Document:

Lexmark International, Inc., 3q 2006 Form 10-Q Exhibit 10.4

    Exhibit
      10.4

     

    

      RESTRICTED
        STOCK UNIT AWARD AGREEMENT

      

      pursuant
        to

      

      LEXMARK
        INTERNATIONAL, INC.

      2005
        NONEMPLOYEE DIRECTOR STOCK PLAN

      

      

      This
        RESTRICTED STOCK UNIT AWARD  AGREEMENT (the "Agreement") between Lexmark
        International, Inc., a Delaware  corporation (the "Company"), and the

      person
        specified on the signature page hereof (the "Grantee") is entered into as
        of
        the ____ day of _____, _____ (the "Grant Date") pursuant to the
        Lexmark International, Inc. 2005 Nonemployee Director Stock Plan, as the
        same
        may be amended from time to time (the "Plan"). Capitalized terms used and
        not
        defined herein shall have the meanings assigned to such terms in the
        Plan.

      

      WHEREAS,
        the Grantee is a member of the Board of Directors of the Company, who is
        not
        also an officer or employee of the Company or one of its Subsidiaries or
        affiliated with any stockholder of the Company holding 5% or more of the
        Company’s equity securities, and the Board has determined that it would be to
        the advantage and in the interest of the Company to grant the restricted
        stock
        unit award provided for herein to the Grantee as an inducement to the Grantee
        to
        remain in the service of the Company and the Subsidiaries and as an incentive
        to
        the Grantee to devote his or her best efforts and dedication to the performance
        of such services and to maximize shareholder value; and

      

      WHEREAS,
        the Grantee desires to accept from the Company the grant of the restricted
        stock
        units evidenced hereby on the terms and subject to the conditions
        herein;

      

      NOW,
        THEREFORE, in consideration of the premises and subject to the terms and
        conditions set forth herein and in the Plan, the parties hereto hereby covenant
        and agree as follows:

      

      
        	 	
                1.

              	
                Restricted
                  Stock Unit Award.

              

      

      

      
        	 	
                (a)

              	
                Restricted
                  Stock Unit Award.
                  The Company hereby grants to the Grantee, effective as of the date
                  hereof
                  and on the terms and conditions herein, the number of restricted
                  stock
                  units set forth on the signature page hereof, each representing
                  the
                  Grantee's right to receive one share of Common Stock at the time
                  or times
                  provided for in Section 3 hereof, subject to the terms and conditions
                  described herein (the "Restricted Stock Units" or "Units").
                  

              

      

      
        
           

          
          

        

        
          1

          
            

          

        

        
          
          

        

      

      
        	 	
                (b)

              	
                2005
                  Nonemployee Director Stock Plan.
                  This Agreement is subject in all respects to the terms of the Plan,
                  all of
                  which terms are made a part of and incorporated in this Agreement
                  by
                  reference. In the event of any conflict between the terms of this
                  Agreement and the terms of the Plan, the terms of the Plan shall
                  control.
                  The Grantee hereby acknowledges that copies of the Plan may be
                  obtained
                  from the Vice President of Human Resources and agrees to comply
                  with and
                  be bound by all of the terms and conditions thereof.
                  

              

      

      

      
        	 	
                (c)

              	
                Establishment
                  of Account.
                  No shares of Common Stock will be issued on the date of grant of
                  the
                  Restricted Stock Units and the Company shall not be required to
                  set aside
                  a fund for the payment of any such Units. The Company will establish
                  a
                  separate account for the Grantee and will record in such account
                  the
                  number of Restricted Stock Units awarded to the Grantee and, to
                  the extent
                  applicable, the Dividend Equivalents provided for in Section 3(b)
                  hereof.

              

      

      

        

        	2.   
                 	
                Vesting
                  and Settlement of Restricted Stock Units.

              

         

      

      
        	 	
                (a)

              	
                Vesting
                  and Settlement.
                  The Restricted Stock Units will become vested in whole on the sixth
                  anniversary of the date of grant, _____, ____, or such other date
                  as
                  determined by the Board (the "Vesting Date"), subject to the Grantee's
                  continuous service as a member of the Board of Directors of the
                  Company
                  from the date hereof to the Vesting Date. After the Restricted
                  Stock Units
                  have become vested on the Vesting Date, they shall settle upon
                  the
                  termination of Grantee’s status as a member of the Board of Directors of
                  the Company, or such other date as determined by the Board (“the
                  Settlement Date”).

              

      

      

      
        	 	
                (b)

              	
                Acceleration.
                  The Board may, in its discretion, accelerate the vesting and/or
                  settlement
                  of all or any portion of the Restricted Stock Units or waive any
                  conditions to the vesting and/or settlement of such Restricted
                  Stock
                  Units.

              

      

      

      
        	 	
                (c)

              	
                Termination
                  of Status as a Board Member.
                  In the event of the Grantee's termination of service as a member
                  of the
                  Board of Directors of the Company prior to the Vesting Date, the
                  Grantee
                  shall immediately forfeit all rights with respect to any Restricted
                  Stock
                  Units (and Dividend Equivalents) which have not yet vested in accordance
                  with the provisions of Section 2(a) of this
                  Agreement.

              

      

      

      
        	 	
                3.

              	
                Payment
                  of Restricted Stock Unit Award.

              

      

      

      
        	 	
                (a)

              	
                Payment.
                  On, or as soon as reasonably practicable after, the Settlement
                  Date,
                  subject to Section 4 hereof, the Company shall direct its stock
                  transfer
                  agent to make (or to cause to be made) an appropriate book entry
                  

              

      

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      
        	 	 	
                in
                  the Company's stock transfer books and records reflecting the transfer
                  to
                  the Grantee, and the Grantee's ownership, of one share of Common
                  Stock for
                  each Restricted Stock Unit that shall have become vested and settled
                  on
                  such Settlement Date. Upon the Grantee's request, subject to Section
                  4
                  hereof, the Company shall deliver to the Grantee a stock certificate
                  registered in the Grantee's name and representing such number of
                  shares of
                  Common Stock free and clear of all restrictions except any that
                  may be
                  imposed by law. No payment will be required to be made by the Grantee
                  upon
                  the delivery of such shares of Common Stock, except as otherwise
                  provided
                  in Section 4 of this Agreement.

              

      

      

      
        	 	
                (b)

              	
                Dividend
                  Equivalents.
                  Unless otherwise determined by the Board, the Company will credit
                  to the
                  account of the Grantee an amount equal to any dividends or dividend
                  equivalents and other distributions paid by the Company with respect
                  to
                  the number of shares of Common Stock corresponding to the number
                  of
                  Restricted Stock Units ("Dividend Equivalents"). Dividend Equivalents
                  in
                  respect of Restricted Stock Units that shall have become vested
                  on the
                  Vesting Date shall be payable to the Grantee on the Settlement
                  Date.

              

      

      

      
        	 	
                (c)

              	
                Restrictions
                  on Sale upon Public Offering. The Grantee hereby agrees that,
                  notwithstanding the vesting of the Restricted Stock Units pursuant
                  to
                  Section 2(a) of this Agreement or the transfer of the shares of
                  Common
                  Stock covered thereby to the Grantee pursuant to Section 3(a) hereof,
                  the
                  Grantee will not effect any public sale or distribution of any
                  of such
                  shares of Common Stock during the 20 day period prior to and the
                  180 days
                  following the effective date of any registration statement hereinafter
                  filed by the Company under the Securities Act of 1933, as amended,
                  with
                  respect to any underwritten public offering of any shares of the
                  Company's
                  capital stock (other than as part of such underwritten public
                  offering).

              

      

      

      
        	 	
                4.

              	
                Tax
                  Withholding.
                  The delivery of any directions to the Company's stock transfer
                  agent or
                  any certificates for shares of Common Stock pursuant to Section
                  3 shall
                  not be made unless and until the Grantee, or, if applicable, the
                  Grantee's
                  beneficiary or estate, has made appropriate arrangements for the
                  payment
                  to the Company of an amount sufficient to satisfy any applicable
                  U.S.
                  federal, state and local and non-U.S. tax withholding or other
                  tax
                  requirements, as determined by the Company. To satisfy the Grantee's
                  applicable withholding and other tax requirements, the Company
                  may, in its
                  sole discretion, (i) withhold a number of shares of Common Stock
                  having an
                  aggregate Fair Market Value on the Settlement Date equal to the
                  applicable
                  amount of such withholding and other tax requirements or (ii) require
                  the
                  Grantee to sell a number of shares of Common Stock having at least
                  a value
                  sufficient to meet the applicable amount of such withholding and
                  other tax
                  requirements to account for rounding and market fluctuations, subject
                  to
                  any rules adopted by the Board or required to ensure compliance
                  with
                  applicable

              

      

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      
        	 	 	
                law,
                  including, but not limited to, Section 16 of the Securities Exchange
                  Act
                  of 1934, as amended. Shares required to be sold to satisfy the
                  Grantee’s
                  applicable withholding and other tax requirements may be sold as
                  part of a
                  block trade with the Grantee receiving an average price. Any cash
                  payment
                  made pursuant to Section 3 shall be made net of any amounts required
                  to be
                  withheld or paid with respect thereto (and with respect to any
                  shares of
                  Common Stock delivered contemporaneously therewith) under any applicable
                  U.S. federal, state and local and non-U.S. tax withholding and
                  other tax
                  requirements.

              

      

      

      
        	 	
                5.

              	
                Transferability.
                  Unless otherwise provided in accordance with the provisions of
                  the Plan,
                  the Restricted Stock Units may not be sold, transferred, pledged,
                  assigned
                  or otherwise alienated or hypothecated by the Grantee, other than
                  by will
                  or the laws of descent and distribution. The term "Grantee" as
                  used in
                  this Agreement shall include any permitted transferee of the Restricted
                  Stock Units.

              

      

      

      
        	 	
                6.

              	
                Adjustment
                  in Capitalization.

              

      

      

      
        	 	
                (a)

              	
                The
                  aggregate number of shares of Common Stock covered by the Restricted
                  Stock
                  Units granted hereunder shall be proportionately adjusted to reflect,
                  as
                  deemed equitable and appropriate by the Board, an Adjustment
                  Event.

              

      

      

      
        	 	
                (b)

              	
                Any
                  shares of stock (whether Common Stock, shares of stock into which
                  shares
                  of Common Stock are converted or for which shares of Common Stock
                  are
                  exchanged or shares of stock distributed with respect to Common
                  Stock) or
                  cash or other property received or credited to the account of the
                  Grantee
                  with respect to the Restricted Stock Units as a result of any Adjustment
                  Event, any distribution of property or any merger, consolidation,
                  reorganization, liquidation, dissolution or other similar transaction
                  shall, except as otherwise provided by the Board, be subject to
                  the same
                  terms and conditions, including restrictions on transfer, as are
                  applicable to the Restricted Stock Units with respect to which
                  such
                  shares, cash or other property is received or so credited and stock
                  certificate(s), if any, representing or evidencing any shares of
                  stock or
                  other property so received shall be legended as
                  appropriate.

              

      

      

      
        	 	
                7.

              	
                Preemption
                  by Applicable Laws and Regulations.
                  Notwithstanding anything in the Plan or this Agreement to the contrary,
                  the issuance of shares of Common Stock hereunder shall be subject
                  to
                  compliance with all applicable U.S. federal, state and non-U.S.
                  securities
                  laws. Without limiting the foregoing, if any law, regulation or
                  requirement of any governmental authority having jurisdiction shall
                  require either the Company or the Grantee (or the Grantee's beneficiary
                  or
                  estate) to take any action in connection with the issuance of any
                  shares
                  of Common Stock hereunder, the issuance of such

              

      

      
        
           

          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      
        	 	 	
                shares
                  shall be deferred until such action shall have been taken to the
                  satisfaction of the Company.

              

      

      

      
        	 	
                8.

              	
                Interpretation;
                  Construction.
                  All of the powers and authority conferred upon the Board pursuant
                  to any
                  term of the Plan or the Agreement shall be exercised by the Board,
                  in its
                  sole discretion. All determinations, interpretations or other actions
                  made
                  or taken by the Board pursuant to the provisions of the Plan or
                  the
                  Agreement shall be final, binding and conclusive for all purposes
                  and upon
                  all persons and, in the event of any judicial review thereof, shall
                  be
                  overturned only if arbitrary and capricious. The Board may consult
                  with
                  legal counsel, who may be counsel to the Company, and shall not
                  incur any
                  liability for any action taken in good faith in reliance upon the
                  advice
                  of counsel.

              

      

      

      
        	 	
                9.

              	
                Amendment.
                  The Board shall have the right, in its sole discretion, to alter
                  or amend
                  this Agreement, from time to time, as provided in the Plan in any
                  manner
                  for the purpose of promoting the objectives of the Plan, provided
                  that no
                  such amendment shall impair the Grantee's rights under this Agreement
                  without the Grantee's consent. Subject to the preceding sentence,
                  any
                  alteration or amendment of this Agreement by the Board shall, upon
                  adoption thereof by the Board, become and be binding and conclusive
                  on all
                  persons affected thereby without requirement for consent or other
                  action
                  with respect thereto by any such person. The Company shall give
                  written
                  notice to the Grantee of any such alteration or amendment of this
                  Agreement as promptly as practicable after the adoption thereof.
                  This
                  Agreement may also be amended by a writing signed by both the Company
                  and
                  the Grantee.

              

      

      

      
        	 	
                10.

              	
                No
                  Rights as a Stockholder.
                  Except as provided by the Plan, the Grantee shall have no rights
                  as a
                  stockholder with respect to the Restricted Stock Units prior to
                  the date
                  as of which the shares of Common Stock covered thereby are transferred
                  to
                  the Grantee in accordance with Section 3(a) hereof.
                  

              

      

      

      
        	 	
                11.

              	
                Miscellaneous.

              

      

      

      
        	 	
                (a)

              	
                Notices.
                  All notices and other communications required or permitted to be
                  given
                  under this Agreement shall be in writing and shall be deemed to
                  have been
                  given if mailed by regular United States mail, first-class and
                  prepaid, or
                  by any recognized international equivalent of such delivery, to
                  the
                  Company or the Grantee, as the case may be, at the following addresses
                  or
                  to such other address as the Company or the Grantee, as the case
                  may be,
                  shall specify by notice to the others delivered in accordance with
                  this
                  Section 11(a):

              

      

      

      
        
           

          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      
        	 	
                (i)

              	
                if
                  to the Company, to it at:

              

      

      

      
        	 	 	
                One
                  Lexmark Centre Drive

              

      

      
        	 	 	
                740
                  West New Circle Road

              

      

      
        	 	 	
                Lexington,
                  KY 40550

              

      

      
        	 	 	
                Attention:
                  Secretary

              

      

      

      
        	 	
                (ii)

              	
                if
                  to the Grantee, to the Grantee at the address set forth on the
                  signature
                  page hereof.

              

      

      

      All
        such
        notices and communications shall be deemed to have been received on the date
        of
        delivery or on the third business day after the mailing thereof. 

      

      
        	 	
                (b)

              	
                Binding
                  Effect; Benefits.
                  This Agreement shall be binding upon and inure to the benefit of
                  the
                  parties to this Agreement and their respective successors and assigns.
                  Nothing in this Agreement, express or implied, is intended or shall
                  be
                  construed to give any person other than the parties to this Agreement
                  or
                  their respective successors or assigns any legal or equitable right,
                  remedy or claim under or in respect of any agreement or any provision
                  contained herein.

              

      

      

      
        	 	
                (c)

              	
                Waiver.
                  Any party hereto may by written notice to the other party (i)
                  extend the time for the performance of any of the obligations or
                  other
                  actions of the other party under this Agreement, (ii)
                  waive compliance with any of the conditions or covenants of the
                  other
                  party contained in this Agreement and (iii)
                  waive or modify performance of any of the obligations of the other
                  party
                  under this Agreement. Except as provided in the preceding sentence,
                  no
                  action taken pursuant to this Agreement, including, without limitation,
                  any investigation by or on behalf of any party, shall be deemed
                  to
                  constitute a waiver by the party taking such action of compliance
                  with any
                  representations, warranties, covenants or agreements contained
                  herein. The
                  waiver by any party hereto of a breach of any provision of this
                  Agreement
                  shall not operate or be construed as a waiver of any preceding
                  or
                  succeeding breach and no failure by a party to exercise any right
                  or
                  privilege hereunder shall be deemed a waiver of such party's rights
                  or
                  privileges hereunder or shall be deemed a waiver of such party's
                  rights to
                  exercise the same at any subsequent time or times
                  hereunder.

              

      

      

      
        	 	
                (d)

              	
                Assignability.
                  Neither this Agreement nor any right, remedy, obligation or liability
                  arising hereunder or by reason hereof shall be assignable by the
                  Company
                  or the Grantee without the prior written consent of the other
                  party.

              

      

      
        
           

          
          

        

        
          6

          
            

          

        

        
          
          

        

      

      
        	 	
                (e)

              	
                Applicable
                  Law.
                  This Agreement shall be governed by and construed in accordance
                  with the
                  laws of the State of Delaware, regardless of the law that might
                  be applied
                  under principles of conflict of laws and excluding any conflict
                  or choice
                  of law rule or principle that may otherwise refer construction
                  or
                  interpretation of the Plan or this Agreement to the substantive
                  law of
                  another jurisdiction.

              

      

      

      
        	 	
                (f)

              	
                Jurisdiction.
                  The Grantee hereby irrevocably and unconditionally submits to the
                  jurisdiction and venue of the state courts of the Commonwealth
                  of Kentucky
                  and of the United States District Court of the Eastern District
                  of
                  Kentucky located in Fayette County, Kentucky, and any appellate
                  court from
                  any thereof, in any action or proceeding arising out of or relating
                  to
                  this Agreement, or for recognition or enforcement of any judgment,
                  and
                  each of the parties hereby irrevocably agree that all claims in
                  respect of
                  any such action or proceeding may be heard and determined in such
                  Kentucky
                  state or United States federal courts located in such jurisdiction.
                  Each
                  of the parties hereto agrees that a final judgment in any such
                  action or
                  proceeding shall be conclusive and may be enforced in other jurisdictions
                  by suit on the judgment or in any other manner provided by law.
                  The
                  parties hereby irrevocably waive, to the fullest extent permitted
                  by
                  applicable law, any objection which they may now or hereafter have
                  to the
                  laying of venue of any such proceeding brought in such a court
                  and any
                  claim that any such proceeding brought in such a court has been
                  brought in
                  an inconvenient forum. Grantee further agrees that any action related
                  to,
                  or arising out of, this Agreement shall only be brought by Grantee
                  exclusively in the federal and state courts located in Fayette
                  County,
                  Kentucky. Nothing in this Agreement shall affect any right that
                  the
                  Company may otherwise have to bring any action or proceeding relating
                  to
                  this Agreement in the courts of any
                  jurisdiction.

              

      

      

      
        	 	
                (g)

              	
                Severability.
                  If any provision of this Agreement or the Plan shall be held invalid
                  or
                  unenforceable, such invalidity or unenforceability shall not affect
                  any
                  other provisions of this Agreement or the Plan, and the Agreement
                  and the
                  Plan shall be construed and enforced as if such provision had not
                  been
                  included.

              

      

      

      
        	 	
                (h)

              	
                Survival.
                  Any provision of this Agreement which contemplates performance
                  or
                  observance subsequent to any termination or expiration of this
                  Agreement
                  shall survive any termination or expiration of this Agreement and
                  continue
                  in full force and effect.

              

      

      

      
        	 	
                (i)

              	
                Internal
                  Revenue Code Section 409A.
                  The Company intends for this Agreement to comply with the provisions
                  of
                  Section 409A of the Code and the guidance issued thereunder.
                  Notwithstanding Section 9 hereof, the Company intends to amend
                  this
                  Agreement, and hereby reserves the right to do so without the Grantee’s
                  consent, in the future as required to

              

      

      
        
           

          
          

        

        
          7

          
            

          

        

        
          
          

        

      

      
        	 	 	
                conform
                  to the provisions of Section 409A of the Code with respect to amounts
                  subject to Section 409A of the
                  Code.

              

      

      

      
        	 	
                (j)

              	
                Section
                  and Other Headings, Etc.
                  The section and other headings contained in this Agreement are
                  for
                  reference purposes only and shall not affect the meaning or interpretation
                  of this Agreement. In this Agreement all references to "dollars"
                  or "$"
                  are to United States dollars.

              

      

      

      
        	 	
                (k)

              	
                Counterparts.
                  This Agreement may be executed in any number of counterparts, each
                  of
                  which shall be deemed to be an original and all of which together
                  shall
                  constitute one and the same
                  instrument.

              

      

      
        
           

          
          

        

        
          8

          
            

          

        

        
          
          

        

      

      IN
        WITNESS WHEREOF, the Company and the Grantee have executed this Agreement
        as of
        the date first above written.

      

      LEXMARK
        INTERNATIONAL, INC.

      

      

      

      Name: Jeri.
        I
        Stromquist

      Title: Vice
        President of Human Resources

      

      

      

      GRANTEE:

      

      

      By:
        ______________________________

      (Sign
        Here)

      

      Name:

      

      

      Address
        of the Grantee:

      

      

      

      Number
        of
        Restricted Stock Units

      Granted
        on:Exhibit 10.1

                                                             EXECUTION
COPY

CREDIT AGREEMENT 

Dated as of November 1, 2006

among

HOME SOLUTIONS OF AMERICA, INC.,

THE OTHER LENDERS PARTY HERETO

and

TEXAS CAPITAL BANK, NATIONAL
ASSOCIATION,

as Administrative Agent, Arranger and Sole Bookrunner

 

 

 

 

 

Table of Contents

		

 

				Page
	

ARTICLE I           
DEFINITIONS................................................................................................... 

				1
	

Section 1.1 
Definitions................................................................................................................ 

				1
	

Section 1.2  Accounting
Matters.................................................................................................. 

				14
	

Section 1.3  Other
Definitional
Provisions..................................................................................... 

				14
	  	 
	

ARTICLE II          
ADVANCES AND LETTERS OF
CREDIT........................................................ 

				14
	

Section 2.1 
Advances................................................................................................................. 

				14
	

Section 2.2  General
Provisions Regarding Interest;
Etc................................................................ 

				17
	

Section 2.3  Unused
Fee.............................................................................................................. 

				17
	

Section 2.4  Use of
Proceeds....................................................................................................... 

				17
	

Section 2.5  Letters of
Credit....................................................................................................... 

				17
	

Section 2.6  Drawings and
Reimbursements; Funding of
Participants............................................. 

				18
	

Section 2.7  Letter of Credit
Fees................................................................................................ 

				19
	  	 
	

ARTICLE III        
PAYMENTS........................................................................................................ 

