use or other transaction taxes paid or payable as a result thereof, and (iii) amounts
required to be applied to repay principal, interest and prepayment premiums and
penalties on Indebtedness secured by a Lien on the asset which is the subject
of such Disposition and (b) in the event of an Event of Loss, (i) all
money actually applied to repair or reconstruct the damaged Property or
Property affected by the condemnation or taking, (ii) all of the costs and
expenses reasonably incurred in connection with the collection of such proceeds,
award or other payments, and (iii) any amounts retained by or paid to
parties having superior rights to such proceeds, awards or other payments.


 


“Note” means any Revolving Note, Term Note or
CapEx Note and “Notes” means all such Notes.


 


“Notice of Borrowing” means a notice given by
the Borrower to the Agent pursuant to Section 1.5, in substantially the
form of Exhibit 12.1(b) hereto.


 


“Notice of Continuation/Conversion” means a
notice given by the Borrower to the Agent pursuant to Section 1.6, in substantially
the form of Exhibit 12.1(c) hereto.


 


“Obligations” means all Loans, and other
Indebtedness, advances, debts, liabilities, obligations, covenants and duties
owing by the Borrower to any Lender, the Agent, or any other Person required to
be indemnified, that arises under any Loan Document, whether or not for the
payment of money, whether arising by reason of an extension of credit, loan,
guaranty, indemnification or in any other manner, whether direct or indirect
(including those acquired by assignment), absolute or contingent, due or to
become due, now existing or hereafter arising and however acquired.


 


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“Ordinary Course of Business” means, in
respect of any transaction involving the Borrower or any of its Subsidiaries,
the ordinary course of such Person’s business, as conducted by any such Person
in accordance with past practice and undertaken by such Person in good faith
and not for purposes of evading any covenant or restriction in any Loan Document.


 


“Organization Documents” means, (a) for
any corporation, the certificate or articles of incorporation, the bylaws, any
certificate of determination or instrument relating to the rights of preferred
shareholders of such corporation, any shareholder rights agreement, and all
applicable resolutions of the board of directors (or any committee thereof) of
such corporation, (b) for any partnership, the partnership agreement and,
if applicable, certificate of limited partnership or (c) for any limited
liability company, the operating agreement and articles or certificate of
formation.


 


“Original Closing Date” means February 18,
2004.


 


“Patriot Act” means the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001, P.L. 107-56, as amended.


 


“PBGC” means the Pension Benefit Guaranty
Corporation or any entity succeeding to any of its principal functions under
ERISA.


 


“Permitted Acquisition” means any Acquisition
by (i) any domestic Wholly-Owned Subsidiary of the Borrower of
substantially all of the assets of a Person, which assets are located in the
United States, or (ii) the Borrower or any domestic Wholly-Owned
Subsidiary of the Borrower of 100% of the equity interests of a Person
incorporated under the laws of any State in the United States or the District
of Columbia (such assets, in the case of an asset acquisition, or entity, in
the case of an acquisition of equity securities, are referred to herein as the “Acquired
Entity”) to the extent that each of the following conditions shall have been
satisfied:


 


(a)                                  the conditions set forth in Section 2.3 shall have been
satisfied;


 


(b)                                 the Borrower shall have furnished to the Agent and Lenders at least
twenty (20) Business Days prior to the consummation of such Acquisition (1) an
executed term sheet and/or commitment letter (setting forth in reasonable
detail the terms and conditions of such Acquisition) and, at the request of the
Agent, such other information and documents that the Agent may request, including,
without limitation, executed counterparts of the respective agreements,
documents or instruments pursuant to which such Acquisition is to be
consummated (including, without limitation, any related management,
non-compete, employment, option or other material agreements), any schedules to
such agreements, documents or instruments and all other material ancillary
agreements, instruments and documents to be executed or delivered in connection
therewith, (2) pro forma financial statements of the Borrower and its
Subsidiaries after giving effect to the consummation of such Acquisition, (3) a
certificate of a Responsible Officer of the Borrower demonstrating on a pro
forma basis compliance with the covenants set forth in Article VI hereof
after giving effect to the consummation of such Acquisition and (4) copies
of such other agreements, instruments and other documents (including, without
limitation, the Loan Documents required by Section 4.12) as the Agent
reasonably shall request;


