Document:

Ex-10.137

 

Exhibit 10.137

SECOND AMENDMENT TO

AMENDED AND RESTATED FINANCING AGREEMENT

     THIS SECOND AMENDMENT, dated as of April 10, 2006 (this “Amendment”), to the Amended
and Restated Financing Agreement, dated as of April 8, 2005 (as amended by the First Amendment to
Amended and Restated Financing Agreement dated as of September 28, 2005 (the “First
Amendment”)) (collectively, the “Financing Agreement”), among LJH, LTD., a Texas
limited partnership, with offices located at 377 Neva Lane, Denison, Texas 75020 (together with its
successors and assigns, the “Lender”) and assignee of each of FORTRESS CREDIT OPPORTUNITIES
I LP (hereinafter, the “Existing Lender”), MONROE INVESTMENTS, INC. and MONROE CAPITAL
ADVISORS LLC (hereinafter, the “Original Lender”)), AIRCRAFT INTERIOR DESIGN, INC., a
Florida corporation (“AID”), BRICE MANUFACTURING COMPANY, INC., a California corporation
(“Brice”), TIMCO AVIATION SERVICES, INC., a Delaware corporation (“Parent”), TIMCO
ENGINE CENTER, INC., a Delaware corporation (“Engine”), TIMCO ENGINEERED SYSTEMS, INC., a
Delaware corporation (“Engineered Systems”), and TRIAD INTERNATIONAL MAINTENANCE
CORPORATION, a Delaware corporation (“TIMCO”; AID, Brice, Parent, Engine, Engineered
Systems and TIMCO each individually being referred to herein as a “Borrower” and collectively as
the “Borrowers”, AVIATION SALES DISTRIBUTION SERVICES COMPANY, a Delaware corporation
(“Distribution Services”), AVIATION SALES LEASING COMPANY, a Delaware corporation
(“Leasing”), AVIATION SALES PROPERTY MANAGEMENT CORP., a Delaware corporation
(“Property Management”), AVS/CAI, INC., a Florida corporation (“AVS/CAI”), AVS/M-1,
INC., a Delaware corporation (“AVS/M-1”), AVS/M-2, INC., a Delaware corporation
(“AVS/M-2”), AVS/M-3, INC., an Arizona corporation (“AVS/M-3”), AVSRE, L.P., a Delaware
limited partnership (“AVSRE”), HYDROSCIENCE, INC., a Texas corporation
(“Hydroscience”), TMAS/ASI, INC., an Arkansas corporation (“TMAS/ASI”), and
WHITEHALL CORPORATION, a Delaware corporation (“Whitehall”; Distribution Services, Leasing,
Property Management, AVS/CAI, AVS/M-1, AVS/M-2, AVS/M-3, AVSRE, Hydroscience, TMAS/ASI and
Whitehall each being individually referred to herein as a “Guarantor” and collectively as
the “Guarantors”; the Borrowers and the Guarantors each being individually referred to
herein as a “Company” and collectively as the “Company”).

W I T N E S S E T H:

     WHEREAS, pursuant to the Financing Agreement, the Original Lender made certain term loans to
the Borrowers;

     WHEREAS, pursuant to the Assignment and Acceptance dated as of April 10, 2006 among the
Existing Lender, the Original Lender and Monroe Investments, Inc., collectively, as Assignor, and
the Lender, as Assignee, Assignor sold, transferred and assigned to the Lender, and the Lender
purchased, assumed and accepted from the Assignor, all of the Assignor’s right, title and interest
in and to the Loan Documents (as defined in the Financing Agreement) as in effect on the Effective
Date (as defined in the Assignment and Acceptance), except to the extent expressly reserved or
retained in the Assignment and Acceptance, including all of the Term

 

 

Loans (as defined in the Financing Agreement) as in effect on the Effective Date (as defined
in the Assignment and Acceptance) then outstanding; and

     WHEREAS, the Borrowers have requested, and, upon this Amendment becoming effective, the Lender
has agreed, that the Financing Agreement be amended to provide for, among other things, a new
extension of credit by the Lender to the Borrowers in the manner set forth in this Amendment.

     NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree, effective as of the Amendment Effective Date (as defined below) as follows:

			
	SECTION 1.	 	Defined Terms. Capitalized terms used herein and defined in
the Financing Agreement or in Section 2 of this Amendment shall
have the meanings given to such terms in the Financing
Agreement or in Section 2 of this Amendment (as applicable).

			
	SECTION 2.	 	Amendments to Financing Agreement.