				19
	

Section 3.1  Method of
Payment.................................................................................................. 

				19
	

Section 3.2 
Pro Rata Treatment.................................................................................................. 

				19
	

Section 3.3 
Prepayments............................................................................................................ 

				20
	

Section 3.4  Non-receipt of
Funds by the Administrative
Agent....................................................

				 20
	  	 
	

ARTICLE IV        
SECURITY......................................................................................................... 

				20
	

Section 4.1 
Collateral................................................................................................................. 

				20
	

Section 4.2 
Setoff....................................................................................................................... 

				20
	

Section 4.3  Notice to Account
Debtors....................................................................................... 

				21
	  	 
	

ARTICLE V         
CONDITIONS
PRECEDENT............................................................................. 

				22
	

Section 5.1  Initial Extension
of
Credit..........................................................................................

				 22
	

Section 5.2  All Extensions of
Credit............................................................................................ 

				24
	  	 
	

ARTICLE VI        
REPRESENTATIONS AND
WARRANTIES.................................................... 

				24
	

Section 6.1  Corporate
Existence................................................................................................. 

				24
	

Section 6.2  Financial
Statements;
Etc.......................................................................................... 

				25
	

Section 6.3  Action; No
Breach................................................................................................... 

				25
	

Section 6.4  Operation of
Business............................................................................................... 

				25
	

Section 6.5  Litigation and
Judgments........................................................................................... 

				25
	

Section 6.6  Rights in
Properties;
Liens......................................................................................... 

				26
	

Section 6.7 
Enforceability........................................................................................................... 

				26
	

Section 6.8 
Approvals................................................................................................................ 

				26
	

Section 6.9 
Debt........................................................................................................................ 

				26
	

Section 6.10 
Taxes..................................................................................................................... 

				26

-i-

 

Table of Contents

		 	Page
	

Section 6.11  Use of Proceeds;
Margin
Securities........................................................................ 

				26
	

Section 6.12  ERISA................................................................................................................... 

				26
	

Section 6.13 
Disclosure.............................................................................................................. 

				27
	

Section 6.14  Subsidiaries,
Ventures,
Etc..................................................................................... 

				27
	

Section 6.15 
Agreements............................................................................................................ 

				27
	

Section 6.16  Compliance with
Laws........................................................................................... 

				27
	

Section 6.17 
Inventory................................................................................................................ 

				27
	

Section 6.18  Investment
Company
Act....................................................................................... 

				27
	

Section 6.19  Public Utility
Holding Company
Act........................................................................ 

				28
	

Section 6.20  Environmental
Matters............................................................................................ 

				28
	

Section 6.21  Intellectual
Property................................................................................................ 

				29
	

Section 6.22  Depository
Relationship.......................................................................................... 

				29
	  	 
	

ARTICLE VII       
AFFIRMATIVE
COVENANTS.......................................................................... 

				29
	

Section 7.1  Reporting
Requirements............................................................................................ 

				29
	

Section 7.2  Maintenance of
Existence; Conduct of
Business........................................................ 

				31
	

Section 7.3  Maintenance of
Properties........................................................................................ 

				31
	

Section 7.4  Taxes and
Claims..................................................................................................... 

				31
	

Section 7.5 
Insurance................................................................................................................. 

				32
	

Section 7.6  Inspection
Rights...................................................................................................... 

				32
	

Section 7.7  Keeping Books and
Records.................................................................................... 

				32
	

Section 7.8  Compliance with
Laws............................................................................................. 

				32
	

Section 7.9  Compliance with
Agreements.................................................................................... 

				32
	

Section 7.10  Further
Assurances................................................................................................. 

				32
	

Section 7.11  ERISA................................................................................................................... 

				32
	

Section 7.12  Additional
Guarantors............................................................................................. 

				33
	  	 
	

ARTICLE VIII       NEGATIVE
COVENANTS................................................................................ 

				33
	

Section 8.1 
Debt........................................................................................................................

				 33
	

Section 8.2  Limitation on
Liens................................................................................................... 

				33
	

Section 8.3  Mergers,
Etc............................................................................................................ 

				34
	

Section 8.4  Restricted
Payments................................................................................................. 

				34
	

Section 8.5  Loans and
Investments............................................................................................. 

				34
	

Section 8.6  Limitation on
Issuance of
Equity................................................................................ 

				35
	

Section 8.7  Transactions With
Affiliates....................................................................................... 

				35
	

Section 8.8  Disposition of
Assets................................................................................................ 

				35
	

Section 8.9  Sale and
Leaseback................................................................................................. 

				35
	

Section 8.10  Prepayment of
Debt...............................................................................................

				 35
	

Section 8.11  Nature of
Business................................................................................................. 

				36
	

Section 8.12  Environmental
Protection........................................................................................ 

				36
	

Section 8.13 
Accounting............................................................................................................. 

				36
	

Section 8.14  No Negative
Pledge............................................................................................... 

				36
	

Section 8.15 
Subsidiaries............................................................................................................ 

				36

-ii-

 

Table of Contents

		

 

				Page
	

ARTICLE IX        
FINANCIAL
COVENANTS..............................................................................

				 36
	

Section 9.1  Current
Ratio........................................................................................................... 

				36
	

Section 9.2  Debt Service
Coverage
Ratio................................................................................... 

				37
	

Section 9.3  Maximum Leverage
Amount..................................................................................... 

				37
	

Section 9.4  Capital
Expenditures.................................................................................................

				 37
	  	 
	

ARTICLE X         
DEFAULT........................................................................................................ 

				37
	

Section 10.1  Events of
Default.................................................................................................... 

				37
	

Section 10.2  Remedies Upon
Default.......................................................................................... 

				39
	

Section 10.3  Performance by
the Administrative
Agent................................................................ 

				39
	  	 
	

ARTICLE XI        
THE ADMINISTRATIVE
AGENT..................................................................... 

				40
	

Section 11.1  Appointment,
Powers and
Immunities..................................................................... 

				40
	

Section 11.2  Reliance by
Administrative
Agent............................................................................ 

				40
	

Section 11.3 
Defaults.................................................................................................................. 

				41
	

Section 11.4  Rights as a
Lender.................................................................................................. 

				41
	

Section 11.5 
Indemnification....................................................................................................... 

				41
	

Section 11.6  Non-Reliance on
Administrative Agent and other Lenders.......................................

				 41
	

Section 11.7  Action by
Administrative
Agent...............................................................................

				 42
	

Section 11.8  Resignation or
Removal of Administrative
Agent...................................................... 

				42
	  	 
	

ARTICLE XII       
MISCELLANEOUS............................................................................................ 

				43
	

Section 12.1 
Expenses................................................................................................................ 

				43
	

Section 12.2 
INDEMNIFICATION.......................................................................................... 

				43
	

Section 12.3  Limitation of
Liability.............................................................................................. 

				44
	

Section 12.4  No
Duty................................................................................................................. 

				44
	

Section 12.5  Lenders Not
Fiduciaries......................................................................................... 

				45
	

Section 12.6  Equitable
Relief...................................................................................................... 

				45
	

Section 12.7  No Waiver;
Cumulative
Remedies.......................................................................... 

				45
	

Section 12.8  Successors and
Assigns.......................................................................................... 

				45
	

Section 12.9 
Survival.................................................................................................................. 

				45
	

Section 12.10  ENTIRE
AGREEMENT...................................................................................... 

				45
	

Section 12.11  Amendments,
Etc................................................................................................. 

				46
	

Section 12.12 
Notices................................................................................................................ 

				46
	

Section 12.13  Governing Law;
Venue; Service of
Process........................................................... 

				46
	

Section 12.14 
Counterparts........................................................................................................ 

				47
	

Section 12.15 
Severability..........................................................................................................

				 47
	

Section 12.16 
Headings.............................................................................................................. 

				47
	

Section 12.17 
Conflicts............................................................................................................... 

				47
	

Section 12.18  Assignments and
Participations............................................................................. 

				47
	

Section 12.19 
Invalidity.............................................................................................................. 

				48
	

Section 12.20 
Counterparts........................................................................................................ 

				48

-iii-

 

Table of Contents

 

	

 

			Page
	

Section 12.21 
Construction......................................................................................................... 

			48
	

Section 12.22  Independence of
Covenants..................................................................................

			 49
	

Section 12.23  WAIVER OF JURY
TRIAL................................................................................ 

			49
	

Section 12.24  Additional
Interest
Provision.................................................................................

			 49
	

Section 12.25  Ceiling
Election..................................................................................................... 

			50
	

Section 12.26  USA Patriot Act
Notice,
Etc................................................................................ 

			50
	

Section 12.27  Treatment of
Certain Information;
Confidentiality...................................................

			 51

 

 

 

-iv-

 

 

		 	

INDEX TO EXHIBITS

				 
	 	  	 
	 Exhibit 	 Description
of Exhibit 	 Section
	  	 	 
	A	Borrowing Base Report	1.1
	B	Compliance Certificate	1.1
	C	Revolving Credit Note	1.1 and 2.1
	D	 Term Note	1.1 and 2.1
	E 	Guaranty Agreement 	1.1
	F 	Security Agreement 	1.1
	  	  	 
	 	  	 
	 	INDEX TO SCHEDULES	 
	 	 	 
	

 

				 Description
of Schedules	 Article/Section
	  	 	 
	

 

				 Disclosure Schedule	1.1 and VI

Annex I - List of Commitments

-v-

 

CREDIT AGREEMENT

THIS CREDIT AGREEMENT (the "Agreement"),
dated as of November 1, 2006, is among HOME SOLUTIONS OF AMERICA, INC., a
Delaware corporation (the "Borrower"), each of the lenders
that is from time to time a party hereto (individually, together with its
successors and assigns, a "Lender" and collectively, the
"Lenders"), and TEXAS CAPITAL BANK, NATIONAL ASSOCIATION, a
national banking association, as administrative agent hereunder (in such
capacity, the "Administrative Agent")

RECITALS

The Borrower has requested that the Lenders extend credit
to the Borrower as described in this Agreement.  The Lenders are willing to
make such credit available to the Borrower upon and subject to the provisions,
terms and conditions hereinafter set forth.

NOW THEREFORE, in consideration of the premises and the
mutual covenants herein contained, the parties hereto agree as follows:

ARTICLE
I

DEFINITIONS

Section 1.1             
Definitions.  As used in this Agreement, all exhibits, appendices
and schedules hereto and in any note, certificate, report or other Loan
Documents made or delivered pursuant to this Agreement, the following terms
will have the meanings given such terms in this Section 1 or in the
provision, section or recital referred to below: 

"AC" means Associated Contractors II,
LLC.

"AC Acquisition" means the Borrower's
acquisition of AC for up to $9,000,000 of cash and other consideration as
described in an Agreement and Plan of Merger (as herein so called) dated as of
October 26, 2006, by and among AC, Home Solutions of America, Inc., Home
Solutions Restoration of Louisiana, Inc., Stephen Scott Sewell, William Aaron
Bennett, William E. Edwards, William J. Bennett and BNOB Construction Services,
LLC, delivered to the Administrative Agent and the Lenders prior to the date
hereof.

"Administrative Agent" means the Person
identified as such in the Introductory paragraph hereto, and includes its
successors and assigns.

"Advance" means an advance to the
Borrower pursuant to Article II and any advance made to cover any drawing
under a Letter of Credit.

"Advance Request Form" means a
certificate, in a form approved by the Administrative Agent, properly completed
and signed by the Borrower requesting a Revolving Credit Advance.

"Affiliate" means, as to any Person, any
other Person (a) that directly or indirectly, through one or more
intermediaries, controls or is controlled by, or is under common control with,
such Person; (b) that directly or indirectly beneficially owns or holds
five percent (5%) or more of any class of voting stock of such Person; or (c) five
percent (5%) or more of the voting stock of which is directly or indirectly beneficially
owned or held by such Person.  The term "control" means the
possession, directly or indirectly, of the power to direct or cause direction
of the management and policies of a Person, whether through the ownership of
voting securities, by contract, or otherwise; provided, however, in no event
shall the Administrative Agent or any Lender be deemed an Affiliate of the
Borrower or any of its Subsidiaries or Affiliates.

 

 

CREDIT AGREEMENT - Page 1

 

"Aged Accounts Receivable Reserves"
means any reserve specifically established against Aged Receivables to the
extent deducted in determining Net Income for the period in question.

"Aged Receivables" means the aggregate
face amount of accounts receivable of the Borrower and its Subsidiaries unpaid
180 days or more after invoice date.

"Agreement" has the meaning set forth in
the introductory paragraph hereto, as the same may, from time to time, be
amended, modified, restated, renewed, replaced, extended, waived, supplemented,
or otherwise changed from time to time, and includes all schedules, exhibits
and appendices attached or otherwise identified therewith.

"Assignment Agreement" means an
agreement entered into by a Lender and an Eligible Assignee and accepted by the
Administrative Agent, in substantially the form of Exhibit F or any
other form approved by the Administrative Agent.

"Base Rate" means for any day, a rate of
interest equal to the higher of (i) the Prime Rate for such day or
(ii) the sum of the Federal Funds Rate for such day plus one half of one
percent (1/2 of 1%).

"Borrowing Base" means, at any time
based on the current Borrowing Base Report, an amount equal to the sum of (a) 80%
of the value of Eligible Accounts Receivable plus (b) 50% of the value of
Eligible Poe Receivables, plus (c) the lesser of (i) $5,000,000 and
(ii) 50% of the value of Eligible Inventory.

"Borrowing Base Report" means, as of any
date of preparation, a certificate setting forth the Borrowing Base (in
substantially the form of Exhibit A attached hereto) prepared by
and certified by the chief financial officer of the Borrower.

"Borrower" means the Person identified
as such in the Introductory Paragraph hereto, and its successors and assigns to
the extent permitted by Section 11.8.

"Business Day" means any day except a
Saturday, Sunday or any other day on which commercial banks in Texas are
authorized or required by law to close.

"Capital Expenditure" means any
expenditure by a Person for (a) an asset which will be used in a year or
years subsequent to the year in which the expenditure is made and which asset
is properly classified in relevant financial statements of such Person as
equipment, real property, a fixed asset or a similar type of capitalized asset
in accordance with GAAP or (b) an asset relating to or acquired in
connection with an acquired business, and any and all acquisition costs related
to (a) or (b) above.

"Capitalized Lease Obligation" means the
amount of Debt under a lease of Property by a Person that would be shown as a
liability on a balance sheet of such Person prepared for financial reporting
purposes in accordance with GAAP.

 

CREDIT AGREEMENT - Page 2

 

"Change of Control"
means the occurrence of either of the following events:

(a)        Any Person or "group" (as such term is
used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934)
is or becomes the "beneficial owner" (as defined in Rules 13d‐3
and 13d‐5 under the Securities Exchange Act of 1934, except that a Person
will be deemed to have "beneficial ownership" of all securities that
such Person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of more
than 33‐1/3% of the voting power of all classes of stock of the Borrower;
or

(b)        During
any consecutive two-year period, individuals who at the beginning of such
period constituted the board of directors of the Borrower (together with any
new directors whose election to such board of directors, or whose nomination
for election by stockholders of the Borrower, was approved by a vote of two
thirds of the directors then still in office who were either directors at the
beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
board of directors of the Borrower then in office.

"Code" means the Internal Revenue Code
of 1986, as amended, and the regulations promulgated and rulings issued
thereunder.

"Collateral" has the meaning for such
term set forth in Section 4.1.

"Commitment" means the Revolving Credit
Commitment and the Term Loan Commitment.

"Compliance Certificate" means a
certificate, substantially in the form of Exhibit B attached
hereto, prepared by and executed by the chief financial officer (or other
officer acceptable to the Administrative Agent) of the Borrower.

"Constituent Documents" means
(a) in the case of a corporation, its articles or certificate of
incorporation and bylaws; (b) in the case of a general partnership, its
partnership agreement; (c) in the case of a limited partnership, its
certificate of limited partnership and partnership agreement; (d) in the
case of a trust, its trust agreement; (e) in the case of a joint venture,
its joint venture agreement; (f) in the case of a limited liability
company, its articles of organization and operating agreement or regulations
and/or other organizational and governance documents and agreements; and
(g) in the case of any other entity, its organizational and governance
documents and agreements.

"Current Maturities of Long-Term Indebtedness"
means, in respect of a Person and as of any applicable date of determination
thereof, that portion of Long-Term Indebtedness that should be classified as
current in accordance with GAAP.

"Current Ratio" means the ratio of
current assets to current liabilities.  The classification of current assets
and current liabilities will be in accordance with GAAP at all times and any
outstandings under the Revolving Credit Commitment will be classified as
current liabilities, and current assets will be reduced by Aged Receivables,
adjusted for any Aged Accounts Receivable Reserves.

 

CREDIT AGREEMENT - Page 3

 

"Debt" means in respect of a Person at
any time (without duplication):  (a) all obligations of such Person for
borrowed money, (b) all obligations of such Person evidenced by bonds,
notes, debentures, or other similar instruments, (c) all obligations of
such Person to pay the deferred purchase price of Property or services, except
trade accounts payable of such Person arising in the ordinary course of
business that are not past due by more than 90 days or are not otherwise being
contested in good faith and for which appropriate reserves under GAAP are being
maintained, (d) all Capital Lease Obligations of such Person, (e) all
Debt or other obligations of others Guaranteed by such Person, (f) all
obligations secured by a Lien existing on Property owned by such Person,
whether or not the obligations secured thereby have been assumed by such Person
or are non-recourse to the credit of such Person, (g) any other obligation
for borrowed money or other financial accommodations which in accordance with
GAAP would be shown as a liability on the balance sheet of such Person,
(h) any repurchase obligation or liability of a Person with respect to
accounts, chattel paper or notes receivable sold by such Person, (i) any
liability under a sale and leaseback transaction that is not a Capital Lease
Obligation, (j) any obligation under any so‐called "synthetic
leases", (k) any obligation arising with respect to any other
transaction that is the functional equivalent of borrowing but which does not
constitute a liability on the balance sheet of a Person, (l) all Letter of
Credit Liabilities and other reimbursement obligations of such Person (whether
contingent or otherwise) in respect of letters of credit, bankers' acceptances,
surety or other bonds and similar instruments, and (m) all liabilities of
such Person in respect of unfunded vested benefits under any Plan.  For
purposes of calculating the financial covenants set forth in this Article IX
only, Subordinated Debt shall be excluded.

"Debt Service Coverage Ratio" means, in
respect of a Person and for any period of determination, the ratio, computed on
a rolling four quarter basis, of (a) Net Income plus interest expense to
(b) Current Maturities of Long-Term Indebtedness plus interest
expense.

"Default" means an Event of Default or
the occurrence of an event or condition which with notice or lapse of time or
both would become an Event of Default.

"Default Interest Rate" has the meaning
assigned to it in the Notes.

"Disclosure Schedule" means the
schedule of the same name attached hereto.  Unless otherwise expressly stated
in this Agreement, any reference in any Section of this Agreement to the
Disclosure Schedule shall mean only reference to the particular part of the
Disclosure Schedule that refers to such Section.

"Dollars" and "$" mean
lawful money of the United States of America.

"Eligible Assignee" means (a) a
Lender, (b) an Affiliate of a Lender and (c) any other Person (other
than a natural person) approved by (i) the Administrative Agent, (ii) in
the case of any assignment of a Revolving Credit Commitment, the Issuing Bank,
and (iii) unless an Event of Default has occurred and is continuing, the
Borrower (each such approval not to be unreasonably withheld, conditioned or
delayed); provided that notwithstanding the foregoing, "Eligible
Assignee" shall not include the Borrower or any of the Borrower's
Affiliates or Subsidiaries.

 

CREDIT AGREEMENT - Page 4

 

"Eligible Accounts Receivable" means, as
of any applicable period of determination thereof, all accounts receivable (net
of service charges, interest and finance fees) of the Borrower that are created
in the ordinary course of business in which the Administrative Agent has a
perfected first priority security interest, that are acceptable to the
Administrative Agent in its reasonable discretion and that satisfy the
following conditions:

(a)               
The account complies with all applicable laws, rules, and regulations,
including, without limitation, usury laws, the Federal Truth in Lending Act,
and Regulation Z of the Board of Governors of the Federal Reserve System;

(b)              
The account has not been outstanding for more than 180 days past the
original date of invoice;

(c)               
The account is owed by an account debtor where no more than 50% of the
total accounts of such account debtor are past due for more than 180 days past
the original date of invoice;

(d)              
Accounts that are either progress billings or arise in connection with
bonded contracts, or a combination thereof (provided, however, that if such
aggregate exceeds $15,000,000 only the excess over $15,000,000 shall be
ineligible);

(e)               
The account does not represent a commission and the account was created
in connection with (i) the sale of goods by the Borrower in the ordinary
course of business and such sale has been consummated and such goods have been
shipped and delivered and received by the account debtor, or (ii) the
performance of services by the Borrower in the ordinary course of business and
such services have been completed and accepted by the account debtor;

(f)                
The account arises from an enforceable contract, the performance of
which has been completed by the Borrower;

(g)               
The account does not arise from the sale of any good that is on a
bill-and-hold, bartered, advance, pre-bill, guaranteed sale, sale-or-return,
sale on approval, consignment, or any other repurchase or return basis;

(h)               
The Borrower has good and indefeasible title to the account and the
account is not subject to any Lien except Liens in favor of the Lender;

(i)                 
The account does not arise out of a contract with or order from, an
account debtor that, by its terms, prohibits or makes void or unenforceable the
grant of a security interest by the Borrower to the Lender in and to such
account;

(j)                
The account is not subject to any retainage, setoff, counterclaim,
defense, dispute, recoupment, or adjustment other than normal discounts for
prompt payment;

(k)              
The account debtor is not insolvent or the subject of any bankruptcy or
insolvency proceeding and has not made an assignment for the benefit of
creditors, suspended normal business operations, dissolved, liquidated, terminated
its existence, ceased to pay its debts as they become due, or suffered a
receiver or trustee to be appointed for any of its assets or affairs;

(l)                 
The account is not evidenced by chattel paper or an instrument;

(m)             
No default exists under the account by any party thereto;

 

CREDIT AGREEMENT - Page 5

 

(n)               
The account debtor has not returned or refused to retain, or otherwise
notified the Borrower of any dispute concerning, or claimed nonconformity of,
any of the goods from the sale of which the account arose;

(o)              
The account is not owed by an Affiliate, employee, officer, director or
member of the Borrower;

(p)              
The account is payable in Dollars by the account debtor;

(q)              
The account debtor is domiciled in the United States of America;

(r)                
The account debtor is not the United States of America or any department,
agency, instrumentality thereof except to the extent it is in compliance with
the Assignment of Claims Act;

(s)               
The account is not subject to specific assignment restrictions;

(t)                
The aggregate of all accounts owed by the account debtor and its
Affiliates to which the account relates does not exceed 30% of all accounts
owed by all of the Borrower's account debtors (provided, however, that if such
aggregate exceeds such percentage of all Accounts, only such excess shall be
ineligible); and

(u)               
The Account is otherwise acceptable in the sole discretion of the
Administrative Agent; 

provided that the Administrative Agent shall have the
right, with the consent of the Majority Lenders, to create and adjust
eligibility standards and related reserves from time to time in its good faith
credit judgment.