 


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(c)                                  the Borrower and its Subsidiaries (including any new Subsidiary)
shall execute and deliver the agreements, instruments and other documents
required by Section 4.12 and the Agent shall have received, for the
benefit of the Agent and Lenders, a collateral assignment of the seller’s
representations, warranties and indemnities to the Borrower or any of its
Subsidiaries under the acquisition documents;


 


(d)                                 such Acquisition shall not be hostile and shall have been approved
by the board of directors (or other similar body) and/or the stockholders or
other equityholders of the Acquired Entity;


 


(e)                                  no Default or Event of Default shall then exist or would exist after
giving effect thereto;


 


(f)                                    after giving effect to such Acquisition and any Loans to be
disbursed in connection therewith, the Maximum Revolving Loan Balance shall
exceed the aggregate outstanding principal balance of Revolving Loans by not
less than $5,000,000, and the Borrower shall deliver to the Agent a pro forma Borrowing
Base Certificate evidencing compliance with this condition, which pro forma
Borrowing Base Certificate shall give effect to such Acquisition and any such
Loans to be disbursed in connection therewith;


 


(g)                                 the Acquired Entity is in the same line of business as the Borrower


 


(h)                                 the “Available Liquidity” (as defined in the High Yield Unsecured
Indenture) of the Borrower shall be at least $7,500,000;


 


(i)                                     at least fifty percent (50%) of the costs of such Acquisition are
financed with “Acceptable Capital Contributions” (as defined in the High Yield
Unsecured Indenture); and


 


(j)                                     such Acquisition is permitted under the terms of the High Yield
Unsecured Documents.


 


“Permitted Issuances” means the issuance of
debt securities by any of the Borrower’s Subsidiaries in respect of
Indebtedness permitted hereunder.


 


“Permitted Securities” shall mean equity
interests of Borrower that by their terms (or by the terms of any security into
which they are convertible or for which they are exchangeable) or upon the happening
of any event or otherwise: (A) are not convertible or exchangeable for
Indebtedness or any securities that are not Permitted Securities, (B) (i) do
not mature and (ii) are not putable or redeemable at the option of the
holder thereof, in each case under clause (i) or (ii) in whole or in
part on or prior to the date six (6) months after the earlier of the
Revolving Termination Date or the actual payment in full in cash of the
Obligations, (C) do not have required payments of cash dividends or other
cash distributions on or prior to the date six (6) months after the
earlier of the Revolving Termination Date or the actual payment in full in cash
of the Obligations, (D) are unsecured and by operation of law or by
legally binding agreement are subordinated in right of repayment, liens,
security and remedies to all of the Obligations and to all of Agent’s and
Lenders’ rights, Liens and remedies, and (E) are not sold, issued or
otherwise transferred in connection with or as a part of a Public Offering.


 


91





















 


“Person” means an individual, partnership,
corporation, limited liability company, business trust, joint stock company,
trust, unincorporated association, joint venture or Governmental Authority.


 


“Plan” means an employee benefit plan (as
defined in Section 3(3) of ERISA) which the Borrower or any member of
the Controlled Group sponsors or maintains or to which the Borrower or any
member of the Controlled Group may have liability.


 


“Pledge Agreements” means collectively, the
Borrower Pledge Agreement, the Woodcraft Pledge Agreement, and any other pledge
agreement, in form and substance acceptable to the Agent, entered into by any
other Subsidiary of the Borrower, or any other Person, and the Agent, on behalf
of the Lenders in respect of the Obligations.


 


“Pledged Collateral” has the meaning
specified in the Pledge Agreements.


 


“Primewood” means Primewood, Inc., a
North Dakota corporation and wholly-owned subsidiary of Woodcraft.


 


“Property” means any interest in any kind of
property or asset, whether real, personal or mixed, and whether tangible or
intangible.


 


“Public Offering” shall mean any offer or
sale of securities pursuant to any registration statement filed and effective
with the Securities and Exchange Commission or any other Governmental
Authority.