	 	2.1	 	Amendments to Section 1. Section 1 of the Financing Agreement is
hereby amended as follows:

	 	(a)	 	Section 1 of the Financing Agreement is hereby amended by
adding thereto the following defined terms in their appropriate alphabetical
order:

     “Assignment and Acceptance shall mean that certain Assignment and Acceptance
dated as of April 10, 2006, between the Original Lender, Existing Lender, and Monroe
Investments, Inc., collectively, as Assignor, and the Lender, as Assignee.

     Assignment and Acceptance Effective Date shall mean the Effective Date (as
defined in the Assignment and Acceptance).

     Collateral Documents shall mean the collective reference to the Financing
Agreement, the Copyright Security Agreement, the Trademark Security Agreement, the
Mortgages, the Pledge Agreements and each other Loan Document now or hereafter in effect
that purports to create a Lien on any Collateral, as amended, restated, supplemented or
otherwise modified from time to time.

     Existing Lender shall mean Fortress Credit Opportunities I LP, a Delaware
limited partnership.

     LJH shall mean LJH, Ltd., a Texas limited partnership.

     LJH-Owl Creek Participation Agreement shall mean the Participation Agreement
dated as of April 10, 2006, between LJH and Owl Creek Asset Management, as amended,
restated, supplemented or otherwise modified from time to time.

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     LJH Transaction Documents shall mean the Term Loan C Amendment, the Assignment
and Acceptance, the LJH-Owl Creek Participation Agreement and each of the other agreements,
instruments and documents executed and delivered under and pursuant to, or in connection
with, any of the foregoing agreements.

     Original Lender shall mean Monroe Capital Advisors LLC, a Delaware limited
liability company.

     Owl Creek Asset Management shall mean Owl Creek Asset Management, L.P., a
Delaware limited partnership, and its successors and assigns.

     Owl Creek Investors shall mean Owl Creek I, L.P., a Delaware limited
partnership, Owl Creek II, L.P., a Delaware limited partnership, Owl Creek Overseas Fund,
Ltd., a Delaware limited partnership, and Owl Creek Overseas Fund II, Ltd., a Delaware
limited partnership.

     Related Parties shall mean with respect to any person, such person’s Affiliates
and the partners, directors, officers, employees, agents and advisors of such person and of
such person’s Affiliates (other than directors and officers of any Company).

     Term Loan C shall mean the term loan in the original principal amount of
$6,000,000, made by the Lender pursuant to, and repayable in accordance with, the provisions
of Section 4 of this Financing Agreement.

     Term Loan C Amendment shall mean the Second Amendment to Amended and Restated
Financing Agreement dated as of April 10, 2006, among the Lender and the Companies, as
amended, supplemented or otherwise modified from time to time.

     Term Loan C Amendment Effective Date shall mean the Amendment Effective Date
(as defined in the Term Loan C Amendment).

     Term Loan C Cash Interest shall have the meaning provided for in Section 8.1(c)
of this Financing Agreement.

     Term Loan C Interest Rates shall have the meaning provided for in Section
8.1(c) of this Financing Agreement.

     Term Loan Exchange shall mean the conversion or exchange of all or any portion
of any Term Loans at any time and from time to time for a specified number of shares of
common stock, warrants or other equity interests of any Company or another Person.

     Term Loan Obligations shall mean, on any date of determination, all or any
portion of the outstanding principal amount of any Term Loan (including any accrued and
unpaid interest (including without limitation regularly scheduled payments of interest and
default interest under Section 8.1), fees, costs, expenses and other amounts payable under
the Loan Documents that are paid in kind and capitalized and added to any such outstanding
principal amount), together with all other accrued and unpaid interest

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(including without limitation regularly scheduled payments of interest and default
interest under Section 8.1), in each case existing on such date of determination.

     Term Note C shall have the meaning provided for in Section 4.1 of this
Financing Agreement.

	 	(b)	 	Section 1 of the Financing Agreement is hereby further amended
by amending the following defined terms set forth therein as follows:

	 	(i)	 	The defined term “CIT Intercreditor
Agreement” is hereby amended and restated in full to read as
follows:
	 
	 	 	 	“CIT Intercreditor Agreement shall mean that certain
Intercreditor and Subordination Agreement dated as of April 20, 2006,
between CIT and the Lender, as amended from time to time.”
	 
	 	(ii)	 	The defined term “CIT Revolving Line of
Credit” in Section 1 of the Financing Agreement is hereby amended
by deleting therefrom the figure “$35,000,000” and substituting in lieu
thereof the figure “$30,000,000.”
	 
	 	(iii)	 	The defined term “CIT Term Loan” in
Section 1 of the Financing Agreement is hereby amended by adding
thereto the phrase “, which Term Loan has been paid in full on the Term
Loan C Amendment Effective Date” after the phrase “CIT Financing
Agreement” at the end thereof.
	 