The amount of the Eligible Accounts owed by an account
debtor to the Borrower shall be reduced by the amount of all "contra
accounts" and other obligations owed by the Borrower to such account
debtor.

"Eligible Inventory" means, as of any
applicable date of determination, inventory of raw granite materials then owned
by (and in the possession or under the control of) the Borrower, in each case
held for sale or disposition in the ordinary course of the Borrower's business
and in which the Administrative Agent has a perfected, first priority security
interest, valued at the lower of actual cost or fair market value (net of
reserves against inventory, including for obsolescence and in respect of
damaged goods).  Eligible Inventory shall not include (a) inventory that
has been shipped or delivered to a customer on consignment, a sale-or-return
basis, or on the basis of any similar understanding, (b) inventory with
respect to which a claim exists disputing the Borrower's title to or right to
possession of such inventory, (c) inventory that has been cut to size, is
not in good condition or does not comply with any applicable law, rule, or
regulation or any standard imposed by any Governmental Authority with respect
to its manufacture, use, or sale, (d) trade show inventory, pre-purchased
software, valuation and testing units and inventory located in any country
other than the United States of America, (e) inventory that the Administrative
Agent, in its reasonable discretion, has determined to be unmarketable, obsolete
or not readily saleable, granite raw materials other than (i) work-in-process
inventory, and (ii) finished goods.

 

CREDIT AGREEMENT - Page 6

 

"Eligible Poe Receivables" means
accounts that, except for the requirements of clauses (c) and (k)
of the definition of "Eligible Accounts Receivable", are Eligible
Accounts Receivable from an account debtor whose property was insured by Poe
Insurance Company.  The exception for clause (c) will only be in effect from
closing through and including June 30, 2007 and the Borrowing Base amount
attributable thereto shall not exceed the lesser of (a) $10,000,000 and (b) 50%
of the value of the Eligible Poe Receivables.

"Eligible Swap Counterparty" means, in
respect of a Swap Contract, (i) the Administrative Agent, (ii) any
Lender while such Person is a Lender hereunder and (iii) any Affiliate of
a Lender.

"Environmental Laws" means any and all
federal, state, and local laws, regulations, judicial decisions, orders,
decrees, plans, rules, permits, licenses, and other governmental restrictions
and requirements pertaining to health, safety, or the environment, including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. § 9601 et seq., the Resource
Conservation and Recovery Act of 1976, 42 U.S.C. § 6901 et seq., the
Occupational Safety and Health Act, 29 U.S.C. § 651 et seq., the
Clean Air Act, 42 U.S.C. § 7401 et seq., the Clean Water Act, 33
U.S.C. § 1251 et seq., and the Toxic Substances Control Act, 15
U.S.C. § 2601 et seq., as the same may be amended or supplemented
from time to time.

"Environmental Liabilities" means, as to
any Person, all liabilities, obligations, responsibilities, Remedial Actions,
losses, damages, punitive damages, consequential damages, treble damages,
costs, and expenses, (including, without limitation, all reasonable fees,
disbursements and expenses of counsel, expert and consulting fees and costs of
investigation and feasibility studies), fines, penalties, sanctions, and
interest incurred as a result of any claim or demand, by any Person, whether
based in contract, tort, implied or express warranty, strict liability,
criminal or civil statute, including any Environmental Law, permit, order or
agreement with any Governmental Authority or other Person, arising from
environmental, health or safety conditions or the Release or threatened Release
of a Hazardous Material into the environment, resulting from the past, present,
or future operations of such Person or its Affiliates.

"ERISA" means the Employee Retirement
Income Security Act of 1974, as amended from time to time, and the regulations
and published interpretations thereunder.

"ERISA Affiliate" means any corporation
or trade or business which is a member of the same controlled group of
corporations (within the meaning of Section 414(b) of the Code) as the
Borrower or is under common control (within the meaning of Section 414(c)
of the Code) with the Borrower.

"Event of Default" has the meaning
specified in Section 10.1.

"Federal Funds Rate" means for any day
an interest rate per annum 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 for such day (or if
such day is not a Business Day, for the immediately preceding Business Day) by
the Federal Reserve Bank of New York, or if such rate is not so published for
any day that is a Business Day, the average of the quotations at approximately
10:00 a.m. (Dallas, Texas time) on such day on such transactions received by
Lender from three Federal funds brokers of recognized standing selected by
Lender in its sole discretion.

 

CREDIT AGREEMENT - Page 7

 

 

"Fireline" means Fireline Restoration,
Inc., a Florida corporation.

"Free Cash Flow" means, for any period
of determination, (a) Net Income, plus (b) the sum of interest
expense, depreciation and amortization, in each case for the applicable period.

"GAAP" means generally accepted
accounting principles, applied on a consistent basis, as set forth in Opinions
of the Accounting Principles Board of the American Institute of Certified
Public Accountants and/or in statements of the Financial Accounting Standards
Board and/or their respective successors and which are applicable in the
circumstances as of the date in question.  Accounting principles are applied on
a "consistent basis" when the accounting principles applied in a
current period are comparable in all material respects to those accounting
principles applied in a preceding period.

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

"Guarantee" by any Person means any obligation
or liability, contingent or otherwise, of such Person directly or indirectly
guaranteeing any Debt or other obligation of any other Person as well as any
obligation or liability, direct or indirect, contingent or otherwise, of such
Person (a) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Debt or other obligation or liability (whether arising by
virtue of partnership arrangements, by agreement to keep-well, to purchase
assets, goods, securities or services, to operate Property, to take-or-pay, or
to maintain net worth or working capital or other financial statement
conditions or otherwise) or (b) entered into for the purpose of
indemnifying or assuring in any other manner the obligee of such Debt or other
obligation or liability of the payment thereof or to protect the obligee
against loss in respect thereof (in whole or in part), provided that the term
Guarantee shall not include endorsements for collection or deposit in the
ordinary course of business.  The term "Guarantee" used as a verb has
a corresponding meaning.

"Guarantor" means any Person who from
time to time guarantees all or any part of the Obligations.  The term Guarantor
includes each Subsidiary.  The initial Guarantors are Cornerstone
Marble & Granite, Inc., Fiber-Seal Systems, L.P., Home Solutions
Restoration of Louisiana, Inc., P.W. Stephens, Inc., Southern Exposure
Unlimited of Florida, Inc., S.E. Tops of Florida, Inc., FSS Holding Corp.,
Southern Exposure Holdings, Inc. and Fireline.

"Guaranty"
means a written guaranty of each Guarantor in favor of the Administrative Agent
for the benefit of the Secured Parties, in substantially the form of Exhibit D
hereto, as the same may be amended, modified, restated, renewed, replaced,
extended, waived, supplemented or otherwise changed from time to time in
accordance with its terms.

"Hazardous Material" means any
substance, product, waste, pollutant, material, chemical, contaminant,
constituent, or other material which is or becomes listed, regulated, or addressed
under any  Environmental Law, including, without limitation, asbestos,
petroleum, and polychlorinated biphenyls.

 

CREDIT AGREEMENT - Page 8

 

"Intellectual Property means all copyrights,
copyright licenses, patents, patent licenses, trademarks, trademark licenses
and other types of intellectual property, in whatever form, now owned or
hereafter acquired.

"Issuing Bank" means TCB.

"Lender" and "Lenders"
means the Person or Persons identified as such in the introductory paragraph
hereto, and includes successors and assigns.

"Letter of Credit" means any letter of
credit issued by the Issuing Bank for the account of or at the direction of the
Borrower pursuant to Article II of this Agreement.

"Letter of Credit Liabilities" means, at
any time, the sum of (a) the aggregate face amount of all outstanding
Letters of Credit, plus (b) any amounts drawn under any Letters of Credit
for which the Issuing Bank has not been fully reimbursed by the Borrower
(unless the Issuing Bank, in its sole discretion, has cleared the drawn amount
by means of an Advance under the Revolving Credit Note, in which case the drawn
amount would not constitute a Letter of Credit Liability).

"Liabilities" means, in respect of a
Person and as of any applicable date of determination thereof, at any
particular time, all amounts which, in conformity with GAAP, would be included
as liabilities on a balance sheet of such Person.

"Lien" means any lien, mortgage,
security interest, tax lien, pledge, charge, hypothecation, assignment,
preference, priority, or other encumbrance of any kind or nature whatsoever
(including, without limitation, any conditional sale or title retention
agreement), whether arising by contract, operation of law, or otherwise.

"Loan" means any Revolving Credit
Advance or Term Loan Advance made in accordance with this Agreement.

"Loan Documents" means this Agreement,
the Security Documents, each Guaranty, the Notes and all other promissory
notes, security agreements, deeds of trust, assignments, letters of credit,
guaranties, subordination agreements, and other instruments, documents, or
agreements executed and delivered pursuant to or in connection with this
Agreement, as such instruments, documents, and agreements may be amended,
modified, restated, renewed, replaced, extended, waived, supplemented, replaced,
consolidated, substituted, or otherwise changed from time to time in accordance
with their respective terms.

"Long-Term Indebtedness" means, in
respect of a Person and as of any applicable date of determination thereof, all
Debt (other than the aggregate outstanding principal balance of the Revolving
Credit Note) which should be classified as "funded indebtedness" or
"long‐term indebtedness" on a balance sheet of such Person as
of such date in accordance with GAAP and includes, without limitation Capital
Lease Obligations which should be so classified. 

"Majority Lenders" means at any time
while Loans are outstanding, the Lenders holding more than 50% of the aggregate
Commitments or, if the commitment of each Lender to make Loans and the
obligations of the Issuing Bank to issue Letters of Credit have terminated, the
Lenders holding in the aggregate more than 50% of the total outstanding
principal amount of the Loans; provided that that commitment of, and the
portion of the total outstandings held by any defaulting Lender shall be
excluded for the purposes of making a determination of the Majority Lenders.

 

CREDIT AGREEMENT - Page 9

 

"Marshall Debt" means the Debt owed by
the Borrower to Brian Marshall pursuant to the acquisition transaction related
to Fireline.

"Maximum Lawful Rate" means, at all
times, the maximum rate of interest which may be charged, contracted for,
taken, received or reserved by a Lender in accordance with applicable Texas law
(or applicable United States federal law to the extent that such law permits a
Lender to charge, contract for, receive or reserve a greater amount of interest
than under Texas law).  The Maximum Lawful Rate shall be calculated in a manner
that takes into account any and all fees, payments, and other charges in
respect of the Loan Documents that constitute interest under applicable law. 
Each change in any interest rate provided for herein based upon the Maximum
Lawful Rate resulting from a change in the Maximum Lawful Rate shall take
effect without notice to the Borrower at the time of such change in the Maximum
Lawful Rate.

"Multiemployer Plan" means a
multiemployer plan defined as such in Section 3(37) of ERISA to which
contributions have been made by the Borrower or any ERISA Affiliate and which
is covered by Title IV of ERISA.

"Net Free Cash Flow" means the Free Cash
Flow of the Borrower and Subsidiaries for the preceding two calendar quarters,
minus (a) Aged Receivables, plus (b) Aged Accounts Receivable
Reserves.

"Net Income" means, for any period and
any entity, (without duplication) such entity's consolidated net income (or
loss), plus (a) income tax expense, minus (b) the sum of
(i) cash taxes actually paid, determined in accordance with GAAP net of
extraordinary transactions, and (ii) dividends and distributions.

"Notes" means, collectively, all
promissory notes (and "Note" means any of such Notes) executed
at any time by the Borrower and payable to the order of a Lender, as the same
may be amended, modified, restated, renewed, replaced, extended, supplemented,
consolidated or otherwise changed and/or increased from time to time in
accordance with their respective terms.

"Obligated Party" means the Guarantors
or any other Person who is or becomes party to any agreement that guarantees or
secures payment and performance of the Obligations or any part thereof.

"Obligations"
means all obligations, indebtedness, and liabilities of the Borrower, each
Guarantor and any other Obligated Party to the Administrative Agent, any
Lender, or any Eligible Swap Counterparty, now existing or hereafter arising,
whether direct, indirect, related, unrelated, fixed, contingent, liquidated,
unliquidated, joint, several, or joint and several, including, without
limitation, the obligations, indebtedness, and liabilities under this
Agreement, any Swap Contract, the other Loan Documents (including, without
limitation, all Letter of Credit Liabilities), any cash management or treasury
services agreements and all interest accruing thereon (whether a claim for
post-filing or post-petition interest is allowed in any bankruptcy, insolvency,
reorganization or similar proceeding) and all reasonable attorneys' fees and
other expenses incurred in the enforcement or collection thereof.

 

CREDIT AGREEMENT - Page 10

 

"OFAC" means the Office of Foreign
Assets Control.

"Operating Lease" means any lease (other
than a lease constituting a Capital Lease Obligation) of real or personal
Property.

"Origination Fee" means $125,000.

"Patriot Act" means the Uniting and
Strengthening America By Providing Appropriate Tools to Intercept and Obstruct
Terrorism Act of 2001 (Title III of Pub. L. 107‐56, signed into law
October 26, 2001).

"PBGC" means the Pension Benefit
Guaranty Corporation or any entity succeeding to all or any of its functions
under ERISA.

"Percentage Share" means the percentage
of the Commitments to be provided by a Lender under this Agreement as indicated
on Annex I hereto, as modified from time to time to reflect any
assignments permitted by this Agreement.

"Person" means any individual,
corporation, limited liability company, business trust, association, company,
partnership, joint venture, Governmental Authority, or other entity, and shall
include such Person's heirs, administrators, personal representatives,
executors, successors and assigns.

"Plan" means any employee benefit or
other plan established or maintained by the Borrower or any ERISA Affiliate and
which is covered by Title IV of ERISA.

"Prime Rate" means the rate of interest
per annum quoted in the "Money Rates" section of The Wall Street
Journal from time to time and designated as the "Prime Rate".  If
such prime rate, as so quoted, is split between two or more different interest
rates, then the Prime Rate shall be the highest of such interest rates.  If
such prime rate shall cease to be published or is published infrequently or
sporadically, then the Prime Rate shall be (i) the rate of interest per
annum established from time to time by the Administrative Agent and designated
as its base or prime rate, which may not necessarily be the lowest interest
rate charged by the Administrative Agent and is set by the Administrative Agent
in its sole discretion, or (ii) if the Administrative Agent does not
publish or announce a base or prime rate, or does so infrequently or
sporadically, then the Prime Rate shall be determined by reference to another
base rate, prime rate or similar lending rate index, generally accepted on a
national basis, as selected by the Administrative Agent in its sole and
absolute discretion.

"Principal Office" means the principal
office of the Administrative Agent, presently located at 2100 McKinney Avenue,
Suite 900, Dallas, Texas 75201.

"Prohibited Transaction" means any
transaction set forth in Section 406 of ERISA or Section 4975 of the
Code.

"Property" of a Person means any and all
property, whether real, personal, tangible, intangible or mixed, of such
Person, or any other assets owned, operated or leased by such Person.

"Related Indebtedness" has the meaning
set forth in Section 12.24 of this Agreement.

 

CREDIT AGREEMENT - Page 11

 

"Release" means, as to any Person, any
release, spill, emission, leaking, pumping, injection, deposit, disposal,
disbursement, leaching, or migration of Hazardous Materials into the indoor or
outdoor environment or into or out of property owned by such Person, including,
without limitation, the movement of Hazardous Materials through or in the air,
soil, surface water, ground water, or property.

"Remedial Action" means all actions
required to (a) clean up, remove, treat, or otherwise address Hazardous
Materials in the indoor or outdoor environment, (b) prevent the Release or
threat of Release or minimize the further Release of Hazardous Materials so
that they do not migrate or endanger or threaten to endanger public health or
welfare or the indoor or outdoor environment, or (c) perform pre-remedial
studies and investigations and post-remedial monitoring and care.

"Reportable Event" means any of the
events set forth in Section 4043 of ERISA.

"Revolving Credit Advance" means any
Advance made by a Lender pursuant to Section 2.1(a) of this
Agreement.

"Revolving Credit Commitment" means the
obligation of the Lenders to make Revolving Credit Advances pursuant to Section 2.1
in an aggregate principal amount at any time outstanding up to but not
exceeding $45,000,000, subject, however, to termination pursuant to Section 10.2.

"Revolving Credit Note" means a
promissory note of the Borrower payable to the order of a Lender, in
substantially the form of Exhibit C hereto, as the same may be
amended, modified, restated, renewed, replaced, extended, supplemented,
consolidated, or otherwise changed and/or increased from time to time.

"Revolving Credit Termination Date"
means 11:00 a.m., Dallas, Texas time on November 1, 2009, or such
earlier date on which the Revolving Credit Commitment terminates as provided in
this Agreement.

"Secured Parties" means the
Administrative Agent, the Lenders and the Eligible Swap Counterparties.

"Security Agreement" means the Security
Agreement of the Borrower and each of its Subsidiaries in favor of the Administrative
Agent, for the benefit of the Secured Parties, in substantially the form of Exhibit E
hereto, as the same may be amended, modified, restated, renewed, replaced,
extended, waived, supplemented, or otherwise changed from time to time in
accordance with its terms.

"Security Documents" means each and
every Security Agreement, Guaranty, pledge, mortgage, deed of trust or other
collateral security agreement required by or delivered to the Administrative
Agent for the benefit of the Secured Parties from time to time to secure the
Obligations or any portion thereof.

"Subordinated Debt" means any Debt of
the Borrower (other than the Obligations) that has been subordinated to the
Obligations by written agreement, in form and content reasonably satisfactory
to the Administrative Agent and a Super Majority of Lenders, and which has been
approved in writing by a Super Majority of Lenders as constituting
"Subordinated Debt" for purposes of this Agreement.

 

CREDIT AGREEMENT - Page 12

 

"Subordinated Lenders" means the holders
of Subordinated Debt.

"Subsidiary" means (a) any
corporation of which at least a majority of the outstanding shares of stock
having by the terms thereof ordinary voting power to elect a majority of the
board of directors of such corporation (irrespective of whether or not at the
time stock of any other class or classes of such corporation shall have or
might have voting power by reason of the happening of any contingency) is at
the time directly or indirectly owned or controlled by the Borrower or one or
more of the Subsidiaries or by the Borrower and one or more of the Subsidiaries;
and (b) any other entity (i) of which at least a majority of the
ownership, equity or voting interest is at the time directly or indirectly
owned or controlled by one or more of the Borrower and the Subsidiaries and
(ii) which is treated as a subsidiary in accordance with GAAP.

"Super Majority" means at any time while
Loans are outstanding, the Lenders holding 75% or more of the aggregate
Commitments or, if the commitment of each Lender to make Loans and the
obligations of the Issuing Bank to issue Letters of Credit have terminated, the
Lenders holding in the aggregate more than 75% of the total outstanding
principal amount of the Loans; provided that that commitment of, and the
portion of the total outstandings held by any defaulting Lender shall be excluded
for the purpose of making a determination of the Super Majority of Lenders.

"Swap Contract" means any agreement
(including related confirmations and schedules) between the Borrower and an
Eligible Swap Counterparty now existing or hereafter entered into which is, or
relates to, a rate swap, basis swap, forward rate transaction, cap transaction,
floor transaction, collar transaction or any other similar transactions
(including any option with respect to any of these transactions) or any
combination thereof.

"TCB" means Texas Capital Bank, National
Association.

"Term Loan Advance" means the Advance
made by the Administrative Agent to the Borrower pursuant to Section 2.1(c)
of this Agreement in accordance with its terms.

"Term Loan Commitment" means the obligation
of the Lenders to make Term Loan Advances pursuant to Section 2.1(c)
in an aggregate principal amount up to but not exceeding $15,000,000, subject,
however, to termination pursuant to Section 10.2.

"Term Loan Termination Date" means 11:00
a.m., Dallas, Texas time on November 1, 2009, or such earlier date on which the
Term Loan Commitment terminates as provided in this Agreement.

"Term Note" means a promissory note of
the Borrower payable to the order of a Lender, in substantially the form of Exhibit D
attached hereto, as the same may be amended, restated, modified, renewed,
extended, waived, supplemented, or otherwise changed and/or increased, from
time to time.

 

CREDIT AGREEMENT - Page 13

 

"UCC" means the Chapters 1 through
11 of the Texas Business and Commerce Code, as amended from time to time.

"Unused Fee" has the meaning specified
in Section 2.3.

Section 1.2             
Accounting Matters.  Any accounting term used in this Agreement
or any other Loan Document shall have, unless otherwise specifically provided
therein, the meaning customarily given such term in accordance with GAAP, and
all financial computations thereunder shall be computed, unless otherwise
specifically provided therein, in accordance with GAAP consistently applied;
provided, however, that all financial covenants and calculations in the Loan
Documents shall be made in accordance with GAAP as in effect on the date of
this Agreement unless the Borrower and the Administrative Agent shall otherwise
specifically agree in writing.  That certain items or computations are
explicitly modified by the phrase "in accordance with GAAP" shall in
no way be construed to limit the foregoing.

Section 1.3             
Other Definitional Provisions.  All definitions contained in this
Agreement are equally applicable to the singular and plural forms of the terms
defined.  The words "hereof", "herein", and
"hereunder" and words of similar import referring to this Agreement
refer to this Agreement as a whole and not to any particular provision of this
Agreement.  Unless otherwise specified, all Article and Section references
pertain to this Agreement.  Terms used herein that are defined in the UCC,
unless otherwise defined herein, shall have the meanings specified in the UCC.

ARTICLE
II

ADVANCES AND LETTERS OF CREDIT

Section
2.1             
Advances.

(a)               
Limitations on Advances.  The sum of (i) the aggregate
amount of all outstanding Revolving Credit Advances, plus (ii) the
aggregate amount of all outstanding Term Loan Advances, plus (iii) all
Letter of Credit Liabilities shall not exceed the Borrowing Base at any time.

(b)              
Revolving Credit Advances.  Subject to the terms and conditions
of this Agreement, each Lender severally, and not jointly, agrees to make one
or more Revolving Credit Advances to the Borrower from time to time from the
date hereof to and including the Termination Date in an aggregate principal
amount at any time outstanding up to but not exceeding the amount of its
Percentage Share of the Revolving Credit Commitment, provided that the
aggregate amount of all Revolving Credit Advances at any time outstanding shall
not exceed the lesser of (i) the amount of the Revolving Credit Commitment
or (ii) the sum of the Borrowing Base minus outstanding Term Loan Advances
minus all Letter of Credit Liabilities.  Subject to the foregoing limitations,
and the other terms and provisions of this Agreement, the Borrower may borrow,
repay, and reborrow under the Revolving Credit Commitment.