 


“Qualified Plan” means a pension plan (as
defined in Section 3(2) of ERISA) intended to be tax-qualified under Section 401(a) of
the Code and which any member of the Controlled Group sponsors, maintains, or
to which it makes, is making or is obligated to make contributions, or in the
case of a multiple employer plan (as described in Section 4064(a) of
ERISA) has made contributions at any time during the immediately preceding
period covering at least five (5) plan years, but excluding any
Multiemployer Plan.


 


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


 


“Related Agreements” means, collectively, the High Yield Unsecured Documents, the Grand Valley
Purchase Documents, the Dimension Purchase Documents and each other instrument, document and purchase, merger and
other agreement executed or delivered by or on behalf of the Borrower or any of
its Subsidiaries in connection with a Permitted Acquisition.


 


“Related Fund” means (a) any fund, trust
or similar entity that invests in commercial loans in the ordinary course of
business and is advised or managed by (i) a Lender, (ii) an Affiliate
of a Lender, (iii) the same investment advisor that manages a Lender or (iv) an
Affiliate of an investment advisor that manages a Lender or (b) any
finance company, insurance company or other financial institution which
temporarily warehouses Loans for any Lender or any Person described in clause (a) above.


 


92





















 


“Related Transactions” means the transactions
contemplated by the Related Agreements and includes, without limitation, the
funding of the High Yield Unsecured Notes, the consummation of the Grand Valley
Acquisition, the consummation of the Dimension Acquisition and the consummation
of any Permitted Acquisitions.


 


“Reportable Event” means, as to any Plan, (a) any
of the events set forth in Section 4043(b) of ERISA or the
regulations thereunder, other than any such event for which the thirty (30) day
notice requirement under ERISA has been waived in regulations issued by the
PBGC, (b) a withdrawal from a Plan described in Section 4063 of
ERISA, or (c) a cessation of operations described in Section 4062(e) of
ERISA.


 


“Required Lenders” means at any time (a) Lenders
then holding at least sixty-six and two-thirds percent (662/3%) of
the sum of the Aggregate Revolving Loan Commitment then in effect plus the
Aggregate CapEx Loan Commitment then in effect (or, if after the CapEx Line
Termination Date or if the CapEx Loan Commitments have been terminated, the
aggregate unpaid principal balance of CapEx Loans) plus the aggregate unpaid
principal balance of the Term Loan then outstanding, or (b) if the
Revolving Loan Commitments have been terminated, Lenders then having at least
sixty-six and two-thirds percent (662/3%) of the sum of the
aggregate unpaid principal amount of Loans then outstanding plus outstanding
Letter of Credit Participation Liability.


 


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


 


“Responsible Officer” means the chief
executive officer or the president of the Borrower or any other officer having
substantially the same authority and responsibility; or, with respect to
compliance with financial covenants or delivery of financial information, the
chief financial officer or the treasurer of the Borrower, or any other officer
having substantially the same authority and responsibility.


 


“Restatement Effective Date” means the date
on which all conditions precedent set forth in Section 2.1 are satisfied
or waived by the Agent and all Lenders.


 


“Restricted Account” means each bank account
of the Borrower and its Subsidiaries set forth on Schedule 12.2
maintained at U.S. Bank or The Middlefield Banking Company for purposes of
paying certain payroll and operating expenses in the Ordinary Course of Business;
provided, that in the event U.S. Bank or The Middlefield Banking Company
delivers to the Agent a control agreement in form and substance acceptable to
the Agent, such account shall cease to be a Restricted Account for purposes
hereof.


 


“Restricted Credit Card Account” means
Account No. 1-536-9138-1964 maintained at U.S. Bank.


 


“Restricted Payroll Account” means Account No. 1-536-9138-1823
maintained at U.S. Bank.


 


93





















 


“Revolving Note” means an amended and
substituted promissory note of the Borrower payable to the order of a Lender in
substantially the form of Exhibit 12.1(d) hereto, evidencing
Indebtedness of the Borrower under the Revolving Loan Commitment of such
Lender.