	 	(iv)	 	The defined term “Line of Credit” in
Section 1 of the Financing Agreement is hereby amended and restated in
full to read as follows:
	 
	 	 	 	“Line of Credit shall mean the aggregate commitment of the
CIT Lenders to make CIT Revolving Loans pursuant to the CIT Financing
Agreement and issue Letter of Credit Guaranties (as defined in the
CIT Financing Agreement) to the Borrowers in the aggregate amount of
$30,000,000.”
	 
	 	(v)	 	The defined term “Minimum Availability Reserve”
in Section 1 of the Financing Agreement is hereby amended and restated
in full to read as follows:
	 
	 	 	 	“Minimum Availability Reserve shall mean the amount of
$3,000,000.”
	 
	 	(vi)	 	The defined term “Purchase Money Liens” in
Section 1 of the Financing Agreement is hereby amended and restated in
full to read as follows:

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	 	 	 	“Purchase Money Liens shall mean liens on any item of
Equipment acquired after the date of this Financing Agreement
provided that (a) each such lien shall attach only to the property to
be acquired, (b) a description of the Equipment so acquired is
furnished to the Lender, and (c) the debt incurred in connection with
such acquisitions shall not exceed, in the aggregate, $2,500,000 in
the Fiscal Year ending December 31, 2006, $2,500,000 in the Fiscal
Year ending December 31, 2007, and $2,500,000 in any Fiscal Year
thereafter.”

	 	(vii)	 	The defined term “Term Loans” in
Section 1 of the Financing Agreement is hereby amended by deleting the
phrase “and Term Loan B” therefrom and substituting in lieu thereof the
phrase “Term Loan B and Term Loan C”.
	 
	 	(viii)	 	The defined term “Term Notes” in Section 1 of the Financing
Agreement is hereby amended by (A) deleting the phrase “and Exhibit
A-3” therefrom and substituting in lieu thereof the phrase “,
Exhibit A-3 and Exhibit A-4” and (B) deleting the
phrase “and Term Loan B” therefrom and substituting in lieu thereof the
phrase “, Term Loan B and Term Loan C”.

	 	(c)	 	Section 1 of the Financing Agreement is hereby further amended
by deleting therefrom the following defined terms, each in their respective
entireties: Fixed Charge Coverage Ratio, Net Worth, Senior Secured Debt Cap,
Tangible Net Worth, Total Assets, and Total Liabilities.

	 	2.2	 	Amendments to Section 2. Section 2 of the Financing Agreement is
hereby amended by (a) deleting therefrom the phrase “Term Loans” from the lead-in text
immediately prior to subsection (a) therein and substituting in lieu thereof the phrase
“Term Loan A and Term Loan B” and (b) adding thereto a new sentence to the end thereof
to read as follows:
	 
	 	 	 	“The obligation of the Lender to make the Term Loan C hereunder is subject to the
satisfaction of, or waiver of, in writing, the conditions precedent set forth in
Section 5 of the Term Loan C Amendment.”
	 
	 	2.3	 	Amendments to Section 4.1. Section 4.1 of the Financing Agreement is
hereby amended by adding thereto the following text to the end thereof:
	 
	 	 	 	“Each Borrower hereby further agrees to execute and deliver to the Lender Term Note
C in the form attached as Exhibit D to this Agreement (the “Term Note
C”) to evidence the Term Loan C to be extended by the Lender hereunder and
pursuant to the Term Loan C Amendment, and hereby acknowledges and agrees that,
effective as of the Assignment and Acceptance Effective Date, the Existing Term
Note, Term Note A-2 and Term Note B, and all of the obligations, liabilities and
indebtedness of the Borrowers thereunder, and all of the other rights,

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	 	 	 	remedies and obligations of the Existing Lender, the Original Lender and Monroe
Investments, Inc. (collectively, the “Assignor”) under the Financing
Agreement, the Collateral Documents and the other Loan Documents (unless expressly
reserved or retained in the Assignment and Acceptance), have been sold, assigned and
transferred by the Assignor to the Lender pursuant to the Assignment and
Acceptance.”

	 	2.4	 	Amendments to Section 4.2. Section 4.2 of the Financing Agreement is
hereby amended by (a) adding thereto an “(a)” immediately prior to the phrase “Upon
receipt” in the first line thereof and (b) adding thereto a new subsection (b) to read
as follows:

	 	 	 	“(b) Upon receipt of Term Note C and the satisfaction of the conditions precedent set
forth in Section 5 of the Term Loan C Amendment, the Lender hereby agrees to extend to the
Borrowers the Term Loan C.”