(i)                 
The Revolving Credit Notes.  The obligation of the Borrower to
repay the Revolving Credit Advances and interest thereon shall be evidenced by a
Revolving Credit Note executed by the Borrower, payable to the order of a
Lender, in the principal amount of such Lender's Percentage Share of the Revolving
Credit Commitment.

 

CREDIT AGREEMENT - Page 14

 

(ii)               
Repayment of Revolving Credit Advances.  The Borrower shall repay
the unpaid principal amount of all Advances on the Revolving Credit Termination
Date, unless sooner due by reason of acceleration as provided in this
Agreement.

(iii)              
Interest.  The unpaid principal amount of the Revolving Credit
Advances shall, subject to the following sentence, bear interest (A) for
the period beginning with the first Advance through June 30, 2007, at the Base
Rate minus 0.25 percentage points and (B) at all times thereafter, at the
Base Rate minus 0.50 percentage points.  If at any time the rate of interest
specified in the Revolving Credit Notes would exceed the Maximum Lawful Rate
but for the provisions thereof limiting interest to the Maximum Lawful Rate,
then any subsequent reduction shall not reduce the rate of interest on the
Revolving Credit Advances below the Maximum Lawful Rate until the aggregate
amount of interest accrued on the Revolving Credit Advances equals the
aggregate amount of interest which would have accrued on the Revolving Credit
Advances if the interest rate had not been limited by the Maximum Lawful Rate. 
Accrued and unpaid interest on the Revolving Credit Advances shall be payable on
the first day of each and every calendar quarter, as provided in the Revolving
Credit Notes, and on the Revolving Credit Termination Date. 

(iv)             
Revolving Credit Termination Date.  On the date of this Agreement,
the Revolving Credit Termination Date is November 1, 2009.

(v)               
Borrowing Procedure.  The Borrower shall give the Administrative
Agent notice of each Revolving Credit Advance by means of an Advance Request
Form containing the information required therein and delivered (by hand or by
mechanically confirmed facsimile) to the Administrative Agent no later than
1:00 p.m. (Texas time) on the day on which the Revolving Credit Advance is
desired to be funded.  Revolving Credit Advances shall be in a minimum amount
of $1,000,000.  The Administrative Agent at its option may accept telephonic
requests for such Advances, provided that such acceptance shall not constitute
a waiver of the Administrative Agent 's right to require delivery of an Advance
Request Form in connection with subsequent Revolving Credit Advances.  The
Administrative Agent shall promptly notify the Lenders of each such request.  Any
telephonic request for a Revolving Credit Advance by the Borrower shall be
promptly confirmed by submission of a properly completed Advance Request Form
to the Administrative Agent, but failure to deliver an Advance Request Form
shall not be a defense to payment of the Advance.  The Administrative Agent
shall have no liability to the Borrower for any loss or damage suffered by the
Borrower as a result of the Administrative Agent's honoring of any requests,
execution of any instructions, authorizations or agreements or reliance on any
reports communicated to it telephonically, by facsimile or electronically and
purporting to have been sent to the Administrative Agent by the Borrower and
the Administrative Agent shall have no duty to verify the origin of any such
communication or the identity or authority of the Person sending it.  Subject
to the terms and conditions of this Agreement, each Revolving Credit Advance
shall be made available to the Borrower by depositing the same, in immediately
available funds, in an account of the Borrower designated by the Borrower
maintained with the Administrative Agent at the Principal Office.

 

CREDIT AGREEMENT - Page 15

 

(c)               
Term Loan.  Subject to the terms and conditions of this
Agreement, each Lender severally, and not jointly, agrees to make, on or about
the date of this Agreement a single Term Loan Advance to the Borrower equal to
its Percentage Share of the Term Loan Commitment.

(i)            The Term Notes.  The obligation of the Borrower to repay the Term
Loan and interest thereon shall be evidenced by a Term Note executed by the
Borrower, payable to the order of such Lender, in the principal amount of such
Lender's Percentage Share of the Term Loan Commitment.

(ii)           Repayment of Principal and Interest.  Subject to prior
acceleration or any prepayment obligation as provided in this Agreement, the
unpaid principal balance of the Term Notes shall be repaid as follows:

(A)  Commencing
on January 1, 2007, and on the first day of each and every calendar
quarter thereafter, principal payments of $1,250,000 shall be paid by the
Borrower to the Administrative Agent for the account of each Lender.

(B)   The
Borrower will make a final payment of the remaining principal balance under the
Term Loan Note to the Administrative Agent, for the account of each Lender, on
the Term Loan Termination Date.

(iii)          Interest.  The unpaid principal amount of the Term Loan shall,
subject to the following sentence, bear interest (A) for the period
beginning with the first Advance through June 30, 2007, at the Base Rate minus
0.25 percentage points and (B) at all times thereafter, at the Base Rate
minus 0.50 percentage points.  If at any time the rate of interest specified in
the Term Notes shall exceed the Maximum Lawful Rate but for the provisions
thereof limiting interest to the Maximum Lawful Rate, then any subsequent
reduction shall not reduce the rate of interest on the Term Loan Advances below
the Maximum Lawful Rate until the aggregate amount of interest accrued on the
Term Loan Advances equals the aggregate amount of interest which would have
accrued on the Term Loan Advances if the interest rate had not been limited by
the Maximum Lawful Rate.  Accrued and unpaid interest on the Term Loan Advances
shall be payable on the first day of each and every calendar quarter, as
provided in the Term Notes, and on the Term Loan Termination Date. 

CREDIT AGREEMENT - Page 16

 

(iv)             
Term Loan Termination Date.  On the date of this Agreement, the
Term Loan Termination Date is November 1, 2009.

Section
2.2             
General Provisions Regarding Interest; Etc. 

(a)               
Default Interest Rate.  Any outstanding principal of any Advance
and (to the fullest extent permitted by law) any other amount payable by the
Borrower under this Agreement or any other Loan Document that is not paid in
full when due, whether at stated maturity, by acceleration, or otherwise, and
after taking into account any grace periods, shall bear interest at the Default
Interest Rate for the period from and including the due date thereof to but
excluding the date the same is paid in full.  Additionally, upon the occurrence
of an Event of Default (and from the date of such occurrence) and during the
continuance, all outstanding and unpaid principal amounts of all of the
Obligations shall, to the extent permitted by law, bear interest at the Default
Interest Rate unless and until such time as the Administrative Agent, with the
consent of the Majority Lenders, shall waive such Event of Default or otherwise
waive in writing the application of the Default Interest Rate to such Event of
Default situation.  Interest payable at the Default Interest Rate shall be
payable from time to time on demand.

(b)              
Computation of Interest.  Interest on the Advances and all other
amounts payable by the Borrower hereunder shall be computed on the basis of a
year of 360 days and the actual number of days elapsed (including the first day
but excluding the last day) unless such calculation would result in a usurious
rate, in which case interest shall be calculated on the basis of a year of 365
or 366 days, as the case may be.

Section 2.3             
Unused Fee.  The Borrower agrees to pay to the Lender an Unused
Fee (herein so called) on the daily average unused amount of the Revolving
Credit Commitment for the period from and including the date of this Agreement
to and including the Termination Date, at the rate of one-half of one percent
(0.50%) per annum based on a 360 day year and the actual number of days
elapsed.  For the purpose of calculating the Unused Fee for the period in question,
the Revolving Credit Commitment shall be deemed utilized by the amount of all
outstanding Revolving Credit Advances and Letter of Credit Liabilities.  The
Unused Fee shall be calculated as of each quarter-end and shall be payable in
arrears quarterly and on the Termination Date.

Section 2.4             
Use of Proceeds.  The proceeds of the Revolving Credit Advances
shall be used by the Borrower for working capital and other lawful general
corporate purposes in the ordinary course of business.  The proceeds of the
Term Note Advances shall be used to refinance the existing debt of Fireline and
of the Borrower.

Section 2.5             
Letters of Credit.  Subject to the terms and conditions of this
Agreement, (a) the Issuing Bank agrees to issue one or more letters of
credit for the account of the Borrower from time to time from the date hereof
to and including the Revolving Credit Termination Date and (b) each Lender
severally agrees to participate in Letters of Credit issued for the account of
the Borrower; provided, however, that the outstanding Letter of Credit
Liabilities shall not at any time exceed the least of (a) an amount equal
to the amount of the Revolving Credit Commitment minus the outstanding
Revolving Credit Advances, (b) the Borrowing Base minus the outstanding
Revolving Credit Advances and Term Loan Advances or (c) $7,500,000 and
provided, further, that the Issuing Bank shall not have received notice from
any Lender that an Event of Default exists.  Each Letter of Credit shall have
an expiration date not to exceed 365 days, shall not have an expiration date
beyond the Termination Date, shall be payable in Dollars, shall have a minimum
face amount of $50,000, must support a transaction that is entered into in the
ordinary course of the Borrower's business, must be satisfactory in form and substance
to the Issuing Bank, will be subject to the payment of such Letter of Credit
fees as may be provided in Section 2.6 hereof, and shall be issued
pursuant to such documents and instruments executed by the Borrower (including,
without limitation, the Borrower's form of letter of credit application as then
in effect) as the Administrative Agent, Issuing Bank and the Lenders may reasonably
require.  The Issuing Bank will send to the Borrower and each Lender,
immediately upon issuance of any Letter of Credit, or an amendment thereto, a
true and complete copy of such Letter of Credit, or such amendment thereto.

CREDIT AGREEMENT - Page 17

 

 

Each payment by the Issuing Bank pursuant to a drawing
under a Letter of Credit is required to be reimbursed by the Borrower to the Issuing
Bank and payable ON DEMAND and, at the sole option of the Issuing Bank, can be
charged as (and in such event will be deemed to be) a Revolving Credit Advance
to the Borrower under the Revolving Credit Commitment and this Agreement as of
the day and time such payment is made by the Issuing Bank and in the amount of
such payment and each Lender agrees to fund its portion of such Revolving
Credit Advance.  

Section
2.6             
Drawings and Reimbursements; Funding of Participants.  

(a)               
Upon receipt from the beneficiary of any Letter of Credit of any notice
of a drawing under such Letter of Credit, the Issuing Bank shall notify the
Borrower and the Administrative Agent thereof.  Not later than 11:00 a.m.
on the date of any payment by the Issuing Bank under a Letter of Credit (each
such date, an "Honor Date"), the Borrower shall reimburse the
Issuing Bank through the Administrative Agent in an amount equal to the amount
of such drawing.  If the Borrower fails to so reimburse the Issuing Bank by
such time, the Administrative Agent shall promptly notify each Lender of the
Honor Date, the amount of the unreimbursed drawing (the "Unreimbursed
Amount"), and the amount of such Lender's Percentage Share thereof. 
In such event, the Borrower shall be deemed to have requested a Revolving
Credit Advance to be disbursed on the Honor Date in an amount equal to the
Unreimbursed Amount.

(b)              
Each Lender shall upon any notice by the Administrative Agent make funds
available to the Administrative Agent for the account of the Issuing Bank at
the Administrative Agent's Office in an amount equal to its Percentage Share of
the Unreimbursed Amount not later than 1:00 p.m. on the Business Day
specified in such notice by the Administrative Agent, whereupon, each Lender
that so makes funds available shall be deemed to have made a Revolving Credit
Advance to the Borrower in such amount.  The Administrative Agent shall remit
the funds so received to the Issuing Bank.

(c)               
With respect to any Unreimbursed Amount that is not fully refinanced by
a Revolving Credit Advance because the conditions set forth in Section 5.2
cannot be satisfied or for any other reason, the Borrower shall be deemed to
have incurred from the Issuing Bank a Letter of Credit in the amount of the
Unreimbursed Amount that is not so refinanced, which Letter of Credit shall be
due and payable on demand (together with interest) and shall bear interest at
the Default Rate.  In such event, each Lender's payment to the Administrative
Agent for the account of the Issuing Bank pursuant to Section 2.6(a)
shall be deemed payment in respect of its participation in such Letter of
Credit and shall constitute an advance from such Lender in satisfaction of its
participation obligation under this Section 2.6.

CREDIT AGREEMENT - Page 18

 

(d)              
If any Lender fails to make available to the Administrative Agent for
the account of the Issuing Bank any amount required to be paid by such Lender
pursuant to the foregoing provisions of this Section 2.6 by the
time specified in Section 2.6(b), the Issuing Bank shall be
entitled to recover from such Lender, on demand, such amount with interest
thereon for the period from the date such payment is required to the date on
which such payment is immediately available to the Issuing Bank at a rate per
annum equal to the greater of the Federal Funds Rate and a rate determined by
the Issuing Bank in accordance with banking industry rules on interbank
compensation, plus any administrative, processing or similar fees
customarily charged by the Issuing Bank in connection with the foregoing.  Any
amounts due to the 

Issuing Bank in the preceding sentence shall be the sole responsibility of such
Lender, and the Borrower shall have no obligation or liability with respect to
such amounts.  A certificate of the Issuing Bank submitted to any Lender
(through the Administrative Agent) with respect to any amounts owing under this
Section 2.6(d)  shall be conclusive absent manifest error.

Section 2.7             
Letter of Credit Fees.  The Borrower shall pay to the Issuing
Bank for the pro rata benefit of the Lenders a fee with respect to each Letter
of Credit on the date of issuance (and on each anniversary date in the case of
Letters of Credit with an evergreen feature) of such Letter of Credit equal to
two percent per annum of the face amount of such Letter of Credit (but not less
than $5,000).  In addition to the foregoing, the Borrower shall also pay to the
Issuing Bank fronting, amendment, transfer, confirmation, negotiation and other
fees charged by the Issuing Bank in accordance with the Issuing Bank's then
current fee policy.

ARTICLE
III

PAYMENTS

Section 3.1             
Method of Payment.  All payments of principal, interest, and
other amounts to be made by the Borrower under this Agreement and the other
Loan Documents shall be made to the Administrative Agent, for the account of
each Lender, at the Principal Office in Dollars and immediately available funds,
without setoff, deduction, or counterclaim, and free and clear of all taxes at
the time and in the manner provided in the Notes.  The Borrower authorizes the Administrative
Agent to automatically debit the Borrower's account on each payment date for the
amount of the payment.  Each payment received by the Administrative Agent under
this Agreement or any Note for the account of a Lender shall be paid promptly
to such Lender in immediately available funds.

Section 3.2             
Pro Rata Treatment.  Except to the extent otherwise
provided herein each Lender agrees that:  (a) each Advance shall be made
in accordance with each Lender's Percentage Share, each payment of fees set
forth in this Agreement shall be made for account of the Lenders pro rata in
accordance with each Lender's Percentage Share, and each termination or
reduction of the amount of the Commitments shall be applied to the Commitment
of each Lender, pro rata according to the amounts of its respective Percentage
Share; (b) each payment of principal of Loans by the Borrower shall be
made for account of the Lenders pro rata in accordance with the respective
unpaid principal amount of the Loans held by the Lenders; and (c) each
payment of interest on Loans by the Borrower shall be made for account of the
Lenders pro rata in accordance with the amounts of interest due and payable to
the Percentage Share of the respective Lenders; and (d) each reimbursement
by the Borrower of disbursements under Letters of Credit shall be made for
account of the Issuing Bank or, if funded by the Lenders, pro rata for the
account of the Lenders, in accordance with the amounts of reimbursement
obligations due and payable to each respective Lender.

 

CREDIT AGREEMENT - Page 19

 

 

Section
3.3             
Prepayments.  

(a)               
Voluntary Prepayments.  The Borrower may prepay all or any
portion of the Revolving Credit Notes as provided in the Revolving Credit Note
without penalty or premium.

(b)              
Mandatory Prepayment.  The Borrower shall pay on DEMAND the
amount by which at any time the outstanding Revolving Credit Advances, Term
Loan Advances and Letter of Credit Liabilities exceed the Borrowing Base.  Any
payment made under this Section 3.3(b) shall be applied in the
following order:  (i) first, to any outstanding Revolving Credit Advances;
(ii) second, to any outstanding Term Loan Advances applied in the inverse
order of maturities; and (iii) third, to any amounts drawn under any
outstanding Letter of Credit Liabilities for which the Issuing Bank has not
been fully reimbursed by the Borrower and (iv) fourth, to provide cash
security for the undrawn amounts of any outstanding Letters of Credit.

Section 3.4             
Non-receipt of Funds by the Administrative Agent.  If any Lender
shall fail to make any payment required to be made by it hereunder, then the
Administrative Agent may, in its discretion (notwithstanding any contrary
provision hereof), apply any amounts thereafter received by the Administrative
Agent for the account of such Lender to satisfy such Lender's obligations until
all such unsatisfied obligations are fully paid.

ARTICLE
IV

SECURITY

Section 4.1             
Collateral.  To secure full and complete payment and performance
of the Obligations, the Borrower shall, and shall cause the other Obligated
Parties and all other necessary Persons to, execute and deliver or cause to be
executed and delivered all of the Security Documents required by the Administrative Agent covering substantially all of the
Property and collateral described in such Security Documents, including but not
limited to all assets (including all stock and other equity securities of
Subsidiaries) now owned or hereafter acquired by the Borrower and any other
Obligated Party, as further described in the Security Agreement and any other
Loan Documents (the foregoing described collateral, together with any other
property which may now or hereafter secure the Obligations or any part thereof,
is sometimes herein called the "Collateral").  The Borrower shall
execute and cause to be executed such further documents and instruments,
including without limitation, Uniform Commercial Code financing statements, as
the Administrative Agent deems necessary or desirable to create, evidence,
preserve, and perfect its liens and security interests in the Collateral. 
Should the Borrower or any Subsidiary acquire any real property after the date
hereof, within 90 days of acquiring the property, the Borrower shall deliver or
cause such Subsidiary to deliver to the Administrative Agent any Security
Documents, title policies and surveys and shall satisfy any other real-estate
related requirements.

Section
4.2             
Setoff.  

(a)               
If an Event of Default shall have occurred and be continuing, each
Lender shall have the right to set off and apply against the Obligations in
such manner as such Lender may determine, at any time and without notice to the
Borrower, any and all deposits (general or special, time or demand, provisional
or final) or other sums at any time credited by or owing from such Lender to
the Borrower whether or not the Obligations are then due.  As further security
for the Obligations, the Borrower hereby grants to the Administrative Agent a
security interest in all money, instruments, and other Property of the Borrower
now or hereafter held by the Administrative Agent, including, without
limitation, Property held in safekeeping.  In addition to each Lender's right
of setoff and as further security for the Obligations, the Borrower hereby
grants to each Lender a security interest in all deposits (general or special,
time or demand, provisional or final) and other accounts of the Borrower now or
hereafter on deposit with or held by the Administrative Agent and all other
sums at any time credited by or owing from the Administrative Agent to the
Borrower.  The rights and remedies of the Administrative Agent hereunder are in
addition to other rights and remedies (including, without limitation, other
rights of setoff) which the Administrative Agent may have.

 

CREDIT AGREEMENT - Page 20

 

 

(b)              
If any Lender shall obtain payment of any principal of or interest on
any Loan made by it to the Borrower under this Agreement (or reimbursement as
to any Letter of Credit) through the exercise of any right of set-off, banker's
lien or counterclaim or similar right or otherwise, and, as a result of such
payment, such Lender shall have received a greater percentage of the principal
or interest (or reimbursement) then due hereunder by the Borrower to such
Lender than the percentage received by any other Lenders, it shall promptly
(i) notify the Administrative Agent and each other Lender thereof and
(ii) purchase from such other Lenders participations in (or, if and to the
extent specified by such Lender, direct interests in) the Loans (or
participations in Letters of Credit) made by such other Lenders (or in interest
due thereon, as the case may be) in such amounts, and make such other
adjustments from time to time as shall be equitable, to the end that all the
Lenders shall share the benefit of such excess payment (net of any expenses
which may be incurred by such Lender in obtaining or preserving such excess
payment) pro rata in accordance with the unpaid principal and/or interest on
the Loans held by each of the Lenders (or reimbursements of Letters of
Credit).  To such end all the Lenders shall make appropriate adjustments among
themselves (by the resale of participations sold or otherwise) if such payment
is rescinded or must otherwise be restored.  The Borrower agrees that any Lender
so purchasing a participation (or direct interest) in the Loans made by other
Lenders (or in interest due thereon, as the case may be) may exercise all
rights of set-off, banker's lien, counterclaim or similar rights with respect
to such participation as fully as if such Lender were a direct holder of Loans
(or Letters of Credit) in the amount of such participation.  Nothing contained
herein shall require any Lender to exercise any such right or shall affect the
right of any Lender to exercise, and retain the benefits of exercising, any
such right with respect to any other indebtedness or obligation of the
Borrower.  If under any applicable bankruptcy, insolvency or other similar law,
any Lender receives a secured claim in lieu of a set off to which this Section 4.2
applies, such Lender shall, to the extent practicable, exercise its rights in
respect of such secured claim in a manner consistent with the rights of the
Lenders entitled under this Section 4.2 to share the benefits of
any recovery on such secured claim.

Section 4.3             
Notice to Account Debtors.  Upon written notice to the Borrower
from the Administrative Agent while an Event of Default exists, the Borrower
will advise all of its account debtors to direct their payments to a lockbox,
at the address or addresses established by the lockbox arrangements.  All
payments received into the lockbox will be deposited into a collateral account
maintained at the Administrative Agent.