 


“Revolving Termination Date” means the
earlier to occur of: (a) September 23, 2010; and (b) the date on
which the Aggregate Revolving Loan Commitment shall terminate in accordance
with the provisions of this Agreement.


 


“Second Amendment Closing Date”
means July 28, 2005.


 


“Security Agreements” means, collectively,
the Borrower Security Agreement, the Subsidiary Security Agreement and any
other security agreement, in form and substance acceptable to the Agent,
entered into by any other Subsidiary of the Borrower, or any other Person, and the
Agent, on behalf of the Lenders in respect of the Obligations.


 


“Solvent” means, as to any Person at any
time, that (a) the fair value of the Property of such Person is greater
than the amount of such Person’s liabilities (including disputed, contingent
and unliquidated liabilities) as such value is established and liabilities
evaluated for purposes of Section 101(32)(A) of the Bankruptcy Code
and, in the alternative, for purposes of the Uniform Fraudulent Transfer Act; (b) the
present fair saleable value of the Property 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 is able to
realize upon its Property and pay its debts and other liabilities (including
disputed, contingent and unliquidated liabilities) as they mature in the normal
course of business; (d) 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 (e) such Person is not
engaged in business or a transaction, and is not about to engage in business or
a transaction, for which such Person’s Property would constitute unreasonably
small capital.


 


“Sponsor” means Behrman Capital III L.P., a
Delaware limited partnership.


 


“Subordinated Indebtedness” means the
Indebtedness of the Borrower or any of its Subsidiaries which (i) contains
terms, conditions, covenants, default triggers and representations and
warranties that are acceptable to the Agent and the Required Lenders and (ii) is
subordinated in right of payment and action to the Obligations on terms and
conditions satisfactory to the Agent and the Required Lenders.


 


“Subsidiary” of a Person means any corporation,
association, limited liability company, partnership, joint venture or other
business entity of which more than fifty percent (50%) of the voting stock or
other equity interests (in the case of Persons other than corporations), is
owned or controlled directly or indirectly by the Person, or one or more of the
Subsidiaries of the Person, or a combination thereof.


 


“Subsidiary Security Agreement” means that
certain Security Agreement dated as of the Original Closing Date, by and
between each of Woodcraft, Primewood and Brentwood and the Agent, for the
benefit of the Lenders, and joined by Grand Valley Acquisition Sub pursuant to
a joinder dated as of the First Amendment Closing Date.


 


94





















 


“Target” means any other Person or business
unit or asset group of any other Person acquired or proposed to be acquired in
an Acquisition.


 


“Term Note”
means a promissory note of the Borrower payable to the order of a Lender, in
substantially the form of Exhibit 12.1(e) hereto, evidencing
the Indebtedness of the Borrower to such Lender resulting from the Term Loan
made to the Borrowers by such Lender.


 


“Trustee” means U.S. Bank National
Association.


 


“UCC” means the Uniform Commercial Code as in
effect from time to time in the State of Illinois.


 


“Unfunded Pension Liabilities” means the
excess of a Plan’s benefit liabilities under Section 4001(a)(16) of ERISA,
over the current value of that Plan’s assets, determined in accordance with the
assumptions used by the Plan’s actuaries for funding the Plan pursuant to section 412
for the applicable plan year.


 


“United States” and “U.S.” each means the
United States of America.


 


“U.S. Bank” means U.S. Bank National
Association, a national banking association.


 


“Wholly-Owned Subsidiary” means any
Subsidiary in which (other than directors’ qualifying shares required by law)
one hundred percent (100%) of the equity securities, at the time as of which
any determination is being made, is owned, beneficially and of record, by the
Borrower, or by one or more of the other Wholly-Owned Subsidiaries, or both.


 


“Withdrawal Liabilities” means, as of any
determination date, the aggregate amount of the liabilities, if any, pursuant
to Section 4201 of ERISA if the Controlled Group made a complete withdrawal
from all Multiemployer Plans and any increase in contributions pursuant to Section 4243
of ERISA.


 


“Woodcraft” means Woodcraft Industries, Inc.,
a Minnesota corporation and wholly-owned subsidiary of Borrower.