	 	2.5	 	Amendments to Section 4.3. Section 4.3 of the Financing Agreement is
hereby amended by adding thereto a new subsection (f) to the end thereof to read as
follows:
	 
	 	 	 	“(f) The parties hereto hereby agree that notwithstanding any term or provision in
Section 4.3 of the Financing Agreement (or any other term or provision in the
Financing Agreement), from and after the Term Loan C Amendment Effective Date, the
Borrowers shall not request, and the Lender shall have no further obligation to
make, any additional Term Loan B Advance under the Term Loan B Line.”
	 
	 	2.6	 	Amendments to Section 4.4. Section 4.4 of the Financing Agreement is
hereby amended by adding thereto new subsections (d), (e) and (f) to the end thereof to
read as follows:
	 
	 	 	 	“(d) The principal amount of the Term Loan C shall be due and payable on the
Maturity Date or as otherwise provided in this Agreement.
	 
	 	 	 	(e) Notwithstanding any term or provision in this Agreement, the Borrowers shall not
be required to make a payment on the outstanding principal balance of any Term Loan
to the Lender when due on any given date if and to the extent the Lender is
expressly prohibited under the CIT Intercreditor Agreement from receiving such
principal payments on such due date, provided that the Borrowers shall make
any such deferred principal payment on the first Business Day following the date on
which the Lender is no longer prohibited under the CIT Intercreditor Agreement from
receiving such principal payment.
	 
	 	 	 	(f) Notwithstanding any term or provision in this Agreement, the Companies and the
Lender may agree from time to time to consummate Term Loan Exchanges and, upon the
consummation of any such Term Loan Exchange, the Term Loan Obligations subject to
such Term Loan Exchange shall be deemed paid and satisfied in full.”

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	 	2.7	 	Amendments to Section 4.6. Section 4.6 of the Financing Agreement is
hereby amended by adding thereto the phrase “, Term Loan C” immediately prior to the
phrase “and all other Obligations” on the fifth line thereof.
	 
	 	2.8	 	Amendments to Section 4.7. Section 4.7 of the Financing Agreement is
hereby amended by adding thereto the phrase “and the Term Loan C” immediately after the
phrase “the Term Loan A” on the fifth line thereof.
	 
	 	2.9	 	Amendments to Section 4.8. Section 4.8 of the Financing Agreement is
hereby amended by adding thereto the phrase “and the Term Loan C” immediately after the
phrase “to the Term Loan A” on the third line thereof.
	 
	 	2.10	 	Amendments to Section 7.1. Section 7.1(m) of the Financing Agreement
is hereby amended by adding thereto a new sentence immediately prior to the third
sentence thereof to read as follows:
	 
	 	 	 	“The proceeds of the Term Loan C shall be used to provide working capital to the
Borrowers and to pay certain of the costs and expenses of closing the transactions
contemplated by the LJH Transaction Documents.”
	 
	 	2.11	 	Amendments to Section 7.5. Section 7.5 of the Financing Agreement is
hereby amended by (a) amending subsection (b)(iv) thereof by deleting therefrom the
phrase “or Term Loan A-2” set forth on the sixth line thereof and substituting in lieu
thereof the phrase “, Term Loan A-2 or Term Loan C”; and (b) (i) amending subsection
(c) thereof by deleting therefrom the term “and” immediately prior to the phrase “Term
Loan B Cash Interest” set forth on the tenth line thereof and substituting in lieu
thereof “,” and (ii) adding thereto the phrase “and Term Loan C Cash Interest as set
forth in Paragraph 8.1(c) of Section 8 of this Financing Agreement” immediately after
the phrase “Term Loan B Cash Interest as set forth in Paragraph 8.1(b) of Section 8 of
this Financing Agreement” set forth in the tenth and eleventh lines thereof.
	 
	 	2.12	 	Amendments to Section 7.9. Section 7.9(b) of the Financing Agreement
is hereby amended in full to read as follows: “(b) Incur or create any Indebtedness
other than Permitted Indebtedness.”
	 
	 	2.13	 	Amendments to Section 7.10. Section 7.10 of the Financing Agreement is
hereby amended and restated in full to read as follows:
	 
	 	 	 	"7.10 Until termination of the Financing Agreement and payment and satisfaction in
full of all Obligations hereunder, the Companies shall not make Capital Expenditures
(including, without limitation, by way of Capital Leases) which, in the aggregate,
as to the Companies, exceeds $2,500,000 during any Fiscal Year, provided,
however, such limitation shall not apply to Capital Expenditures made solely
from the proceeds of cash contributions to the equity of the Company making such
Capital Expenditure which are made after the date of the Assignment and Acceptance
Effective Date but excluding cash contributions to the equity of any Company
required pursuant to the terms and provisions of

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	 	 	 	any merger agreement and excluding any equity contributions arising from the
conversion of any Indebtedness.”