 

CREDIT AGREEMENT - Page 21

 

ARTICLE
V

CONDITIONS PRECEDENT

Section 5.1             
Initial Extension of Credit.  The obligation of the Lenders to
make the initial Advance under any Note or of the Issuing Bank to issue any
initial Letter of Credit is subject to the condition precedent that the Administrative
Agent shall have received on or before the day of such Advance or issuance all
of the following, each dated (unless otherwise indicated) the date hereof, in
form and substance satisfactory to the Administrative Agent:

(a)               
Resolutions.  Resolutions of the Board of Directors (or other
governing body) of the Borrower and each other Obligated Party certified by the
Secretary or an Assistant Secretary (or other custodian of records) of such
Person which authorize the execution, delivery, and performance by such Person
of this Agreement and the other Loan Documents to which such Person is or is to
be a party;

(b)              
Incumbency Certificate.  A certificate of incumbency certified by
an authorized officer or representative certifying the names of the individuals
or other Persons authorized to sign this Agreement and each of the other Loan
Documents to which the Borrower and each other Obligated Party is or is to be a
party (including the certificates contemplated herein) on behalf of such Person
and each other Obligated Party, together with specimen signatures of such
individual Persons;

(c)               
Constituent Documents.  The Constituent Documents for the
Borrower and each other Obligated Party as of a date acceptable to the Administrative
Agent;

(d)              
Governmental Certificates.  Certificates of the appropriate
government officials of the state of incorporation or organization of the
Borrower and each other Obligated Party as to the existence and good standing
of the Borrower, each dated within 10 days prior to the date of the initial
Advance or Letter of Credit;

(e)               
Notes.  The Notes executed by the Borrower;

(f)                
Security Documents.  The Security Documents executed by the
Borrower and other Obligated Parties;

(g)               
Financing Statements.  Uniform Commercial Code financing
statements executed by the Borrower and the other Obligated Parties and
necessary Persons required to grant a Lien that secures the Obligations and
covering such Collateral as the Administrative Agent may request;

(h)               
Guaranty.  The Guaranty executed by the Guarantors;

(i)                 
Payoff of Debt.  Evidence satisfactory to the Lender that all
Debt of the Borrower and the Guarantors, other than the Marshall Debt and other
Debt permitted under Section 8.1 and listed on the Disclosure Schedule,
has been paid in full;

(j)                
Fireline Subordinate Debt.  Evidence that $21,650,000 of the
Marshall Debt is Subordinated Debt;

 

CREDIT AGREEMENT - Page 22

 

(k)              
Insurance Matters.  Copies of insurance certificates describing
all insurance policies required by Section 7.5, together with loss
payable and lender endorsements in favor of the Administrative Agent with
respect to all insurance policies covering Collateral and evidence of directors
and officers liability insurance covering each of the officers and directors of
the Borrower and the Guarantors;

(l)                 
Lien Searches.  The results of UCC, tax lien and judgment lien
searches showing all financing statements and other documents or instruments on
file against the Borrower or any other Obligated Party in the office of the
Secretary of State of Delaware, such search to be as of a date no more than 10
days prior to the date of the initial Advance or the Letter of Credit;

(m)             
Opinion of Counsel.  A favorable opinion of Hallett &
Perrin, P.C., legal counsel to the Borrower and the Guarantors, as to such
matters as the Administrative Agent may reasonably request; 

(n)               
Attorneys' Fees and Expenses.  Evidence that the costs and
expenses (including reasonable attorneys' fees) referred to in Section 11.1,
to the extent incurred, shall have been paid in full by the Borrower;

(o)              
Lender's Due Diligence.  The Lender shall be satisfied with the
results of a collateral audit, by Freed Maxick or any other auditor
satisfactory to the Administrative Agent, of the Borrower, each Subsidiary of
the Borrower and Fireline, which shall include (i) a proforma Borrowing
Base calculation, computed as of September 30, 2006 and (ii) a
backlog report dated as of September 30, 2006.

(p)              
Fireline Financial Statements.  Copies of (a) audited
financial statements of Fireline for the fiscal years 2004 and 2005, prepared
by an independent accounting firm acceptable to the Administrative Agent or
Stark, Winter, Schenkein & Co., LLP, including balance sheets and statements
of income, retained earnings, and cash flow as at the end of such fiscal year
and for the 12‐month period then ended, in each case setting forth in
comparative form the figures for the preceding fiscal year and
(b) unaudited financial statements of Fireline for the fiscal quarter
ending June 30, 2006, including balance sheets and statements of income,
retained earnings, and cash flow as at the end of such fiscal year and for the
12‐month period then ended, in each case setting forth in comparative
form the figures for the preceding fiscal year;

(q)              
Borrower and Guarantor Financial Statements.  Copies of
preliminary consolidated and consolidating financial statements and balance
sheets as of September 30, 2006 for the Borrower and each Guarantor,
including a copy of an unaudited financial report of the Borrower and its
Subsidiaries as of the end of such fiscal quarter and for the portion of the
fiscal year then ended, containing, on a consolidating basis, balance sheets
and statements of income, retained earnings, and cash flow, in each case
setting forth in comparative form the figures for the corresponding period of
the preceding fiscal year;

(r)                
Litigation Disclosure.  Disclosure of any action, suit,
investigation or proceeding, including any class action suit, before or by any
Governmental Authority or arbitrator pending, or to the knowledge of the
Borrower, threatened against the borrower of any of its Subsidiaries, that
would, if adversely determined, have a material adverse effect on the business,
condition (financial or otherwise), operations, prospects, or Properties of the
Borrower or any of its Subsidiaries or the ability of the borrower to pay and
perform the Obligations;

 

CREDIT AGREEMENT - Page 23

 

(s)               
Initial Compliance Certificate.  A Compliance Certificate of the
Borrower dated as of the closing date affirming that the covenants set forth in
Articles VII and VIII are satisfied as of September 30, 2006;

(t)                
Additional Items.  The additional items set forth on Schedule 5.1(n);
and

(u)               
Closing Fees.  Evidence that all fees due at closing have been
paid.

Section 5.2             
All Extensions of Credit.  The obligation of the Lenders to make
any Advance and of the Issuing Bank to issue any Letter of Credit (including
the initial Advance and any initial Letter of Credit) is subject to the
following additional conditions precedent:

(a)               
Request for Advance.  The Administrative Agent shall have
received in accordance with this Agreement, as the case may be, an Advance
Request Form or Letter of Credit Request Form pursuant to the Administrative
Agent's requirements dated the date of such Advance or Letter of Credit and
executed by an authorized officer of the Borrower;

(b)              
No Default, Etc.  No Default or material adverse change or effect
shall have occurred and be continuing, or would result from or after giving
effect to such Advance or Letter of Credit;

(c)               
Representations and Warranties.  All of the representations and
warranties contained in Article VI hereof and in the other Loan Documents
shall be true and correct in all material respects on and as of the date of
such Advance or Letter of Credit with the same force and effect as if such
representations and warranties had been made on and as of such date; 

(d)              
Borrowing Base Report.  A current Borrowing Base Report and
accompanying materials specified in Section 7.1(e);

(e)               
Compliance Certificate.  A current Compliance Certificate and
accompanying materials specified in Section 7.1(f); and

(f)                
Additional Documentation.  The Administrative Agent shall have
received such additional approvals, opinions, or documents as the Administrative
Agent or its legal counsel may reasonably request.

ARTICLE
VI

REPRESENTATIONS AND WARRANTIES

To induce the Administrative Agent  and each Lender to
enter into this Agreement, and except as set forth on the Disclosure Schedule,
the Borrower represents and warrants to the Administrative Agent and each Lender
that:

Section 6.1             
Corporate Existence.  The Borrower and each of its Subsidiaries
(a) is a corporation duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its incorporation; (b) has
all requisite power and authority to own its assets and carry on its business
as now being or as proposed to be conducted; and (c) is qualified to do
business in all jurisdictions in which the nature of its business makes such
qualification necessary and where failure to so qualify would have a material
adverse effect on its business, condition (financial or otherwise), operations,
prospects, or properties. Each of the Borrower and the other Obligated Parties
has the power and authority to execute, deliver, and perform its obligations
under this Agreement and the other Loan Documents to which it is or may become
a party.

 

CREDIT AGREEMENT - Page 24

 

Section 6.2             
Financial Statements; Etc.  The Borrower has delivered to the Lenders
audited consolidated financial statements of the Borrower and its Subsidiaries
as at and for the fiscal year ended December 31, 2005 and unaudited
consolidated and consolidating financial statements of the Borrower and its
Subsidiaries for the nine month period ended September 30, 2006.  Such
financial statements are true and correct in all material respects, have been
prepared in accordance with GAAP, and fairly and accurately present, on a
consolidated basis, the financial condition of the Borrower and its
Subsidiaries or any Obligated Party (to the extent
such Obligated Party is a Subsidiary) as of the respective dates indicated
therein and the results of operations for the respective periods indicated
therein.  Neither the Borrower nor any of its Subsidiaries has any material
contingent liabilities, liabilities for taxes, unusual forward or long-term
commitments, or unrealized or anticipated losses from any unfavorable
commitments except as referred to or reflected in such financial statements. 
There has been no material adverse change in the  business, condition
(financial or otherwise), operations, prospects, or properties of the Borrower
or any of its Subsidiaries or any Obligated Party since the effective date of
the most recent financial statements referred to in this Section.  All
projections delivered by the Borrower to the Lenders have been prepared in good
faith, with care and diligence and use assumptions that are reasonable under
the circumstances at the time such projections were prepared and delivered to
the Lenders and all such assumptions are disclosed in the projections.

Section 6.3             
Action; No Breach.  The execution, delivery, and performance by
the Borrower of this Agreement and the other Loan Documents to which the
Borrower is or may become a party and compliance with the terms and provisions
hereof and thereof have been duly authorized by all requisite action on the
part of the Borrower and do not and will not (a) violate or conflict with,
or result in a breach of, or require any consent under (i) Constituent
Documents of the Borrower or any of its Subsidiaries, (ii) any applicable
law, rule, or regulation or any order, writ, injunction, or decree of any
Governmental Authority or arbitrator, or (iii) any agreement or instrument
to which the Borrower or any of its Subsidiaries is a party or by which any of
them or any of their Properties is bound or subject, or (b) constitute a
default under any such agreement or instrument permitting the other party to
terminate such agreement or instrument, or suspend performance or accelerate
the Borrower's or any Subsidiary's obligations thereunder, or result in the
creation or imposition of any Lien upon any of the revenues or assets of the
Borrower or any Subsidiary.  With respect to clause (a)(ii) above, the
Borrower's warranty is absolute but its representation is to its knowledge.

Section 6.4             
Operation of Business.  The Borrower and each of its Subsidiaries
possess all licenses, permits, franchises, patents, copyrights, trademarks, and
trade names, or rights thereto, that are materially necessary to conduct their
respective businesses substantially as now conducted and as presently proposed
to be conducted, and the Borrower and each of its Subsidiaries are not in
material violation of any valid rights of others with respect to any of the
foregoing, except as noted on the Disclosure Schedule.

 

CREDIT AGREEMENT - Page 25

 

Section 6.5             
Litigation and Judgments.  There is no action, suit,
investigation, or proceeding before or by any Governmental Authority or
arbitrator pending, or to the knowledge of the Borrower, threatened against the
Borrower or any of its Subsidiaries, that would, if adversely determined, have
a material adverse effect on the business, condition (financial or otherwise),
operations, prospects, or Properties of the Borrower or any of its Subsidiaries
or the ability of the Borrower to pay and perform the Obligations.  There are
no outstanding judgments against the Borrower or any Subsidiary of the
Borrower.

Section 6.6             
Rights in Properties; Liens.  The Borrower and each of its
Subsidiaries have good and indefeasible title to or valid leasehold interests
in their respective Properties, including the Properties reflected in the
financial statements described in Section 6.2, and none of the
Properties of the Borrower or any Subsidiary is subject to any Lien, except as
permitted by Section 8.2.

Section 6.7             
Enforceability.  This Agreement constitutes, and the other Loan
Documents to which the Borrower or any other Obligated Party is party, when
delivered, shall constitute legal, valid, and binding obligations of such
Person, enforceable against it in accordance with their respective terms,
except as limited by bankruptcy, insolvency, or other laws of general
application relating to the enforcement of creditors' rights.

Section 6.8             
Approvals.  Other than filings with the Securities and Exchange
Commission, no authorization, approval, or consent of, and no filing or
registration with, any Governmental Authority or third party is or will be
necessary for the execution, delivery, or performance by the Borrower or any
other Obligated Party of this Agreement and the other Loan Documents to which
such Person is or may become a party or the validity or enforceability thereof.

Section 6.9             
Debt.  Except for Loans and as specified on the Disclosure
Schedule, the Borrower and its Subsidiaries have no Debt.

Section 6.10         
Taxes.  The Borrower and each Subsidiary have filed all tax
returns (federal, state, and local) required to be filed, including all income,
franchise, employment, Property, and sales tax returns, and have paid all of
their respective liabilities for taxes, assessments, governmental charges, and
other levies that are due and payable other than those taxes, assessments,
governmental charges and other levies that are being contested in good faith by
appropriate proceeding and for which adequate reserves have been set aside
under GAAP.  The Borrower knows of no pending investigation of the Borrower or
any Subsidiary by any taxing authority or of any pending but unassessed tax
liability of the Borrower or any Subsidiary.  

Section 6.11         
Use of Proceeds; Margin Securities.  Neither the Borrower nor any
Subsidiary is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulations T, U, or X of the Board of
Governors of the Federal Reserve System), and no part of the proceeds of any
Advance will be used to purchase or carry any margin stock or to extend credit
to others for the purpose of purchasing or carrying margin stock.

Section 6.12         
ERISA.  Except as set forth on the Disclosure Schedule, the
Borrower and each Subsidiary are in compliance in all material respects with
all applicable provisions of ERISA.  Neither a Reportable Event nor a
Prohibited Transaction has occurred and is continuing with respect to any
Plan.  No notice of intent to terminate a Plan has been filed, nor has any Plan
been terminated.  No circumstances exist which constitute grounds entitling the
PBGC to institute proceedings to terminate, or appoint a trustee to administer,
a Plan, nor has the PBGC instituted any such proceedings.  Neither the Borrower
nor any ERISA Affiliate has completely or partially withdrawn from a
Multiemployer Plan.  Each of the Borrower and ERISA Affiliates have met its
minimum funding requirements under ERISA with respect to all of their Plans,
and the present value of all vested benefits under each Plan do not exceed the
fair market value of all Plan assets allocable to such benefits, as determined
on the most recent valuation date of the Plan and in accordance with ERISA. 
Neither the Borrower nor any ERISA Affiliate has incurred any liability to the
PBGC under ERISA.

 

CREDIT AGREEMENT - Page 26

 

Section 6.13         
Disclosure.  No statement, information, report, representation,
or warranty made by the Borrower or any other Obligated Party in this Agreement
or in any other Loan Document or furnished to any Lender in connection with
this Agreement or any of the transactions contemplated hereby contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the statements herein or therein not misleading.  There is no
fact known to the Borrower which has a material adverse effect, or which would in
the future be reasonably expected to have a material adverse effect, on the
business, condition (financial or otherwise), operations, prospects, or
properties of the Borrower or any Subsidiary that has not been disclosed in
writing to the Administrative Agent and the Lenders.

Section 6.14         
Subsidiaries, Ventures, Etc.  The Borrower has no Subsidiaries,
Affiliates or joint ventures or partnerships other than those listed on the
Disclosure Schedule and the Disclosure Schedule sets forth the jurisdiction of
incorporation or organization of each such Person and the percentage of the
Borrower's ownership interest in such Person.  All of the outstanding capital
stock or other ownership interest of each Person described in the Disclosure
Schedule has been validly issued, is fully paid, and is nonassessable.

Section 6.15         
Agreements.  Neither the Borrower nor any Subsidiary is a party
to any indenture, loan, or credit agreement, or to any lease or other agreement
or instrument, or subject to any charter or corporate or other organizational restriction
which could have a material adverse effect on the business, condition
(financial or otherwise), operations, prospects, or Properties of the Borrower
or any Subsidiary, or the ability of the Borrower to pay and perform its
obligations under the Loan Documents to which it is a party.  Neither the
Borrower nor any Subsidiary is in default in any respect in the performance,
observance, or fulfillment of any of the  obligations, covenants, or conditions
contained in any agreement or instrument material to its business to which it
is a party.

Section 6.16         
Compliance with Laws.  To the Borrower's knowledge after such
inquiry as a reasonably prudent person would undertake, neither the Borrower
nor any Subsidiary is in violation in any material respect of any law, rule,
regulation, order, or decree of any Governmental Authority or arbitrator.

Section 6.17         
Inventory.  All inventory of the Borrower has been and will
hereafter be produced in compliance with all applicable laws, rules,
regulations, and governmental standards, including, without limitation, the
minimum wage and overtime provisions of the Fair Labor Standards Act, as amended
(29 U.S.C. §§ 201‐219), and the regulations promulgated thereunder.

 

CREDIT AGREEMENT - Page 27

 

Section 6.18         
Investment Company Act.  Neither the Borrower nor any Subsidiary
is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.

Section 6.19         
Public Utility Holding Company Act.  Neither the Borrower nor any
Subsidiary is an "electric utility company" or an "associate
company" of an "electric utility company" or a "non-utility
associate company" of an "electric utility company" or an "electric
utility" within the meaning of the Public Utility Holding Company Act of 2005,
as amended.

Section
6.20         
Environmental Matters.  

(a)               
The Borrower, each Subsidiary, and all of their respective properties,
assets, and operations are in material compliance with all Environmental Laws. 
The Borrower is not aware of, nor has the Borrower received notice of, any
past, present, or future conditions, events, activities, practices, or
incidents which may interfere with or prevent the compliance or continued
compliance of the Borrower and the Subsidiaries with all Environmental Laws;

(b)              
The Borrower and each Subsidiary have obtained all permits, licenses,
and authorizations that are required under applicable Environmental Laws, and
all such permits are in good standing and the Borrower and its Subsidiaries are
in compliance with all of the terms and conditions of such permits;

(c)               
No Hazardous Materials exist on, about, or within or have been used,
generated, stored, transported, disposed of on, or Released from any of the
Properties or assets of the Borrower or any Subsidiary other than in compliance
with Environmental Laws.  The use which the Borrower and the Subsidiaries make
and intend to make of their respective Properties and assets will not result in
the use, generation, storage, transportation, accumulation, disposal, or
Release of any Hazardous Material on, in, or from any of their Properties or
assets other than in compliance with Environmental Laws;

(d)              
Neither the Borrower nor any of its Subsidiaries nor any of their
respective currently or previously owned or leased Properties or operations is
subject to any outstanding or threatened order from or agreement with any
Governmental Authority or other Person or subject to any judicial or docketed
administrative proceeding with respect to (i) failure to comply with
Environmental Laws, (ii) Remedial Action, or (iii) any Environmental
Liabilities arising from a Release or threatened Release;

(e)               
There are no conditions or circumstances associated with the currently
or previously owned or leased Properties or operations of the Borrower or any
of its Subsidiaries that could reasonably be expected to give rise to any
Environmental Liabilities;

(f)                
Neither the Borrower nor any of its Subsidiaries is a treatment,
storage, or disposal facility requiring a permit under the Resource
Conservation and Recovery Act, 42 U.S.C. § 6901 et seq., regulations thereunder
or any comparable provision of state law.  The Borrower and its Subsidiaries
are in compliance with all applicable financial responsibility requirements of
all Environmental Laws;

(g)               
Neither the Borrower nor any of its Subsidiaries has filed or failed to
file any notice required under applicable Environmental Law reporting a Release;
and

 

CREDIT AGREEMENT - Page 28

 

(h)               
No Lien arising under any Environmental Law has attached to any Property
or revenues of the Borrower or its Subsidiaries.

Section 6.21         
Intellectual Property.  All material Intellectual Property owned
or used by the Borrower, any Subsidiary or any Obligated Party is listed,
together with application or registration numbers, where applicable, in the
Disclosure Schedule.  Each Person identified on the Disclosure Schedule owns,
or is licensed to use, all Intellectual Property necessary to conduct its
business as currently conducted except for such Intellectual Property the
failure of which to own or license could not reasonably be expected to have a
material adverse effect.  Each Person identified on the Disclosure Schedule
will maintain the patenting and registration of all Intellectual Property with
the United States Patent and Trademark Office, the United States Copyright
Office, or other appropriate Governmental Authority and each Person identified
on the Disclosure Schedule will promptly patent or register, as the case may
be, all new Intellectual Property and notify the Lender in writing five (5)
Business Days prior to filing any such new patent or registration.

Section 6.22         
Depository Relationship.  The Borrower will, and will cause each
of its Subsidiaries to, (i) promptly establish the Administrative Agent as
its principal depository and disbursement bank and (ii) covenant and agree
to maintain the Administrative Agent as its principal depository and
disbursement bank, including for the maintenance of business, cash management,
operating and administrative deposit accounts.  Subsidiaries may maintain local
collection accounts that are swept to the Administrative Agent on a regular
basis.

ARTICLE
VII

AFFIRMATIVE COVENANTS

The Borrower covenants and agrees that, as long as the
Obligations or any part thereof are outstanding or the Lender has any
Commitment hereunder, the Borrower will perform and observe the following affirmative
covenants, unless the Majority Lenders shall otherwise consent in writing:

Section
7.1             
Reporting Requirements.  The Borrower will furnish (or cause to
be furnished) to the Administrative Agent with sufficient copies of each for each
Lender:

(a)               
Annual Financial Statements.  As soon as available, and in any
event within 120 days after the end of each fiscal year of the Borrower, beginning
with the fiscal year ending December 31, 2005, (i) a copy of the
annual audit report of the Borrower and its Subsidiaries for such fiscal year
containing, on a consolidated and consolidating basis, balance sheets
and statements of income, retained earnings, and cash flow as at the end of
such fiscal year and for the 12‐month period then ended, in each case
setting forth in comparative form the figures for the preceding fiscal year,
all in reasonable detail and audited and certified by independent certified
public accountants of recognized standing reasonably acceptable to the Administrative
Agent, to the effect that such report has been prepared in accordance with GAAP
and containing no material qualifications or limitations on scope; 

(b)              
Quarterly Financial Statements.  As soon as available, and in any
event within 50 days after the end of each of the quarters of each fiscal year
of the Borrower, a copy of an unaudited financial report of the Borrower and
its Subsidiaries as of the end of such fiscal quarter and for the portion of
the fiscal year then ended, containing, on a consolidating basis, balance
sheets and statements of income, retained earnings, and cash flow, in each case
setting forth in comparative form the figures for the corresponding period of
the preceding fiscal year, all in reasonable detail certified by the chief
financial officer of the Borrower to have been prepared in accordance with GAAP
and to fairly and accurately present in all material respects (subject to
year-end audit adjustments) the financial condition and results of operations
of the Borrower and its Subsidiaries, on a consolidating basis, at the date and
for the periods indicated therein;

 

CREDIT AGREEMENT - Page 29

 

(c)               
Form 10‐K.  As soon as available and in any event within 120 days
of the end of each fiscal year, the Borrower's annual Form 10‐K report
filed with the Securities and Exchange Commission;

(d)              
Form 10‐Q.  As soon as available and in any event within 50
days of the end of each fiscal quarter, the Borrower's quarterly Form 10‐Q
report filed with the Securities and Exchange Commission;

(e)               
Borrowing Base Report.  As soon as available, and in any event
within 50 days after the end of each calendar quarter, a Borrowing Base Report,
certified by the chief financial officer of the Borrower, which Borrowing Base
Report shall be accompanied by the details of calculation thereof and by an
accounts receivable aging summary and detailed aging reports, in each case by
entity, and shall be based upon publicly available financial information
contained in the Borrower's Form 10‐K and Form 10‐Q reports, as
applicable;

(f)                
Compliance Certificate.  (i) As soon as available, and in
any event within 50 days after the end of each fiscal quarter beginning with
the fiscal quarter ending on December 31, 2006, a certificate of the chief financial
officer of the Borrower (A) stating that to the best of such officer's
knowledge, no Default has occurred and is continuing, or if a Default has
occurred and is continuing, a statement as to the nature thereof and the action
which is proposed to be taken with respect thereto, and (B) showing in
reasonable detail the calculations demonstrating compliance with Article IX
and (ii) as soon available, and in any event within five days after the
Borrower's 10-K has been filed, a certificate of compliance that evidences the
satisfaction of subsections (A) and (B) of this Section 7.1(f);

(g)               
Management Letters.  Promptly upon receipt thereof, a copy of any
management letter or written report submitted to the Borrower or any Subsidiary
by independent certified public accountants with respect to the business,
condition (financial or otherwise), operations, prospects, or properties of the
Borrower or any Subsidiary;

(h)               
Pending Acquisitions.  To the extent that senior management of
the Borrower is involved in substantive and material discussions regarding a
pending acquisition, the Borrower shall provide to the Administrative Agent a
detailed description of such pending acquisition at least 30 days prior to
consummation of the transaction in a form acceptable to the Administrative
Agent in its sole discretion. 