 


“Woodcraft Pledge Agreement” means that certain
Pledge Agreement dated as of the Original Closing Date, by and between
Woodcraft and the Agent, for the benefit of the Lenders, pursuant to which
Woodcraft has pledged one hundred percent (100%) of the issued and outstanding
capital stock of its Subsidiaries.


 


12.2                           Other
Interpretive Provisions.


 


(a)                                  Defined
Terms. 
Unless otherwise specified herein or therein, all terms defined in this
Agreement shall have the defined meanings when used in any certificate or other
document made or delivered pursuant hereto. 
The meanings of defined terms shall be equally applicable to the
singular and plural forms of the defined terms. 
Terms (including uncapitalized terms) not otherwise defined herein and
that are defined in the UCC shall have the meanings therein described.


 


95





















 


(b)                                 The
Agreement. 
The words “hereof,” “herein,” “hereunder” and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement; and subsection, section, schedule and
exhibit references are to this Agreement unless otherwise specified.


 


(c)                                  Certain
Common Terms. 
The term “documents” includes any and all instruments, documents,
agreements, certificates, indentures, notices and other writings, however
evidenced.  The term “including” is not
limiting and means “including without limitation.”


 


(d)                                 Performance;
Time. 
Whenever any performance obligation hereunder (other than a payment
obligation) shall be stated to be due or required to be satisfied on a day
other than a Business Day, such performance shall be made or satisfied on the
next succeeding Business Day.  In the
computation of periods of time from a specified date to a later specified date,
the word “from” means “from and including”; the words “to” and “until” each
mean “to but excluding,” and the word “through” means “to and including.”  If any provision of this Agreement refers to
any action taken or to be taken by any Person, or which such Person is prohibited
from taking, such provision shall be interpreted to encompass any and all
means, direct or indirect, of taking, or not taking, such action.


 


(e)                                  Contracts.  Unless otherwise expressly
provided herein, references to agreements and other contractual instruments,
including this Agreement and the other Loan Documents, shall be deemed to
include all subsequent amendments, thereto, restatements and substitutions
thereof and other modifications and supplements thereto which are in effect
from time to time, but only to the extent such amendments and other
modifications are not prohibited by the terms of any Loan Document.


 


(f)                                    Laws. 
References to any statute or regulation are to be construed as including
all statutory and regulatory provisions consolidating, amending, replacing,
supplementing or interpreting the statute or regulation.


 


12.3                           Accounting Principles.


 


(a)                                  Unless
the context otherwise clearly requires, all accounting terms not expressly
defined herein shall be construed, and all financial computations required
under this Agreement shall be made, in accordance with GAAP, consistently
applied.


 


(b)                                 References
herein to “fiscal year,” “fiscal quarter” and “fiscal month” refer to such
fiscal periods of the Borrower.


 


96





















 


(c)                                  If
any change in GAAP results in a change in the calculation of the financial
covenants or interpretation of related provisions of this Agreement or any
other Loan Document, then the Borrower, the Agent and the Lenders agree to
amend such provisions of this Agreement so as to equitably reflect such changes
in GAAP with the desired result that the criteria for evaluating the Borrower’s
financial condition shall be the same after such change in GAAP as if such
change had not been made; provided, that notwithstanding any other
provision of this Agreement, the Required Lenders’ agreement to any amendment
of such provisions shall be sufficient to bind all Lenders.


 


[Balance of page intentionally
left blank; signature page follows.]


 


97





















 


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


 


	
   

  	
  WII COMPONENTS, INC.,

  
	
   

  	
  a Delaware corporation, as the Borrower

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /S/ Dale B. Herbst

  	
   

  
	
   

  	
  Name: 

  	
  Dale B. Herbst

  
	
   

  	
  Title: 

  	
  Treasurer

  
	
   

  	
  FEIN:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address for notices for Borrower:

  
	
   

  	
   

  
	
   

  	
  525 Lincoln Avenue SE

  
	
   

  	
  St. Cloud, Minnesota 56304

  
	
   

  	
  Attn: President

  
	
   

  	
  Facsimile: (320) 352-1504

  
	
   

  	
   

  
	
   

  	
  Address for Wire Transfers for Borrower:

  
	
   

  	
   

  
	
   

  	
  U.S. Bank National Association

  
	
   

  	
  ABA Number: 091000022

  
	
   

  	
  Account Number: 149510174050

  
	
   

  	
  Reference: Woodcraft Industries, Inc.