	 	2.14	 	Amendments to Section 8.1.

	 	(a)	 	Section 8.1(a) of the Financing Agreement is hereby amended by
(i) deleting therefrom the phrase “six (6%) percent” in the third line thereof
and substituting in lieu thereof the phrase “one and three-quarters (1.75%)
percent” and (ii) deleting therefrom the second sentence thereof.
	 
	 	(b)	 	Section 8.1(b) of the Financing Agreement is hereby amended by
(i) deleting therefrom the phrase “six (6%) percent” in the third line thereof
and substituting in lieu thereof the phrase “one and three quarters (1.75%)
percent” and (ii) deleting therefrom the second sentence thereof.
	 
	 	(c)	 	Section 8.1(c) is hereby amended and restated in full to read
as follows:
	 
	 	 	 	“(c) Cash Interest (“Term Loan C Cash Interest”) on the Term
Loan C shall be payable monthly in arrears on the first day of each calendar
month, on the date of each payment of principal thereof and on the Maturity
Date at the rate of LIBOR plus one and three quarters (1.75%) percent per annum
(the “Term Loan C Interest Rates”), provided that all such
interest shall be paid-in-kind, immediately capitalized and added to the
outstanding principal amount of the Term Loan C in accordance with Section
8.1(o).”
	 
	 	(d)	 	Section 8.1 of the Financing Agreement is hereby further
amended by adding thereto a new subsection (o) to read as follows:
	 
	 	 	 	“(o) Notwithstanding any term or provision in this Section 8.1, the
Borrowers shall not be required to pay in cash any fees required to be paid
to the Lender when due under Section 8.1 or to make cash interest payments
(including regularly scheduled interest payments and default interest
payments) on any Term Loan to the Lender when due, in each case to the
extent that the Lender is expressly prohibited under the CIT Intercreditor
Agreement from receiving such fees in cash or cash interest payments on such
due date, provided that any such fees that are not paid to the
Lender in cash when due shall on the date or dates when due and owing be
paid in kind to the Lender and immediately capitalized and added to the then
outstanding principal amount of the Term Loan B on such date or dates, and
such cash interest payments that are not made to the Lender when due shall
on the date or dates such interest payments are due and owing be immediately
paid in kind, capitalized and added to the then outstanding principal amount
of such Term Loan to which such interest payment relates on such date or
dates, and all of the foregoing capitalized amounts shall thereupon bear
interest at the rate of interest specified in this Section 8.1.”

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	 	2.15	 	Amendments to Section 13.2. Section 13.2 of the Financing Agreement is
hereby amended by (a) adding thereto an “(A)” immediately prior to the phrase
“commercial banks” and (b) adding thereto the phrase “or (B) Owl Creek Asset
Management, any Owl Creek Investor and any other investor entity that is reasonably
acceptable to the Parent (provided that the Parent shall have no such rights if
a Default has occurred and is continuing)” immediately after the phrase “or other
financial institutions” at the end of the third sentence thereof.
	 
	 	2.16	 	Amendments to Section 13.6. Section 13.6 of the Financing Agreement is
hereby amended by (a) amending and restating subsection (a) thereof in full to read as
follows:

	 	 	 	“(a) If to Lender, at:

LJH, Ltd.

Attention: Lacy J. Harber, President

377 Neva Lane

Denison, Texas 75020

Telephone: 903-465-6937

Facsimile: 903-465-6514”

and (b) by deleting therefrom the Companies’ counsel contact information in
subsection (b) therein and substituting in lieu thereof the following:

“With a courtesy copy of any material notice to the Companies’ counsel at:

TIMCO Aviation Services, Inc.

Attention: Legal Department

623 Radar Road

Greensboro, North Carolina 27410

Facsimile: (336) 665-9014”

	 	2.17	 	Additional Amendments to Section 13. Section 13 of the Financing
Agreement is hereby further amended by adding thereto new Sections 13.10, 13.11, 13.12,
13.13 and 13.14 to the end thereof to read as follows:

“13.10. The Lender and each of the Companies agree 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, members,
directors, officers, employees, agents, attorneys, 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), (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

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other Loan Document or any action or proceeding relating to this Financing 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 13.10, to (i) any assignee of or participant in, or any prospective
assignee of or participant in, any of its rights or obligations under this Financing
Agreement or (ii) any actual or prospective counterparty (or its advisors) to any
swap or derivative transaction relating to any Borrower and its obligations, (g)
with the consent of each Borrower and each other Company, or (h) to the extent such
Information (x) becomes publicly available other than as a result of a breach of
this Section 13.10 or (y) becomes available to the Lender or any of its respective
Affiliates on a nonconfidential basis from a source other than any Borrower or any
other Company, provided, that such source is not bound by a written obligation to
maintain such Information as confidential.