(i)                 
Notice of Litigation.  Promptly after the commencement thereof,
notice of all actions, suits, and proceedings before any Governmental Authority
or arbitrator affecting the Borrower or any Subsidiary which, if determined
adversely to the Borrower or such Subsidiary, could have a material adverse
effect on the business, condition (financial or otherwise), operations,
prospects, or properties of the Borrower or such Subsidiary;

CREDIT AGREEMENT - Page 30

 

(j)                
Notice of Default.  As soon as possible and in any event within
three Business Days after the occurrence of each Default or other event,
development or circumstance, financial or otherwise that might materially and
adversely affect the Borrower or the Collateral, a written notice setting forth
the details of such Default, event, development or circumstance and the action
that the Borrower has taken and proposes to take with respect thereto;

(k)              
ERISA Reports.  Promptly after the filing or receipt thereof,
copies of all reports, including annual reports, and notices which the Borrower
or any Subsidiary files with or receives from the PBGC or the U.S. Department
of Labor under ERISA; and as soon as possible and in any event within five days
after the Borrower or any Subsidiary knows or has reason to know that any
Reportable Event or Prohibited Transaction has occurred with respect to any
Plan or that the PBGC or the Borrower or any Subsidiary has instituted or will
institute proceedings under Title IV of ERISA to terminate any Plan, a
certificate of the chief financial officer of the Borrower setting forth the
details as to such Reportable Event or Prohibited Transaction or Plan
termination and the action that the Borrower proposes to take with respect
thereto;

(l)                 
Reports to Other Creditors.  Promptly after the furnishing
thereof, copies of any statement or report furnished to any other party
pursuant to the terms of any indenture, loan, or credit or similar agreement
and not otherwise required to be furnished to the Lenders pursuant to any other
clause of this Section;

(m)             
Notice of Material Adverse Change.  As soon as possible and in
any event within five days after the occurrence thereof, written notice of any
matter that could have a material adverse effect on the business, condition
(financial or otherwise), operations, prospects, or properties of the Borrower
or any Subsidiary; 

(n)               
General Information.  Promptly, such other information concerning
the Borrower or any Subsidiary as the Administrative Agent and the other
Lenders may from time to time reasonably request.

Section 7.2             
Maintenance of Existence; Conduct of Business.  The Borrower will
preserve and maintain, and will cause each Subsidiary to preserve and maintain,
its existence and all of its leases, privileges, licenses, permits, franchises,
qualifications, and rights that are necessary or desirable in the ordinary
conduct of its business.  The Borrower will conduct, and will cause each
Subsidiary to conduct, its business in an orderly and efficient manner in
accordance with good business practices.  Without limitation, the Borrower will
not make (and will not permit any of its Subsidiaries to make) any material
change in its credit collection policies if such change would materially impair
the collectibility of any Account, nor will it rescind, cancel or modify any
Account except in the ordinary course of business.

Section 7.3             
Maintenance of Properties.  The Borrower will maintain, keep, and
preserve, and cause each Subsidiary to maintain, keep, and preserve, all of its
Properties (tangible and intangible) necessary or useful in the proper conduct
of its business in good working order and condition, ordinary wear and tear
excepted.

Section 7.4             
Taxes and Claims.  The Borrower will pay or discharge, and will
cause each Subsidiary to pay or discharge, at or before maturity or before becoming
delinquent (a) all taxes, levies, assessments, and governmental charges
imposed on it or its income or profits or any of its Property, and (b) all
lawful claims for labor, material, and supplies, which, if unpaid, might become
a Lien upon any of its Property; provided, however, that neither the Borrower
nor any Subsidiary shall be required to pay or discharge any tax, levy,
assessment, or governmental charge which is being contested in good faith by
appropriate proceedings diligently pursued, and for which adequate reserves
have been established.

 

CREDIT AGREEMENT - Page 31

 

Section 7.5             
Insurance.  The Borrower will maintain, and will cause each of
the Subsidiaries to maintain, insurance with financially sound and reputable
insurance companies in such amounts and covering such risks as is usually
carried by corporations engaged in similar businesses and owning similar
Properties in the same general areas in which the Borrower and the Subsidiaries
operate, provided that in any event the Borrower will maintain and cause each
Subsidiary to maintain workmen's compensation insurance, property insurance,
comprehensive general liability insurance, products liability insurance,
and business interruption insurance reasonably satisfactory to the Administrative
Agent.  Each insurance policy covering Collateral shall name the Administrative
Agent as loss payee and shall provide that such policy will not be cancelled or
reduced without 30 days prior written notice to the Administrative Agent.

Section 7.6             
Inspection Rights.  At any reasonable time and from time to time,
the Borrower will permit, and will cause each Subsidiary to permit,
representatives of the Administrative Agent and each Lender to examine the
Collateral and conduct Collateral audits, to examine, copy, and make extracts
from its books and records, to visit and inspect its properties, and to discuss
its business, operations, and financial condition with its officers, employees,
and independent certified public accountants; provided, however,
absent the existence of a Default, the Administrative Agent or such Lender shall
have given the Borrower at least 15 days prior notice of its desire to exercise
inspection rights hereunder.  The initial audit will be conducted on or prior
to the closing date of this Agreement, and thereafter, the Borrower agrees that
subsequent audits will be conducted annually prior to the Borrower's fiscal
year end beginning with the year ending December 31, 2007.

Section 7.7             
Keeping Books and Records.  The Borrower will maintain, and will
cause each Subsidiary to maintain, proper books of record and account in which
full, true, and correct entries in conformity with GAAP shall be made of all
dealings and transactions in relation to its business and activities.  The
Borrower will maintain and complete accurate books and records with respect to
the Collateral as the Administrative Agent and the Lenders shall from time to
time reasonably request.

Section 7.8             
Compliance with Laws.  The Borrower will comply, and will cause
each Subsidiary to comply, in all material respects with all applicable laws,
rules, regulations, orders, and decrees of any Governmental Authority or
arbitrator.

Section 7.9             
Compliance with Agreements.  The Borrower will comply, and will
cause each Subsidiary to comply, in all material respects with all agreements,
contracts, and instruments binding on it or affecting its properties or
business.

Section 7.10         
Further Assurances.  The Borrower will, and will cause each
Subsidiary to, execute and deliver such further agreements and instruments and
take such further action as may be reasonably requested by the Administrative Agent
and the Lenders to carry out the provisions and purposes of this Agreement and
the other Loan Documents and to create, preserve, and perfect the Liens of the Administrative
Agent in the Collateral.

CREDIT AGREEMENT - Page 32

 

Section 7.11         
ERISA.  The Borrower will comply, and will cause each Subsidiary
to comply, with all minimum funding requirements, and all other material
requirements, of ERISA, if applicable, so as not to give rise to any liability
thereunder.

Section 7.12         
Additional Guarantors.  The Borrower will notify the Administrative
Agent at the time that any Person becomes a Subsidiary, and promptly thereafter
(and in any event within ten days) cause such Person to (a) become a
Guarantor by executing and delivering to the Administrative Agent a Guaranty,
(b) execute and deliver Security Documents pledging to the Administrative
Agent all of its Property (subject to such exceptions as the Administrative
Agent and the Majority Lenders may permit) and (c) deliver to the Administrative
Agent such other documents and instruments as the Administrative Agent may reasonably
require, including appropriate favorable opinions of counsel to such Person in
form, content and scope reasonably satisfactory to the Administrative Agent.

ARTICLE
VIII

NEGATIVE COVENANTS

The Borrower covenants and agrees that, as long as the
Obligations or any part thereof are outstanding or any Lender has any
Commitment hereunder, the Borrower will perform and observe the following
covenants, unless the Majority Lenders (or, as applicable, the Super Majority
of Lenders) shall otherwise consent in writing:

Section
8.1             
Debt.  The Borrower will not incur, create, assume, or permit to
exist, and will not permit any Subsidiary to incur, create, assume, or permit
to exist, any Debt, except:

(a)               
the Obligations;

(b)              
Existing Debt described on the Disclosure Schedule hereto; 

(c)               
Subordinated Debt; and

(d)              
Purchase money Debt not to exceed $1,500,000 in the aggregate at any one
time outstanding.

Section 8.2             
Limitation on Liens.  The Borrower will not incur, create,
assume, or permit to exist, and will not permit any Subsidiary to incur,
create, assume, or permit to exist, any Lien upon any of its Property, assets,
or revenues, whether now owned or hereafter acquired, except:

(a)               
Liens disclosed on the Disclosure Schedule hereto; 

(b)              
Liens in favor of the Secured Parties;

(c)               
Encumbrances consisting of minor easements, zoning restrictions, or
other restrictions on the use of real property that do not (individually or in
the aggregate) materially affect the value of the assets encumbered thereby or
materially impair the ability of the Borrower or the Subsidiaries to use such
assets in their respective businesses, and none of which is violated in any
material respect by existing or proposed structures or land use;

CREDIT AGREEMENT - Page 33

 

(d)              
Liens for taxes, assessments, or other governmental charges which are
not delinquent or which are being contested in good faith and for which
adequate reserves have been established;

(e)               
Liens of mechanics, materialmen, warehousemen, carriers, or other
similar statutory Liens securing obligations that are not yet due and are
incurred in the ordinary course of business;

(f)                
Liens resulting from good faith deposits to secure payments of workmen's
compensation or other social security programs or to secure the performance of
tenders, statutory obligations, surety and appeal bonds, bids, or contracts
(other than for payment of Debt), or leases made in the ordinary course of
business; and

(g)               
Purchase money Liens on the specific property so purchased to secure
Debt permitted in Section 8.1(d) hereof.

Section 8.3             
Mergers, Etc.  Except with the consent of a Super Majority of
Lenders, the Borrower will not, and will not permit any Subsidiary to, become a
party to a merger or consolidation, or purchase or otherwise acquire all or any
part of the assets of any Person or any shares or other evidence of beneficial
ownership of any Person, or wind-up, dissolve, or liquidate; provided, however,
that the Borrower may (a) make the AC Acquisition provided that
(i) in the judgment of the Administrative Agent and a Super Majority of
Lenders, there is no material adverse change in the business, financial
condition, assets, prospects or properties of AC since September 30, 2006;
(ii) the Administrative Agent receives a field examination of assets of AC
and the results thereof are satisfactory to the Administrative Agent and a
Super Majority of Lenders; (iii) the terms, consideration and provisions
of the final Agreement and Plan of Merger are satisfactory to the
Administrative Agent and a Super Majority of the Lenders; and (iv) the AC
Acquisition cash payments can be made only if (A) the Borrower is in compliance
(before and after giving effect to the payment) with the Loan Documents,
(B) such payments do not exceed 38% of the profits per job earned by AC in
the case of certain "Selected Receivables," "Net Profits"
in the case of other receivables (except the "Stennis Receivables")
and five percent of "Net Profits" in the case of "Stennis
Receivables" (such terms as defined in the Agreement and Plan of Merger
approved by a Super Majority of Lenders) and (C) such payments are only
made after collection of the Accounts related to such job; and (b) make other
acquisitions in which the aggregate cash and non-cash consideration to be paid
directly by the Borrower does not exceed $5,000,000 if the Borrower has, at the
time of (and after giving effect to) such acquisition at least an aggregate of
$20,000,000 in unrestricted cash and availability for Revolving Credit Advances
under the Borrowing Base.

Section 8.4             
Restricted Payments.  The Borrower will not declare or pay any
dividends or make any other payment or distribution (in cash, property, or
obligations) on account of its equity interests, or redeem, purchase, retire,
call, or otherwise acquire any of its equity interests, or permit any of its
Subsidiaries to purchase or otherwise acquire any equity interest of the Borrower
or another Subsidiary, or set apart any money for a sinking or other analogous
fund for any dividend or other distribution on its equity interests or for any
redemption, purchase, retirement, or other acquisition of any of its equity
interests.  Except with the consent of a Super Majority of Lenders, the
Borrower may not make payments in connection with the AC Acquisition unless the
conditions set forth in Section 8.3 have been satisfied and if at
the time of (or after giving effect to) payment any Event of Default exists or
would exist (but not otherwise).

CREDIT AGREEMENT - Page 34

 

Section 8.5             
Loans and Investments.  The Borrower will not make, and will not
permit any Subsidiary to make, any advance, loan, extension of credit, or
capital contribution to or investment in, or purchase, or permit any Subsidiary
to purchase, any stock, bonds, notes, debentures, or other securities of, any
Person, except:

(a)               
readily marketable direct obligations of the United States of America or
any agency thereof with maturities of one year or less from the date of
acquisition;

(b)              
fully insured certificates of deposit with maturities of one year or
less from the date of acquisition issued by any commercial bank operating in
the United States of America having capital and surplus in excess of
$50,000,000; 

(c)               
commercial paper of a domestic issuer if at the time of purchase such
paper is rated in one of the two highest rating categories of Standard and
Poor's Corporation or Moody's Investors Service; 

(d)              
deferred payment terms reasonably satisfactory to the Administrative
Agent for (i) accounts receivable, not to exceed $500,000 at any one time
outstanding, owing by any account debtor and (ii) accounts receivable
owing by Home Depot; and

(e)               
the AC Acquisition and other acquisitions permitted in Section 8.3.

Section 8.6             
Limitation on Issuance of Equity.  Except with respect to
transactions permitted under Section 8.3, the Borrower will not, and
will not permit any of its Subsidiaries to, at any time issue, sell, assign, or
otherwise dispose of (a) any of its equity interests, (b) any
securities exchangeable for or convertible into or carrying any rights to
acquire any of its equity interests, or (c) any option, warrant, or other
right to acquire any of its equity interests, to the extent the aggregate value
of the securities described under the foregoing clauses (a), (b) and (c)
exceeds $1,000,000.

Section 8.7             
Transactions With Affiliates.  The Borrower will not enter into,
and will not permit any Subsidiary to enter into, any transaction, including,
without limitation, the purchase, sale, or exchange of property or the
rendering of any service, with any Affiliate of the Borrower or such
Subsidiary, except in the ordinary course of and pursuant to the reasonable
requirements of the Borrower's or such Subsidiary's business and 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.

Section 8.8             
Disposition of Assets.  The Borrower will not sell, lease,
assign, transfer, or otherwise dispose of any of its assets, or permit any
Subsidiary to do so with any of its assets, except (a) dispositions of
inventory in the ordinary course of business, (b) dispositions, for fair
value, of worn-out and obsolete equipment not necessary or useful to the
conduct of business, (c) disposition of the Borrower's existing Houston
real estate and (d) other dispositions not to exceed $1,000,000 per year.

Section 8.9             
Sale and Leaseback.  The Borrower will not enter into, and will
not permit any Subsidiary to enter into, any arrangement with any Person
pursuant to which it leases from such Person real or personal property that has
been or is to be sold or transferred, directly or indirectly, by it to such
Person.

CREDIT AGREEMENT - Page 35

 

Section 8.10         
Prepayment of Debt.  The Borrower will not prepay, and will not
permit any Subsidiary to prepay, any Debt, except (a) the Obligations and
(b) as permitted on written agreements with the Administrative Agent
relating to Subordinated Debt.

Section 8.11         
Nature of Business.  The Borrower will not, and will not permit
any Subsidiary to, engage in any business other than the businesses in which
they are engaged as of the date hereof.

Section 8.12         
Environmental Protection.  The Borrower will not, and will not
permit any of its Subsidiaries to, (a) use (or permit any tenant to use) any
of their respective properties or assets for the handling, processing, storage,
transportation, or disposal of any Hazardous Material, (b) generate any
Hazardous Material in violation of Environmental Laws, (c) conduct any
activity that is likely to cause a Release or threatened Release of any
Hazardous Material in violation of Environmental Laws, or (d) otherwise
conduct any activity or use any of their respective properties or assets in any
manner that is likely to violate any Environmental Law or create any
Environmental Liabilities for which the Borrower or any of its Subsidiaries
would be responsible.

Section 8.13         
Accounting.  The Borrower will not, and will not permit any of
its Subsidiaries to, change its fiscal year or make any change (a) in
accounting treatment or reporting practices, except as required by GAAP and
disclosed to the Administrative Agent and each Lender, or (b) in tax
reporting treatment, except as required by law and disclosed to the
Administrative Agent and each Lender.

Section 8.14         
No Negative Pledge.  The Borrower will not, and will not permit
any Subsidiary to, enter into or permit to exist any arrangement or agreement,
other than pursuant to this Agreement or any Loan Document, which directly or
indirectly prohibits the Borrower or any Subsidiary from creating or incurring
a Lien on any of its assets.

Section 8.15         
Subsidiaries.  The Borrower will not form any Subsidiary unless
such Subsidiary complies with the requirements of Section 7.12.

ARTICLE
IX

FINANCIAL COVENANTS

The Borrower covenants and agrees that, as long as the Obligations
or any part thereof are outstanding or the Administrative Agent or any Lender
has any Commitment hereunder, the Borrower will, at all times, observe and
perform the following financial covenants, unless the Majority Lenders shall
otherwise consent in writing.  The first reporting period for purposes of the
financial covenants set forth in this Article IX will be the fiscal
quarter ending on December 31, 2006.  In calculating the financial
covenants set forth in this Article IX, the financial results of
new-acquired Subsidiaries (including Fireline) shall not be included for any
period before the quarter in which such Subsidiary was acquired.

CREDIT AGREEMENT - Page 36

 

Section 9.1             
Current Ratio.   The Borrower
will at all times maintain on a consolidated basis a Current Ratio of not less
than the ratios set forth in the chart below:

	
   Period

   	
   Ratio

   
	
  November 1, 2006 through
  December 31, 2007

  	
  1.50:1.00

  
	
  At all times from and
  after January 1, 2008

  	
  2.00:1.00

  
	

  

  
	

  

  

Section 9.2             
Debt Service Coverage Ratio.  The Borrower will at all times
maintain on a consolidated basis a Debt Service Coverage Ratio of not less than
2.0 to 1.0.

Section 9.3             
Maximum Leverage Amount.  At all times prior to July 1,
2007, the Borrower will not allow total Debt, including Letter of Credit
Liabilities, to exceed Net Free Cash Flow of the Borrower and Subsidiaries for
the preceding two calendar quarters times two and one half (2.5), and at all
times from and after July 1, 2007, the Borrower will not allow the total Debt,
including Letter of Credit Liabilities, to exceed Net Free Cash Flow of the Borrower
and Subsidiaries for the preceding two calendar quarters times two (2). 

Section 9.4             
Capital Expenditures.  The Borrower will not permit, on a
consolidated basis, the aggregate Capital Expenditures of the Borrower to
exceed $5,000,000.00 during any fiscal year.

ARTICLE
X

DEFAULT

Section
10.1         
Events of Default.  Each of the following shall be deemed an
"Event of Default":

(a)               
The Borrower shall fail to pay the Obligations or any part thereof shall
not be paid when due or if the Obligations shall be declared due prior to their
stated maturity unless such failure occurs solely because the Administrative
Agent fails to debit one of the Borrower's depository accounts or make an ACH
request if such account is not with the Administrative Agent, in which event
such due date (other than the Revolving Credit Termination Date or Term Loan
Termination Date) shall be extended for three days provided that the Borrower
has sufficient collateral funds available on the due date for the Administrative
Agent to effect a debit.

(b)              
The Borrower shall fail to provide to the Administrative Agent timely
any notice of Default as required by Section 7.1.(j) of this
Agreement or the Borrower shall breach any provision of Sections 7.1(a),
(b), (c) (d), (e), or (f), Article VIII or Article IX of
this Agreement.

(c)               
Any representation or warranty made or deemed made by the Borrower or
any other Obligated Party (or any of their respective officers) in any Loan
Document or in any certificate, report, notice, or financial statement
furnished at any time in connection with this Agreement shall be false,
misleading, or erroneous in any material respect when made or deemed to have
been made.

CREDIT AGREEMENT - Page 37

 

(d)              
The Borrower or any other Obligated Party shall fail to perform,
observe, or comply with any covenant, agreement, or term contained in this Agreement
or any other Loan Document (other than as covered by Section 10.1(a),(b),
or (c) of this Article), and such failure continues for more than 30 days
following the date such failure first began.

(e)               
The Borrower, any Subsidiary, or any other Obligated Party shall
commence a voluntary proceeding seeking liquidation, reorganization, or other
relief with respect to itself or its debts under any bankruptcy, insolvency, or
other similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian, or other similar official of it or a
substantial part of its Property or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it or shall make a general assignment for
the benefit of creditors or shall generally fail to pay its debts as they
become due or shall take any corporate action to authorize any of the
foregoing.

(f)                
The Borrower, any Subsidiary, or any other Obligated Party shall fail to
pay when due any principal of or interest on Debt, excluding Subordinated Debt,
having an aggregate principal amount (including undrawn committed or available
amounts) of more than $500,000 or the maturity of any such Debt shall have been
accelerated, or any such Debt shall have been required to be prepaid prior to
the stated maturity thereof, or any event shall have occurred that permits (or,
with the giving of notice or lapse of time or both, would permit) any holder or
holders of such Debt or any Person acting on behalf of such holder or holders
to accelerate the maturity thereof or require any such prepayment.