  
					



 





















 


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


 


	
   

  	
  ANTARES CAPITAL CORPORATION,

  
	
   

  	
  as Agent and as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /S/ Michael P. King

  	
   

  
	
   

  	
  Name: 

  	
  Michael P. King

  
	
   

  	
  Title: 

  	
  Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address for notices:

  
	
   

  	
   

  
	
   

  	
  311 South Wacker Drive

  
	
   

  	
  Suite 4400

  
	
   

  	
  Chicago, Illinois 60606

  
	
   

  	
  Attn: Portfolio Manager – Woodcraft

  
	
   

  	
  Facsimile: (312) 697-3998

  
	
   

  	
  Telephone: (312) 697-3999

  
	
   

  	
   

  
	
   

  	
  Address for payments:

  
	
   

  	
   

  
	
   

  	
  Antares Capital Corporation

  
	
   

  	
  Account # 4070-6016

  
	
   

  	
  Citibank N.A., New York

  
	
   

  	
  ABA # 021000089

  
	
   

  	
  Reference: Woodcraft

  
	
   

  	
  Please advise Jim Luchansky at

  
	
   

  	
  (312) 697-3991 upon receipt

  



 





















 


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


 


	
   

  	
  M&I MARSHALL & ILSLEY
  BANK, as a

  Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /S/ Chad M. Kortgard

  	
   

  
	
   

  	
  Name: 

  	
  Chad M. Kortgard

  
	
   

  	
  Title: 

  	
  Assistant Vice President

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /S/ John Howard

  	
   

  
	
   

  	
  Name: 

  	
  John Howard

  
	
   

  	
  Title: 

  	
  Senior Vice President

  
	
   

  	
   

  
	
   

  	
  Address for notices:

  
	
   

  	
   

  
	
   

  	
  401 N. Executive Drive

  
	
   

  	
  Brookfield, Wisconsin 53005

  
	
   

  	
  Attn:   Nenita Yumang

  
	
   

  	
  Facsimile: (262) 938-8684

  
	
   

  	
  Telephone: (262) 938-8675

  
	
   

  	
   

  
	
   

  	
  Lending Office:

  
	
   

  	
   

  
	
   

  	
  651 Nicollet Mall

  
	
   

  	
  Minneapolis, Minnesota 55402

  
	
   

  	
  Attn:   Chad Kortgard

  
	
   

  	
  Facsimile: (612) 904-8012

  
	
   

  	
  Telephone: (612) 904-8195

  
					



 





















 


Schedule 1.1(a)


 


Term Loan Commitments and CapEx Loan
Commitments


 


	
  Lender:

  	
   

  	
  Term Loan Commitment:

  	
   

  	
  CapEx Loan Commitment:

  	
   

  
	
  Antares Capital Corporation

  	
   

  	
  $

  	
  4,772,727.27

  	
   

  	
  $

  	
  4,772,727.27

  	
   

  
	
  M&I Marshall & Ilsley Bank

  	
   

  	
  $

  	
  2,727,272.73

  	
   

  	
  $

  	
  2,727,272.73

  	
   

  
	
  TOTAL

  	
   

  	
  $

  	
  7,500,000

  	
   

  	
  $

  	
  7,500,000

  	
   

  



 





















 


Schedule 1.1(b)


 


Revolving Loan Commitments


 


	
  Lender:

  	
   

  	
  Revolving Loan Commitment:

  	
   

  
	
  Antares Capital Corporation

  	
   

  	
  $

  	
  25,454,545.46

  	
   

  
	
  M&I Marshall & Ilsley Bank

  	
   

  	
  $

  	
  14,545,454.54

  	
   

  
	
  TOTAL

  	
   

  	
  $

  	
  40,000,000.00