For purposes of this Section, “Information” means all information received from any
Borrower or any other Company relating to such Borrower or any such other Company or
any of their respective businesses, other than any such information that is
available to the Lender on a nonconfidential basis prior to disclosure by any
Borrower or any other Company, provided that, in the case of information received
from any Borrower or any other Company after the date hereof, such information is
clearly identified at the time of delivery as confidential. Any person or entity
required to maintain the confidentiality of Information as provided in this Section
13.10 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.

13.11 (a) THE BORROWERS SHALL PAY (I) ALL REASONABLE OUT-OF-POCKET EXPENSES INCURRED
BY THE LENDER (INCLUDING THE REASONABLE FEES, CHARGES AND DISBURSEMENTS OF COUNSEL
FOR THE LENDER) IN CONNECTION WITH THE PREPARATION, NEGOTIATION, EXECUTION, DELIVERY
AND ADMINISTRATION OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS OR ANY AMENDMENTS,
MODIFICATIONS OR WAIVERS OF THE PROVISIONS HEREOF OR THEREOF (WHETHER OR NOT THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY SHALL BE CONSUMMATED), AND (II) ALL
REASONABLE OUT-OF-POCKET EXPENSES INCURRED BY THE LENDER (INCLUDING THE FEES,
CHARGES AND DISBURSEMENTS OF COUNSEL), IN CONNECTION WITH ANY DEFAULT OR THE
ENFORCEMENT OR PROTECTION OF ITS RIGHTS (A) IN CONNECTION WITH THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS, INCLUDING ITS RIGHTS UNDER THIS SECTION, OR (B) IN
CONNECTION WITH THE TERM LOANS MADE HEREUNDER, INCLUDING ALL SUCH OUT-OF-POCKET
EXPENSES INCURRED DURING ANY WORKOUT, RESTRUCTURING OR NEGOTIATIONS IN RESPECT OF
SUCH LOANS.

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(b) THE BORROWERS SHALL, TO THE FULLEST EXTENT PERMITTED UNDER APPLICABLE LAW,
INDEMNIFY THE LENDER, AND EACH RELATED PARTY OF THE LENDER (EACH SUCH PERSON BEING
CALLED AN “INDEMNITEE”) AGAINST, AND HOLD EACH INDEMNITEE HARMLESS FROM, ANY
AND ALL LOSSES, CLAIMS, DAMAGES, LIABILITIES, PENALTIES, ACTIONS, JUDGMENTS, SUITS,
COSTS, EXPENSES, AND DISBURSEMENTS (INCLUDING THE FEES, CHARGES AND DISBURSEMENTS OF
ANY COUNSEL FOR ANY INDEMNITEE), INCURRED BY ANY INDEMNITEE OR ASSERTED AGAINST ANY
INDEMNITEE BY ANY THIRD PARTY OR BY ANY BORROWER OR ANY OTHER COMPANY ARISING OUT
OF, IN CONNECTION WITH, OR AS A RESULT OF (I) THE EXECUTION OR DELIVERY OF THIS
AGREEMENT, ANY OTHER LOAN DOCUMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED
HEREBY OR THEREBY, THE PERFORMANCE BY THE PARTIES HERETO OF THEIR RESPECTIVE
OBLIGATIONS HEREUNDER OR THEREUNDER OR THE CONSUMMATION OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY, (II) ANY TERM LOAN OR THE USE OR PROPOSED USE OF THE
PROCEEDS THEREFROM, (III) ANY ACTUAL OR ALLEGED PRESENCE OR RELEASE OF HAZARDOUS
MATERIALS ON OR FROM ANY PROPERTY OWNED OR OPERATED BY ANY COMPANY, OR ANY
ENVIRONMENTAL LIABILITY RELATED IN ANY WAY TO ANY COMPANY, OR (IV) ANY ACTUAL OR
PROSPECTIVE CLAIM, LITIGATION, INVESTIGATION OR PROCEEDING RELATING TO ANY OF THE
FOREGOING, WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY, WHETHER BROUGHT BY A
THIRD PARTY OR BY ANY COMPANY, AND REGARDLESS OF WHETHER ANY INDEMNITEE IS A PARTY
THERETO, PROVIDED THAT SUCH INDEMNITY SHALL NOT, AS TO ANY INDEMNITEE, BE AVAILABLE
TO THE EXTENT THAT SUCH LOSSES, CLAIMS, DAMAGES, LIABILITIES, PENALTIES, ACTIONS,
JUDGMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS (X) ARE DETERMINED BY A COURT OF
COMPETENT JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM THE
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE OR (Y) RESULT FROM A CLAIM
BROUGHT BY ANY COMPANY AGAINST AN INDEMNITEE FOR BREACH IN BAD FAITH OF SUCH
INDEMNITEE’S OBLIGATIONS HEREUNDER OR UNDER ANY OTHER LOAN DOCUMENT, IF SUCH COMPANY
HAS OBTAINED A FINAL NONAPPEALABLE JUDGMENT IN ITS FAVOR ON SUCH CLAIM AS DETERMINED
BY A COURT OF COMPETENT JURISDICTION. WITHOUT LIMITING ANY PROVISIONS OF THIS
AGREEMENT OR OF ANY OTHER LOAN DOCUMENT, IT IS THE EXPRESS INTENTION OF THE PARTIES
HERETO THAT EACH INDEMNITEE SHALL BE INDEMNIFIED FROM AND HELD HARMLESS AGAINST ANY
AND ALL LOSSES, CLAIMS, DAMAGES, LIABILITIES, PENALTIES, ACTIONS, JUDGMENTS, SUITS,
COSTS, EXPENSES AND