(g)               
This Agreement or any other Loan Document shall cease to be in full
force and effect or shall be declared null and void or the validity or
enforceability thereof shall be contested or challenged by the Borrower, any
Subsidiary, any other Obligated Party or any of their respective shareholders,
or the Borrower, any Subsidiary or any other Obligated Party shall deny that it
has any further liability or obligation under any of the Loan Documents, or any
lien or security interest created by the Loan Documents shall for any reason
cease to be a valid, first priority perfected security interest in and lien
upon any of the Collateral purported to be covered thereby.

(h)               
Any of the following events shall occur or exist with respect to the
Borrower or any ERISA Affiliate: (i) any Prohibited Transaction involving
any Plan; (ii) any Reportable Event with respect to any Plan; (iii) the
filing under Section 4041 of ERISA of a notice of intent to terminate any
Plan or the termination of any Plan; (iv) any event or circumstance that
might constitute grounds entitling the PBGC to institute proceedings under Section 4042
of ERISA for the termination of, or for the appointment of a trustee to
administer, any Plan, or the institution by the PBGC of any such proceedings;
or (v) complete or partial withdrawal under Section 4201 or 4204 of
ERISA from a Multiemployer Plan or the reorganization, insolvency, or
termination of any Multiemployer Plan; and in each case above, such event or
condition, together with all other events or conditions, if any, have subjected
or could in the reasonable opinion of the Lender subject the Borrower to any
tax, penalty, or other liability to a Plan, a Multiemployer Plan, the PBGC, or
otherwise (or any combination thereof) which in the aggregate exceed or could
reasonably be expected to exceed $500,000.

(i)                 
The Guarantor or any other Obligated Party shall be the subject of a
bankruptcy or receivership proceeding or shall have dissolved, liquidated or
otherwise ceased doing business.

CREDIT AGREEMENT - Page 38

 

(j)                
The Borrower, any of its Subsidiaries, or any other Obligated Party, or
any of their properties, revenues, or assets, shall become subject to an order
of forfeiture, seizure, or divestiture (whether under RICO or otherwise) and
the same shall not have been discharged within 30 days from the date of entry
thereof.

(k)              
A Change of Control of the Borrower shall have occurred, or the Borrower
shall cease to own all (or 50% in the case of Southern Stone Cabinets, Inc., a
Florida corporation) the equity interests in its Subsidiaries required by the
Loan Documents (excluding, however the effect of transactions specifically
permitted by the Loan Documents).

(l)                 
An involuntary proceeding shall be commenced against the Borrower, any
Subsidiary, or any other Obligated Party seeking liquidation, reorganization,
or other relief with respect to it or its debts under any bankruptcy,
insolvency, or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian, or other similar
official for it or a substantial part of its property, and such involuntary
proceeding shall remain undismissed and unstayed for a period of 60 days.

(m)             
The Borrower, any Subsidiary or any other Obligated Party shall fail to
discharge within a period of 30 days after the commencement thereof any
attachment, sequestration, or similar proceeding or proceedings involving an
aggregate amount in excess of $500,000 against any of its assets or
Properties.

(n)               
A final judgment or judgments for the payment of money in excess of $500,000
in the aggregate shall be rendered by a court or courts against the
Borrower, any of its Subsidiaries, or any other Obligated Party and the same
shall not be discharged (or provision shall not be made for such discharge), or
a stay of execution thereof shall not be procured, within thirty days from the
date of entry thereof and the Borrower or the relevant Subsidiary or other
Obligated Party shall not, within said period of 30 days, or such longer period
during which execution of the same shall have been stayed, appeal therefrom and
cause the execution thereof to be stayed during such appeal.

(o)              
All of Frank Fradella, Rick O'Brien and Jeff Mattich shall cease to be
active in the management of the Borrower.

Section 10.2         
Remedies Upon Default.  If any Event of Default shall occur and
be continuing, the Administrative Agent, may and at the request of the Majority
Lenders shall, without notice terminate the Commitments or declare the
Obligations or any part thereof to be immediately due and payable, or both, and
the same shall thereupon become immediately due and payable, without notice,
demand, presentment, notice of dishonor, notice of acceleration, notice of intent
to accelerate, notice of intent to demand, protest, or other formalities of any
kind, all of which are hereby expressly waived by the Borrower; provided,
however, that upon the occurrence of an Event of Default under Section 10.1(e)
or Section 10.1(l), the Commitment shall automatically
terminate, and the Obligations shall become immediately due and payable, in
each case, without notice, demand, presentment, notice of dishonor, notice of
acceleration, notice of intent to accelerate, notice of intent to demand,
protest, or other formalities of any kind, all of which are hereby expressly
waived by the Borrower.  If any Event of Default shall occur and be continuing,
the Administrative Agent and each Lender may exercise all rights and remedies
available to it in law or in equity, under the Loan Documents, or otherwise.

CREDIT AGREEMENT - Page 39

 

Section 10.3         
Performance by the Administrative Agent.  If the Borrower shall
fail to perform any covenant or agreement contained in any of the Loan
Documents and such failure shall constitute a default, the Administrative Agent
may perform or attempt to perform such covenant or agreement on behalf of the
Borrower.  In such event, the Borrower shall, at the request of the Administrative
Agent, promptly pay any amount expended by the Lender in connection with such
performance or attempted performance to the Administrative Agent, together with
interest thereon at the Default Interest Rate from and including the date of
such expenditure to but excluding the date such expenditure is paid in full. 
Notwithstanding the foregoing, it is expressly agreed that the Administrative
Agent shall not have any liability or responsibility for the performance of any
obligation of the Borrower under this Agreement or any other Loan Document.

ARTICLE
XI

THE ADMINISTRATIVE AGENT

Section 11.1         
Appointment, Powers and Immunities.  Each Lender hereby
irrevocably appoints and authorizes the Administrative Agent to act as its
agent hereunder and  under the Security Documents with such powers as are
specifically delegated to the Administrative Agent by the terms of this
Agreement and the Security Documents, together with such other powers as are
reasonably incidental thereto.  The Administrative Agent (which term as used in
this sentence and in Section 11.5 and the first sentence of Section 11.6
shall include reference to its Affiliates and its and its Affiliates' officers,
directors, employees, attorneys, accountants, experts and agents): 
(i) shall have no duties or responsibilities except those expressly set
forth in the Loan Documents, and shall not by reason of the Loan Documents be a
trustee or fiduciary for any Lender; (ii) makes no representation or
warranty to any Lender and shall not be responsible to the Lenders for any
recitals, statements, representations or warranties contained in this Agreement,
or in any certificate or other document referred to or provided for in, or
received by any of them under, this Agreement, or for the value, validity,
effectiveness, genuineness, execution, effectiveness, legality, enforceability
or sufficiency of this Agreement, any Note or any other document referred to or
provided for herein or for any failure by the Borrower or any other Person
(other than the Administrative Agent) to perform any of its obligations
hereunder or thereunder or for the existence, value, perfection or priority of
any collateral security or the financial or other condition of the Borrower,
its Subsidiaries or any other obligor or guarantor; (iii) except pursuant
to Section 11.7 shall not be required to initiate or conduct any
litigation or collection proceedings hereunder; and (iv) shall not be
responsible for any action taken or omitted to be taken by it hereunder or
under any other document or instrument referred to or provided for herein or in
connection herewith including its own ordinary negligence, except for its own
gross negligence or willful misconduct.  The Administrative Agent may employ
agents, accountants, attorneys and experts and shall not be responsible for the
negligence or misconduct of any such agents, accountants, attorneys or experts
selected by it in good faith or any action taken or omitted to be taken in good
faith by it in accordance with the advice of such agents, accountants,
attorneys or experts.  The Administrative Agent may deem and treat the payee of
any Note as the holder thereof for all purposes hereof unless and until a
written notice of the assignment or transfer thereof permitted hereunder shall
have been filed with the Administrative Agent.  The Administrative Agent is
authorized to release any collateral that is permitted to be sold or released
pursuant to the terms of the Loan Documents.

 

CREDIT AGREEMENT - Page 40

 

Section 11.2         
Reliance by Administrative Agent.  The Administrative Agent shall
be entitled to rely upon any certification, notice or other communication
(including any thereof by telephone, telex, telecopier, telegram or cable)
believed by it to be genuine and correct and to have been signed or sent by or
on behalf of the proper Person or Persons, and upon advice and statements of
legal counsel, independent accountants and other experts selected by the
Administrative Agent.

Section 11.3         
Defaults.  The Administrative Agent shall not be deemed to have
knowledge of the occurrence of a Default (other than the non‐payment of
principal of or interest on Loans or of fees or failure to reimburse for Letter
of Credit drawings) unless the Administrative Agent has received notice from a
Lender or the Borrower specifying such Default and stating that such notice is
a "Notice of Default."  In the event that the Administrative Agent
receives such a notice of the occurrence of a Default, the Administrative Agent
shall give prompt notice thereof to the Lenders.  In the event of a payment
Default, the Administrative Agent shall give each Lender prompt notice of each
such payment Default.

Section 11.4         
Rights as a Lender.  With respect to its Commitments and the
Loans made by it and its participation in the issuance of Letters of Credit,
TCB (and any successor acting as Administrative Agent) in its capacity as a
Lender hereunder shall have the same rights and powers hereunder as any other
Lender and may exercise the same as though it were not acting as the
Administrative Agent, and the term "Lender" or "Lenders"
shall, unless the context otherwise indicates, include the Administrative Agent
in its individual capacity.  TCB (and any successor acting as Administrative
Agent) and its Affiliates may (without having to account therefor to any
Lender) accept deposits from, lend money to and generally engage in any kind of
banking, trust or other business with the Borrower (and any of its Affiliates)
as if it were not acting as the Administrative Agent, and TCB and its
Affiliates may accept fees and other consideration from the Borrower for
services in connection with this Agreement or otherwise without having to
account for the same to the Lenders.

Section 11.5         
Indemnification.  The Lenders agree to indemnify the
Administrative Agent and the Issuing Bank ratably in accordance with their
Percentage Shares for the indemnity matters as described in Section 12.2
to the extent not indemnified or reimbursed by the Borrower under Section 12.2,
but without limiting the obligations of the Borrower under said Section 12.2
and for any and all other liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind and
nature whatsoever which may be imposed on, incurred by or asserted against the
Administrative Agent or the Issuing Bank in any way relating to or arising out
of: (i) this Agreement, the Security Documents or any other documents
contemplated by or referred to herein or the transactions contemplated hereby,
but excluding, unless a Default has occurred and is continuing, normal
administrative costs and expenses incident to the performance of its agency
duties hereunder or (ii) the enforcement of any of the terms of this
Agreement, any Security Document or of any such other documents; whether or not
any of the foregoing specified in this Section 11.5 arises from the
sole or concurrent negligence of the Administrative Agent or the Issuing Bank,
provided that no Lender shall be liable for any of the foregoing to the extent
they arise from the gross negligence or willful misconduct of the
Administrative Agent.

 

CREDIT AGREEMENT - Page 41

 

Section 11.6         
Non-Reliance on Administrative Agent and other Lenders.  Each
Lender acknowledges and agrees that it has, independently and without reliance
on the Administrative Agent or any other Lender, and based on such documents
and information as it has deemed appropriate, made its own credit analysis of
the Borrower and its decision to enter into this Agreement, and that it will,
independently and without reliance upon the Administrative Agent or any other
Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own analysis and decisions in
taking or not taking action under this Agreement.  The Administrative Agent
shall not be required to keep itself informed as to the performance or
observance by the Borrower of this Agreement, the Notes, the Security Documents
or any other document referred to or provided for herein or to inspect the
properties or books of the Borrower.  Except for notices, reports and other
documents and information expressly required to be furnished to the Lenders by
the Administrative Agent hereunder, the Administrative Agent shall not have any
duty or responsibility to provide any Lender with any credit or other
information concerning the affairs, financial condition or business of the
Borrower (or any of its Affiliates) which may come into the possession of the
Administrative Agent or any of its Affiliates.  In this regard, each Lender
acknowledges that Winstead Sechrest & Minick P.C. is acting in this
transaction as special counsel to the Administrative Agent only, except to the
extent otherwise expressly stated in any legal opinion or any Loan Document. 
Each Lender will consult with its own legal counsel to the extent that it deems
necessary in connection with the Loan Documents and the matters contemplated
therein.

Section 11.7         
Action by Administrative Agent.  Except for action or other
matters expressly required of the Administrative Agent hereunder, the
Administrative Agent shall in all cases be fully justified in failing or
refusing to act hereunder unless it shall (i) receive written instructions
from the Majority Lenders (or, as applicable, a Super Majority of Lenders or
all Lenders) any of the Lenders as expressly provided herein specifying the
action to be taken, and (ii) be indemnified to its satisfaction by the
Lenders against any and all liability and expenses which may be incurred by it
by reason of taking or continuing to take any such action.  The instructions of
the Majority Lenders (or , as applicable, a Super Majority of Lenders or all
Lenders) and any action taken or failure to act pursuant thereto by the
Administrative Agent shall be binding on all of the Lenders.  If a Default has
occurred and is continuing, the Administrative Agent shall take such action
with respect to such Default as shall be directed by the Majority Lenders (or,
as applicable, a Super Majority of Lenders or all Lenders) in the written
instructions (with indemnities) described in this Section 11.7,
provided that, unless and until the Administrative Agent shall have received
such directions, the Administrative Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default as it shall deem advisable in the best interests of the Lenders.  In no
event, however, shall the Administrative Agent be required to take any action
which exposes the Administrative Agent to personal liability or which is
contrary to this Agreement and the Security Documents or applicable law.

Section 11.8         
Resignation or Removal of Administrative Agent.  Subject to the
appointment and acceptance of a successor Administrative Agent as provided
below, the Administrative Agent may resign at any time by giving notice thereof
to the Lenders and the Borrower, and the Administrative Agent may be removed at
any time with or without cause by the Majority Lenders.  Upon any such
resignation or removal, the Majority Lenders shall have the right to appoint a
successor Administrative Agent with the consent of the Borrower, which consent
shall not be unreasonably withheld.  If no successor Administrative Agent shall
have been so appointed by the Majority Lenders  in accordance with the
foregoing provisions, and shall have accepted such appointment within 30 days
after the retiring Administrative Agent's giving of notice of resignation or
the Majority Lenders' removal of the retiring Administrative Agent, then the
retiring Administrative Agent may, on behalf of the Lenders, appoint a
successor Administrative Agent.  Upon the acceptance of such appointment
hereunder by a successor Administrative Agent, such successor Administrative
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder.  After any retiring Administrative Agent's resignation or removal
hereunder as Administrative Agent, the provisions of this Article XI
and Section 12.2 shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting
as the Administrative Agent.

 

CREDIT AGREEMENT - Page 42

 

ARTICLE
XII

MISCELLANEOUS

Section 12.1         
Expenses.  The Borrower hereby agrees to pay on demand: (a) all
costs and expenses of the Administrative Agent in connection with the administration
of, and preparation, negotiation, execution, and delivery of, this Agreement
and the other Loan Documents and any and all amendments, modifications,
renewals, extensions, and supplements thereof and thereto, including, without
limitation, the reasonable fees and expenses of legal counsel, advisors,
consultants, and auditors for the Administrative Agent, (b) all costs and
expenses of the Administrative Agent and each Lender in connection with any
Default and the enforcement of this Agreement or any other Loan Document,
including, without limitation, the fees and expenses of legal counsel,
advisors, consultants, and auditors for the Administrative Agent, (c) all
transfer, stamp, documentary, or other similar taxes, assessments, or charges
levied by any Governmental Authority in respect of this Agreement or any of the
other Loan Documents, (d) all costs, expenses, assessments, and other
charges incurred in connection with any filing, registration, recording, or
perfection of any security interest or Lien contemplated by this Agreement or
any other Loan Document, and (e) all other costs and expenses incurred by
the Administrative Agent in connection with this Agreement or any other Loan
Document, any litigation, dispute, suit, proceeding or action; the enforcement
of its rights and remedies, protection of its interests in bankruptcy,
insolvency or other legal proceedings, including, without limitation, all
costs, expenses, and other charges (including the Administrative Agent's
internal charges) incurred in connection with evaluating, observing,
collecting, examining, auditing, appraising, selling, liquidating, or otherwise
disposing of the Collateral or other assets of the Borrower, and promptly
reimburse the Administrative Agent for all amounts expended, advanced or
incurred by the Administrative Agent or the Lenders to satisfy any obligation
of the Borrower under this Agreement or any Security Document.

Section 12.2         
INDEMNIFICATION.  (a) THE BORROWER SHALL INDEMNIFY THE ADMINISTRATIVE
AGENT AND EACH LENDER AND EACH AFFILIATE THEREOF AND THEIR RESPECTIVE OFFICERS,
DIRECTORS, EMPLOYEES, ATTORNEYS, AND AGENTS FROM, AND HOLD EACH OF THEM
HARMLESS AGAINST, ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES,
JUDGMENTS, DISBURSEMENTS, COSTS, AND EXPENSES (INCLUDING REASONABLE ATTORNEYS'
FEES) TO WHICH ANY OF THEM MAY BECOME SUBJECT WHICH DIRECTLY OR INDIRECTLY ARISE
FROM OR RELATE TO (A) THE NEGOTIATION, EXECUTION, DELIVERY, PERFORMANCE,
ADMINISTRATION, OR ENFORCEMENT OF ANY OF THE LOAN DOCUMENTS, (B) ANY OF
THE TRANSACTIONS CONTEMPLATED BY THE LOAN DOCUMENTS, (C) ANY BREACH BY THE
BORROWER OF ANY REPRESENTATION, WARRANTY, COVENANT, OR OTHER AGREEMENT
CONTAINED IN ANY OF THE LOAN DOCUMENTS, (D) THE PRESENCE, RELEASE,
THREATENED RELEASE, DISPOSAL, REMOVAL, OR CLEANUP OF ANY HAZARDOUS MATERIAL
LOCATED ON, ABOUT, WITHIN, OR AFFECTING ANY OF THE PROPERTIES OR ASSETS OF THE
BORROWER OR ANY SUBSIDIARY OR ANY OTHER OBLIGATED PARTY, (E) THE USE OR
PROPOSED USE OF ANY LOAN OR LETTER OF CREDIT, (F) ANY AND ALL TAXES,
LEVIES, DEDUCTIONS, OR CHARGES IMPOSED ON THE LENDER OR ANY OF THE LENDER'S
CORRESPONDENTS IN RESPECT OF ANY LETTER OF CREDIT, OR (G) ANY
INVESTIGATION, LITIGATION, OR OTHER PROCEEDING, INCLUDING, WITHOUT LIMITATION,
ANY THREATENED INVESTIGATION, LITIGATION, OR OTHER PROCEEDING, RELATING TO ANY
OF THE FOREGOING.  WITHOUT LIMITING ANY PROVISION OF THIS AGREEMENT OR OF ANY
OTHER LOAN DOCUMENT, IT IS THE EXPRESS INTENTION OF THE PARTIES HERETO THAT
EACH PERSON TO BE INDEMNIFIED UNDER THIS SECTION SHALL BE INDEMNIFIED FROM AND
HELD HARMLESS AGAINST ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES,
PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, AND EXPENSES (INCLUDING REASONABLE ATTORNEYS'
FEES) ARISING OUT OF OR RESULTING FROM THE SOLE CONTRIBUTORY OR ORDINARY
NEGLIGENCE OF SUCH PERSON EXCLUDING, HOWEVER, NEGLIGENCE IN THE PERFORMANCE OF,
OR ADMINISTRATION UNDER THE LOAN DOCUMENTS.  NOTWITHSTANDING THE FOREGOING, NO
PERSON SHALL BE INDEMNIFIED HEREUNDER FOR ACTS OR OMISSIONS ARISING OUT OF OR
RESULTING FROM SUCH PERSON'S GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR FRAUD.

 

CREDIT AGREEMENT - Page 43

 

(b)              
To the fullest extent permitted by applicable law, the Borrower shall
not assert, and hereby waives, any claim against any indemnitee under Section 12.2(a)
above, on any theory of liability, for special, indirect, consequential or
punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement, any other Loan Document or
any agreement or instrument contemplated hereby, the transactions contemplated
hereby or thereby, any Loan or Letter of Credit or the use of the proceeds
thereof.  No indemnitee referred to in subsection (a) above shall be
liable for any damages arising from the use by unintended recipients of any
information or other materials distributed by it through telecommunications,
electronic or other information transmission systems in connection with this
Agreement or the other Loan Documents or the transactions contemplated hereby
or thereby.

Section 12.3         
Limitation of Liability.  Neither the Administrative Agent, each
Lender nor any Affiliate, officer, director, employee, attorney, or agent of
the Administrative Agent  and any Lender shall have any liability with respect
to, and the Borrower hereby waives, releases, and agrees not to sue any of them
upon, any claim for any special, indirect, incidental, or consequential damages
suffered or incurred by the Borrower in connection with, arising out of, or in
any way related to, this Agreement or any of the other Loan Documents, or any
of the transactions contemplated by this Agreement or any of the other Loan
Documents.  The Borrower hereby waives, releases, and agrees not to sue the Administrative
Agent or any Lender or any of the Administrative Agent or Lender's Affiliates,
officers, directors, employees, attorneys, or agents for punitive damages in
respect of any claim in connection with, arising out of, or in any way related
to, this Agreement or any of the other Loan Documents, or any of the
transactions contemplated by this Agreement or any of the other Loan Documents.

CREDIT AGREEMENT - Page 44

 

Section 12.4         
No Duty.  All attorneys, accountants, appraisers, and other
professional Persons and consultants retained by the Administrative Agent except
for gross negligence, willful misconduct or fraud, shall have the right to act
exclusively in the interest of the person who hired them and shall have no duty
of disclosure, duty of loyalty, duty of care, or other duty or obligation of
any type or nature whatsoever to any other Person.

Section 12.5         
Lenders Not Fiduciaries.  The relationship between the Borrower,
on one hand, and the Administrative Agent and each Lender, on the other hand,
is solely that of debtor and creditor, and the Administrative Agent and such
Lenders have no fiduciary or other special relationship with the Borrower, and
no term or condition of any of the Loan Documents shall be construed so as to
deem the relationship between the Borrower and the Administrative Agent and the
Lenders to be other than that of debtor and creditor.

Section 12.6         
Equitable Relief.  The Borrower recognizes that in the event the
Borrower fails to pay, perform, observe, or discharge any or all of the
Obligations, any remedy at law may prove to be inadequate relief to the Administrative
Agent and the Lenders.  The Borrower therefore agrees that the Administrative
Agent and such Lenders, if the Administrative Agent and such Lender so request,
shall be entitled to temporary and permanent injunctive relief in any such case
without the necessity of proving actual damages.

Section 12.7         
No Waiver; Cumulative Remedies.  No failure on the part of the Administrative
Agent or any Lender to exercise and no delay in exercising, and no course of
dealing with respect to, any right, remedy, power, or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, power, or privilege under this Agreement
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power, or privilege. The rights and remedies provided for in
this Agreement and the other Loan Documents are cumulative and not exclusive of
any rights and remedies provided by law.