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DISBURSEMENTS (INCLUDING THE FEES, CHARGES AND DISBURSEMENTS OF COUNSEL) ARISING OUT
OF OR CAUSED IN WHOLE OR IN PART BY THE ORDINARY NEGLIGENCE OF ANY INDEMNITEE.
WITHOUT LIMITING THE FOREGOING, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH
COMPANY AGREES NOT TO ASSERT AND TO CAUSE ITS SUBSIDIARIES NOT TO ASSERT, AND HEREBY
WAIVES AND AGREES TO CAUSE ITS SUBSIDIARIES TO SO WAIVE, ALL RIGHTS FOR CONTRIBUTION
OR ANY OTHER RIGHTS OF RECOVERY WITH RESPECT TO ALL CLAIMS, DEMANDS, PENALTIES,
FINES, LIABILITIES, SETTLEMENTS, DAMAGES, COSTS AND EXPENSES OF WHATEVER KIND OR
NATURE, UNDER OR RELATED TO ENVIRONMENTAL LAWS, THAT ANY OF THEM MIGHT HAVE BY
STATUTE OR OTHERWISE AGAINST ANY INDEMNITEE.

(c) TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH COMPANY SHALL NOT
ASSERT, AND EACH COMPANY HEREBY WAIVES, ANY CLAIM AGAINST ANY INDEMNITEE, 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 TERM LOAN
OR THE USE OF THE PROCEEDS THEREOF. NO INDEMNITEE 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.

(d) ALL AMOUNTS DUE UNDER THIS SECTION 13.11 SHALL BE PAYABLE PROMPTLY/NOT LATER
THAN TEN (10) DAYS AFTER WRITTEN DEMAND THEREFOR. THE AGREEMENTS IN THIS SECTION
13.11 SHALL SURVIVE REPAYMENT OF THE TERM LOANS AND ALL OTHER AMOUNTS PAYABLE
HEREUNDER.

13.12 Each Company hereby acknowledges and agrees that:

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

(b) the Lender has no fiduciary relationship with or duty to any Company arising out
of or in connection with this Agreement or any of the other Loan Documents, and the
relationship between the Lender, on the one hand, and the

12

 

Borrowers and the Guarantors, on the other hand, in connection herewith or therewith
is solely that of debtor and creditor; and

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

13.13 Each Company hereby acknowledges and agrees that in connection with all
aspects of each transaction contemplated by the Loan Documents: (a) the Term Loans
provided for under this Agreement and any related transactions, services and matter
in connection therewith (including in connection with any amendment, waiver or other
modification to this Agreement or any other Loan Document) are arms-length
commercial transactions between the Borrowers and the Guarantors, on the one hand,
and the Lender, on the other hand, and each Borrower and each Guarantor is capable
of evaluating and understanding and understands and accepts the terms, risks and
conditions of the transactions contemplated by this Agreement and the other Loan
Documents (including any amendment, waiver or other modification hereof or thereof);
(b) in connection with any of the negotiations and processes relating to any such
transactions, the Lender is and has been acting solely as a principal and is not the
financial advisor, agent or fiduciary, for any Borrower or any Guarantor; (c) the
Lender has not assumed and will not assume any advisory, agency or fiduciary
responsibility in favor of any Borrower or any Guarantor with respect to any of the
transactions contemplated by any Loan Document or any of the negotiations or
processes relating to any such transactions, including with respect to any
amendment, waiver or other modification to this Agreement or any other Loan Document
(irrespective of and without regard to any LJH Transaction Document or whether the
Lender or any of its Affiliates has advised or is currently advising any Borrower,
any Guarantor or any of their respective Affiliates on any such matters or other
matters) and the Lender has no obligation to any Borrower, any Guarantor or any of
their respective Affiliates with respect to any of the transactions contemplated by
any Loan Document except those obligations expressly set forth in this Agreement and
in the other Loan Documents; (d) the Lender and its respective Affiliates are or may
be engaged in a broad range of transactions (including any transaction contemplated
under any LJH Transaction Document) that involve interests that differ from those of
any Borrower, any Guarantor and any of their respective Affiliates, and the Lender
has no obligation to disclose any of such interests by virtue of any advisory,
agency or fiduciary relationship; and (e) the Lender has not provided and will not
provide any legal, accounting, regulatory or tax advice to any Company with respect
to any of the transactions contemplated by any Loan Document (including any
amendment, waiver or other modification of any Loan Document) and each Company has
consulted its own legal, accounting, regulatory and tax advisors to the extent it
has deemed appropriate. Each Company hereby waives and releases, to the fullest
extent permitted by law, any claims that it may have against the Lender or any
Related Parties of the Lender with respect to any breach or alleged breach of agency
or fiduciary duty in connection with any Loan Document.”