Section 12.8         
Successors and Assigns.  This Agreement is binding upon and shall
inure to the benefit of the Administrative Agent and each Lender and the
Borrower and their respective successors and assigns, except that the Borrower
may not assign or transfer any of its rights, duties or obligations under this
Agreement or the other Loan Documents without the prior written consent of the Administrative
Agent and the Majority Lenders.

Section 12.9         
Survival.  All representations and warranties made in this
Agreement or any other Loan Document or in any document, statement, or
certificate furnished in connection with this Agreement shall survive the
execution and delivery of this Agreement and the other Loan Documents, and no
investigation by the Administrative Agent  and the Lenders or any closing shall
affect the representations and warranties or the right of the Administrative
Agent and the Lenders to rely upon them. Without prejudice to the survival of
any other obligation of the Borrower hereunder, the obligations of the Borrower
under Sections 12.1 and 12.2 shall survive repayment of the
Note and termination of the Commitment.

Section 12.10     
ENTIRE AGREEMENT.  THIS AGREEMENT, THE NOTE, AND THE OTHER LOAN
DOCUMENTS REFERRED TO HEREIN EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE
PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE
PARTIES HERETO.  THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO. 

 

CREDIT AGREEMENT - Page 45

 

Section 12.11      Amendments,
Etc.  Any provision of this Agreement or any Security Document to which the
Borrower is a party may be amended, modified or waived with the Borrower's and
the Majority Lenders' prior written consent; provided that (i) no
amendment, modification or waiver which extends the final maturity or scheduled
payment dates of the Loans, increases the Revolving Credit Commitment or Term
Loan Commitment, forgives the principal amount or reduces any scheduled
principal payment of any Loans outstanding under this Agreement, releases any
guarantor of the Obligations or releases all or substantially all of the
collateral, reduces the interest rate applicable to the Loans or the fees
payable to the Lenders generally, or modifies the definition of "Majority
Lenders" shall be effective without consent of all Lenders, and
(ii) no amendment, modification or waiver of (A) any subordination
agreement with Fireline, (B) the definition of Subordinated Debt or (C) Sections 8.3
and 8.4 of this Agreement shall be effective without the consent of a
Super Majority of the Lenders.

Section 12.12      Notices. 
Unless otherwise expressly provided herein, all notices and other
communications provided for hereunder shall be in writing (including by
facsimile transmission) and mailed, faxed or delivered, to the address,
facsimile number or subject to the last sentence hereof electronic mail address
specified for notices below the signatures hereon or to such other address as
shall be designated by such party in a notice to the other parties.  All such
other notices and other communications shall be deemed to have been given or
made upon the earliest to occur of (i) actual receipt by the intended
recipient or (ii) (A) if delivered by hand or courier, when signed
for by the designated recipient; (B) if delivered by mail, four business
days after deposit in the mail, postage prepaid; (C) if delivered by
facsimile when sent and receipt has been confirmed by telephone; and
(D) if delivered by electronic mail (which form of delivery is subject to
the provisions of the last sentence below) when delivered; provided, however,
that notices and other communications pursuant to Article II shall
not be effective until actually received by the Administrative Agent. 
Electronic mail and intranet websites may be used only to distribute only
routine communications, such as financial statements and other information, and
to distribute Loan Documents for execution by the parties thereto, and may not
be used for any other purpose.

Section 12.13     
Governing Law; Venue; Service of Process.  This Agreement shall
be governed by and construed in accordance with the laws of the State of Texas
and the applicable laws of the United States of America.  This Agreement has
been entered into in Dallas County, Texas, and it shall be performable for all
purposes in Dallas County, Texas.  Any action or proceeding against the
Borrower under or in connection with any of the Loan Documents may be brought
in any state or federal court in Dallas County, Texas.  The Borrower hereby
irrevocably (a) submits to the nonexclusive jurisdiction of such courts,
and (b) waives any objection it may now or hereafter have as to the venue
of any such action or proceeding brought in any such court or that any such court
is an inconvenient forum.  The Borrower agrees that service of process upon it
may be made by certified or registered mail, return receipt requested, at its
address specified or determined in accordance with the provisions of Section 12.11. 
Nothing herein or in any of the other Loan Documents shall affect the right of
the Lender to serve process in any other manner permitted by law or shall limit
the right of the Administrative Agent and each Lender to bring any action or
proceeding against the Borrower or with respect to any of its property in
courts in other jurisdictions.  Any action or proceeding by the Borrower
against the Administrative Agent and any Lender shall be brought only in a
court located in Dallas County, Texas.

 

CREDIT AGREEMENT - Page 46

 

Section 12.14      Counterparts. 
This Agreement may be executed in one or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument.

Section 12.15      Severability. 
Any provision of this Agreement held by a court of competent jurisdiction to be
invalid or unenforceable shall not impair or invalidate the remainder of this
Agreement and the effect thereof shall be confined to the provision held to be
invalid or illegal.

Section 12.16      Headings. 
The headings, captions, and arrangements used in this Agreement are for
convenience only and shall not affect the interpretation of this Agreement.

Section 12.17      Conflicts. 
In the event of any conflict between this Agreement and any other Loan
Document, this Agreement will prevail.

Section 12.18      Assignments
and Participations.

(a)               
The Borrower may not assign its rights or obligations hereunder or under
the Notes or any Letters of Credit without the prior consent of all of the
Lenders and the Administrative Agent.

(b)              
Any Lender may, upon the written consent of the Administrative Agent
and, if no Event of Default has occurred and is continuing, the Borrower (which
consent will not be unreasonably withheld), assign to one or more Eligible
Assignees all or a portion of its rights and obligations under this Agreement
pursuant to an Assignment Agreement substantially in the form of Exhibit E
(an "Assignment"); provided, however, that (i) any
such assignment shall assign proportionate amounts (if less than all) in each
of such Assignor's Loans and Commitments, (ii) any such assignment shall
be in the amount of at least $2,000,000 or such lesser amount to which the
Borrower has consented and (iii) the assignee or assignor shall pay to the
Administrative Agent a processing and recordation fee of $5,000 for each
assignment.  Any such assignment will become effective as of the date provided
therein upon the execution and delivery to the Administrative Agent of the
Assignment and the consent of the Administrative Agent and, if applicable, the
Borrower.  Promptly after receipt of an executed Assignment, the Administrative
Agent shall send to the Borrower a copy of such executed Assignment.  Upon
receipt of such executed Assignment, the Borrower, will, at its own expense,
execute and deliver new Notes to the assignor and/or assignee, as appropriate,
in accordance with their respective interests as they appear.  Upon the
effectiveness of any assignment pursuant to this Section 12.18(b),
the assignee will become a "Lender," if not already a
"Lender," for all purposes of this Agreement and the Security Documents. 
The assignor shall be relieved of its obligations hereunder from and after the
effective date thereof to the extent of such assignment (and if the assigning
Lender no longer holds any rights or obligations under this Agreement, such
assigning Lender shall cease to be a "Lender" hereunder except that
its rights under Section 12.3 shall not be affected).  The
Administrative Agent will prepare on the last Business Day of each month during
which an assignment has become effective pursuant to this Section 12.18(b),
a new Annex I giving effect to all such assignments effected during such
month, and will promptly provide the same to the Borrower and each of the
Lenders.

 

CREDIT AGREEMENT - Page 47

 

(c)               
Each Lender may transfer, grant or assign participations in all or any
part of such Lender's interests hereunder pursuant to this Section 12.18(c)
to any Person, provided that: (i) such Lender shall remain a
"Lender" for all purposes of this Agreement and the transferee of
such participation shall not constitute a "Lender" hereunder; and (ii) no
participant under any such participation shall have rights to approve any
amendment to or waiver of any of the Loan Documents except to the extent such
amendment or waiver would (x) forgive any principal owing on any
Obligations or extend the final maturity of the Loans in which such participant
is participating, (y) reduce the interest rate (other than as a result of
waiving the applicability of any post-default increases in interest rates) or
fees applicable to any of the Commitments or Loans or Letters of Credit in which
such participant is participating, or postpone the payment of any thereof, or
(z) release any guarantor of the Obligations or release all or
substantially all of the collateral (except as provided in the Loan Documents)
supporting any of the Commitments or Loans or Letters of Credit in which such
participant is participating.  In the case of any such participation, the
participant shall not have any rights under this Agreement or any of the
Security Documents (the participant's rights against the granting Lender in
respect of such participation to be those set forth in the agreement with such
Lender creating such participation), and all amounts payable by the Borrower
hereunder shall be determined as if such Lender had not sold such participation. 
In addition, each agreement creating any participation must include an
agreement by the participant to be bound by the provisions of Section 12.2
for the benefit of the Borrower.

(d)              
The Lenders may furnish any information concerning the Borrower in the
possession of the Lenders from time to time to assignees and participants
(including prospective assignees and participants); provided that, such Persons
agree to be bound by the provisions of Sections 12.2 and 12.27
for the benefit of the Borrower.

(e)               
Notwithstanding anything in this Section 12.18 to the
contrary, any Lender may assign and pledge all or any of its Notes to any
Federal Reserve Bank.  No such assignment and/or pledge shall release the
assigning and/or pledging Lender from its obligations hereunder.

(f)                
Notwithstanding any other provisions of this Section 12.18,
no transfer or assignment of the interests or obligations of any Lender or any
grant of participations therein shall be permitted if such transfer, assignment
or grant would require the Borrower (i) to file a registration statement or
make other filings with the SEC (ii) to qualify the Loans under the
"Blue Sky" laws of any state, or (iii) to contravene the
prohibited transactions restrictions of Sections 4975 of the code or Sections 406
or 407 of ERISA.

Section 12.19      Invalidity. 
In the event that any one or more of the provisions contained in any of the
Loan Documents or the Letters of Credit, or the Letter of Credit Agreements
shall, for any reason, be held invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision of the Notes, this Agreement or any other Loan Document.

Section 12.20      Counterparts. 
This Agreement may be executed in any number of counterparts, all of which
taken together shall constitute one and the same instrument and any of the
parties hereto may execute this Agreement by signing any such counterpart.

 

CREDIT AGREEMENT - Page 48

 

Section 12.21     
Construction.  The Borrower, the Administrative Agent and each
Lender acknowledge that each of them has had the benefit of legal counsel of
its own choice and has been afforded an opportunity to review this Agreement
and the other Loan Documents with its legal counsel and that this Agreement and
the other Loan Documents shall be construed as if jointly drafted by the
Borrower, the Administrative Agent and each Lender.

Section 12.22      Independence
of Covenants.  All covenants hereunder shall be given independent effect so
that if a particular action or condition is not permitted by any of such
covenants, the fact that it would be permitted by an exception to, or be
otherwise within the limitations of, another covenant shall not avoid the
occurrence of a Default if such action is taken or such condition exists.

Section 12.23      WAIVER
OF JURY TRIAL.  TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BORROWER
HEREBY IRREVOCABLY AND EXPRESSLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT, OR
OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED THEREBY OR THE ACTIONS OF LENDER IN THE NEGOTIATION,
ADMINISTRATION, OR ENFORCEMENT THEREOF.

Section 12.24     
Additional Interest Provision.  It is expressly stipulated and
agreed to be the intent of the Borrower, the Administrative Agent and Lenders
at all times to comply strictly with the applicable Texas law governing the
maximum rate or amount of interest payable on the indebtedness evidenced by any
Note, any Loan Document, and the Related Indebtedness (or applicable United
States federal law to the extent that it permits the Administrative Agent and
the Lenders to contract for, charge, take, reserve or receive a greater amount
of interest than under Texas law).  If the applicable law is ever judicially
interpreted so as to render usurious any amount (a) contracted for,
charged, taken, reserved or received pursuant to any Note, any of the other
Loan Documents or any other communication or writing by or between the Borrower
and the Lender related to the transaction or transactions that are the subject
matter of the Loan Documents, (b) contracted for, charged, taken, reserved
or received by reason of the Administrative Agent's exercise of the option to
accelerate the maturity of any Note and/or any and all indebtedness paid or
payable by the Borrower to the Administrative Agent and the Lenders pursuant to
any Loan Document other than any Note (such other indebtedness being referred
to in this Section as the "Related Indebtedness"), or
(c) the Borrower will have paid or the Administrative Agent will have
received by reason of any voluntary prepayment by the Borrower of any Note
and/or the Related Indebtedness, then it is the Borrower's and the Administrative
Agent and the Lenders' express intent that all amounts charged in excess of the
Maximum Lawful Rate shall be automatically canceled, ab initio, and all
amounts in excess of the Maximum Lawful Rate theretofore collected by the Administrative
Agent shall be credited on the principal balance of any Note and/or the Related
Indebtedness (or, if any Note and all Related Indebtedness have been or would
thereby be paid in full, refunded to the Borrower), and the provisions of any
Note and the other Loan Documents shall immediately be deemed reformed and the
amounts thereafter collectible hereunder and thereunder reduced, without the
necessity of the execution of any new document, so as to comply with the
applicable law, but so as to permit the recovery of the fullest amount
otherwise called for hereunder and thereunder; provided, however, if any Note
has been paid in full before the end of the stated term of any such Note, then
the Borrower and the Administrative Agent agree that the Administrative Agent shall,
with reasonable promptness after the Administrative Agent discovers or is
advised by the Borrower that interest was received in an amount in excess of
the Maximum Lawful Rate, either refund such excess interest to the Borrower
and/or credit such excess interest against such Note and/or any Related
Indebtedness then owing by the Borrower to the Administrative Agent.  The
Borrower hereby agrees that as a condition precedent to any claim seeking usury
penalties against the Administrative Agent or any Lender, the Borrower will
provide written notice to the Administrative Agent and such Lender, advising
the Administrative Agent and such Lender in reasonable detail of the nature and
amount of the violation, and the Lender shall have 60 days after receipt of
such notice in which to correct such usury violation, if any, by either
refunding such excess interest to the Borrower or crediting such excess
interest against the Note to which the alleged violation relates and/or the
Related Indebtedness then owing by the Borrower to the Administrative Agent and
such Lender.  All sums contracted for, charged, taken, reserved or received by
the Lender for the use, forbearance or detention of any debt evidenced by any
Note and/or the Related Indebtedness shall, to the extent permitted by
applicable law, be amortized or spread, using the actuarial method, throughout
the stated term of such Note and/or the Related Indebtedness (including any and
all renewal and extension periods) until payment in full so that the rate or
amount of interest on account of any Note and/or the Related Indebtedness does
not exceed the Maximum Lawful Rate from time to time in effect and applicable to
such Note and/or the Related Indebtedness for so long as debt is outstanding. 
In no event shall the provisions of Chapter 346 of the Texas Finance Code
(which regulates certain revolving credit loan accounts and revolving triparty
accounts) apply to this Note and/or any of the Related Indebtedness. 
Notwithstanding anything to the contrary contained herein or in any of the
other Loan Documents, it is not the intention of the Administrative Agent or
any to accelerate the maturity of any interest that has not accrued at the time
of such acceleration or to collect unearned interest at the time of such
acceleration.

 

CREDIT AGREEMENT - Page 49

 

Section 12.25      Ceiling
Election.  To the extent that the Administrative Agent and each Lender is
relying on Chapter 303 of the Texas Finance Code to determine the Maximum
Lawful Rate payable on any such Note and/or any other portion of the
Indebtedness, the Lender will utilize the weekly ceiling from time to time in
effect as provided in such Chapter 303, as amended.  To the extent United
States federal law permits the Administrative Agent and each Lender to contract
for, charge, take, receive or reserve a greater amount of interest than under
Texas law, the Administrative Agent and each Lender will rely on United States
federal law instead of such Chapter 303 for the purpose of determining the
Maximum Lawful Rate.  Additionally, to the extent permitted by applicable law
now or hereafter in effect, the Administrative Agent and each Lender may, at
its option and from time to time, utilize any other method of establishing the
Maximum Lawful Rate under such Chapter 303 or under other applicable law
by giving notice, if required, to the Borrower as provided by applicable law
now or hereafter in effect.

Section 12.26     
USA Patriot Act Notice, Etc.  Each of the Administrative Agent
and each Lender hereby notifies the Borrower that pursuant to the requirements
of the Patriot Act, it is required to obtain, verify and record information
that identifies the Borrower and each other Obligated Party, which information
includes the name and address of the Borrower and each other Obligated Party
and other information that will allow the Administrative Agent and each Lender to
identify the Borrower and each other Obligated Party in accordance with the
Patriot Act.  In addition, the Borrower agrees to (a) ensure that no
Person who owns a controlling interest in or otherwise controls the Borrower or
any Subsidiary of the Borrower is or shall be listed on the Specially
Designated Nationals and Blocked Person List or other similar lists maintained
by the OFAC, the Department of the Treasury or included in any Executive Order,
(b) not to use or permit the use of proceeds of the Obligations to violate
any of the foreign asset control regulations of the OFAC or any enabling
statute or Executive Order relating thereto, and (c) comply, or cause its
Subsidiaries to comply, with the applicable laws.

 

CREDIT AGREEMENT - Page 50

 

Section 12.27      Treatment
of Certain Information; Confidentiality.  Each of the Administrative Agent,
the Lenders, the Issuing Bank and any participants or assigns agrees to
maintain the confidentiality of the Information (as defined below), except that
Information may be disclosed (a) to its Affiliates and to its and its
Affiliates' respective partners, directors, officers, employees, agents,
advisors and other representatives (it being understood that the Persons to
whom such disclosure is made will be informed of the confidential nature of
such Information and instructed to keep such Information confidential),
(b) to the extent requested by any regulatory authority purporting to have
jurisdiction over it (including any self-regulatory authority, such as the
National Association of Insurance Commissioners), (c) to the extent
required by applicable laws or regulations or by any subpoena or similar legal
process, (d) to any other party hereto, (e) in connection with the
exercise of any remedies hereunder or under any other Loan Document or any
action or proceeding relating to this Agreement or any other Loan Document or
the enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section, to
(i)  any assignee of or participant in (which assignees and participants
shall themselves be subject to this Section 12.27), or any prospective
assignee of or participant in (which assignees and participants shall
themselves be subject to this Section 12.27), any of its rights or
obligations under this Agreement or (ii) any actual or prospective
counterparty (or its advisors) to any swap or derivative transaction relating
to the Borrower and its obligations, (g) with the consent of the Borrower
or (h) to the extent such Information (x) becomes publicly available
other than as a result of a breach of this Section 12.27 or
(y) becomes available to the Administrative Agent, any Lender, the Issuing
Bank or any of their respective Affiliates on a nonconfidential basis from a
source other than the Borrower.

For purposes of this Section, "Information" means
all information received from the Borrower or any of its Subsidiaries relating
to the Borrower or any of its Subsidiaries or any of their respective
businesses, other than any such information that is available to the
Administrative Agent, any Lender or the Issuing Bank on a nonconfidential basis
prior to disclosure by the Borrower or any of its Subsidiaries, provided
that, in the case of information received from the Borrower or any of its
Subsidiaries after the date hereof, other than disclosures made pursuant to Section
7.1(h) regarding pending acquisitions, such information is clearly
identified at the time of delivery as confidential.  Any Person required to
maintain the confidentiality of Information as provided in this Section 12.27
shall be considered to have complied with its obligation to do so if such
Person has exercised the same degree of care to maintain the confidentiality of
such Information as such Person would accord to its own confidential
information.  Each of the Administrative Agent, the Lenders and the Issuing
Bank will handle such Information in accordance with applicable laws, including
Federal and state securities laws.

 

CREDIT AGREEMENT - Page 51

 

IN WITNESS WHEREOF, the
parties hereto have duly executed this Agreement as of the day and year first
above written.

		

BORROWER:

HOME SOLUTIONS OF AMERICA, INC.

By:   /s/ Jeff Mattich                                   

            Jeff Mattich

            Chief Financial Officer

Address for Notices:

Home Solutions of America, Inc.

1500 Dragon Street, Suite B

Dallas, TX  75207

Phone No.:  (214) 623-8446

Fax No.:  (214) 333-9435

Attention:  Jeff Mattich

e-mail:  Jeff@homcorp.com

			   

			   

			
	

ADMINISTRATIVE AGENT:

TEXAS CAPITAL BANK,

NATIONAL ASSOCIATION,

as Administrative Agent

By:  /s/ Ronald K. Baker                                 

            Ronald K. Baker

            Executive Vice President

Address for Notices:

2100 McKinney Avenue, Suite 900

Dallas, TX  75201

Phone No.:  (214) 932-6665

Fax No.:  (214) 932-6604

Attention:  Ronald K. Baker

e-mail:  ron.baker@texascapitalbank.com

			

 

 

LOAN AGREEMENT - Signature Page

 

		

LENDERS:

			    

			
	

TEXAS CAPITAL BANK,

NATIONAL ASSOCIATION, 

as Lender

By:  /s/ Ronald K. Baker                                

            Ronald K. Baker

            Executive Vice President

Address for Notices:

2100 McKinney Avenue, Suite 900

Dallas, TX  75201

Phone No.:  (214) 932-6665

Fax No.:  (214) 932-6604

Attention:  Ronald K. Baker

e-mail:  ron.baker@texascapitalbank.com

			

 

 

 

 

LOAN AGREEMENT - Signature Page

 

		

AMEGY BANK, N.A.,

as Lender

By:  /s/  Stephanie Flores                               

             Stephanie Flores

             Vice President

Address for Notices:

1807 Ross Avenue, Suite 400

Dallas, Texas 75201

Phone No.:  (214) 754-9437

Fax No.:  (214) 754-6640

Attention:  Stephanie Flores

e-mail:  Stephanie.flores@amegybank.com

			

  

 

LOAN AGREEMENT - Signature Page

 

		

BANK OF OKLAHOMA, NA,

as Lender

By:   /s/   David Lamb                                                

              David Lamb

              Senior Vice President, Lending Officer

Address for Notices:

P.O. Box 2300, 8th Floor

Tulsa, Oklahoma 74192

Phone No.:  (918) 588-8685

Fax No.:  (918) 295-0400

Attention:  David Lamb

e-mail:  dlamb@bokf.com

			

 

 

 

 

LOAN AGREEMENT - Signature Page

 

		COMPASS BANK, 

as Lender

By:   /s/      Key Coker                                           

                  Key Coker

                  Executive Vice President
	

Address for Notices:

8080 North Central Expressway, Suite 250

Dallas, Texas 75206 

Phone No.:  (214) 706-8044

Fax No.:  (214) 346-2746

Attention:  Key Coker

e-mail:  key.coker@compassbank.com

  

 

LOAN AGREEMENT - Signature Page

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