13

 

13.14 Notwithstanding any term or provision to the contrary in this Agreement (but
without limiting any term or provision in Section 8.1), the Borrowers and the other
Companies shall not be required to pay in cash any cost, expense, indemnification
payment or other miscellaneous amounts to the Lender when due, in each case to the
extent that the Lender is expressly prohibited under the CIT Intercreditor Agreement
from receiving any such cost, expense, indemnification payment or other amounts in
cash on such due date, provided that any such amounts that are not paid to
the Lender in cash when due shall on the date or dates when due and owing from any
Borrower or any other Company under the Loan Documents, be immediately paid in kind,
capitalized and added to the outstanding principal amount of the Term Loan B, and
shall thereupon bear interest at the rates specified in Section 8.1.”

	 	2.18	 	Amendments to Exhibits. The Financing Agreement is hereby further
amended by (a) deleting Exhibit A-1 therefrom in its entirety and substituting
in lieu thereof a new Exhibit A-1 in the form attached as Exhibit A to this
Amendment; (b) deleting Exhibit A-2 therefrom in its entirety and substituting
in lieu thereof a new Exhibit A-2 in the form attached as Exhibit B to this
Amendment; (c) deleting Exhibit A-3 therefrom in its entirety and substituting in lieu
thereof a new Exhibit A-3 in the form attached as Exhibit C to this Amendment;
(d) incorporating therein a new Exhibit A-4, Term C Note, in the form attached
as Exhibit D to this Amendment; and (e) deleting Exhibit B therefrom in
its entirety and substituting in lieu thereof a new Exhibit B in the form
attached as Exhibit E to this Amendment.

SECTION 3. Amendment Documents.

	 	3.1	 	Execution and Delivery of New Term Notes.

	 	(a)	 	The Borrowers hereby agree to execute and deliver to the
Lender, prior to the Amendment Effective Date, each of (i) the Amended and
Restated Term Note A-1 in the form attached as Exhibit A to this
Amendment (as amended, restated, supplemented or otherwise modified from time
to time, the “Amended and Restated Term Note A-1”); (ii) the Amended
and Restated Term Note A-2 in the form attached as Exhibit B to this
Amendment (as amended, restated, supplemented or otherwise modified from time
to time, the “Amended and Restated Term Note A-2”); (iii) the Amended
and Restated Term Note B in the form attached as Exhibit C to this
Amendment (as amended, restated, supplemented or otherwise modified from time
to time, the “Amended and Restated Term Note B”); and (iv) Term Note C
in the form attached as Exhibit D to this Amendment (as amended,
restated, supplemented or otherwise modified from time to time, the “Term C
Note”; and, together with the Amended and Restated Term Note A-1, the
Amended and Restated Term Note A-2 and the Amended and Restated Term Note B,
the “New LJH Term Notes”).

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	 	(b)	 	The Companies hereby further acknowledge and agree that upon
execution and delivery of the New LJH Term Notes by the Borrowers to the Lender
and the occurrence of the Amendment Effective Date, (i) the New LJH Term Notes
shall be and constitute the “Term Notes” (as such term is used in the Financing
Agreement and the other Loan Documents) in all respects and for all purposes,
(ii) the Amended and Restated Term Note A-1 shall constitute the “Existing Term
Note” (as defined in the Financing Agreement in all respects and for all
purposes, (ii) the Amended and Restated Term Note A-2 shall be and constitute
the “Term Note A-2” under the Financing Agreement in all respects and for all
purposes, and (iii) the Amended and Restated Term Note B shall be and
constitute the “Term Note B” under the Financing Agreement in all respects and
for all purposes.
	 
	 	(c)	 	The Lender shall deliver (or cause to be delivered) to the
Borrowers, the Existing Term Note, the Term Note A-2 and the Term Note B, each
as in effect immediately prior to the Amendment Effective Date (the
“Existing Term Notes”).
	 
	 	(d)	 	The Companies hereby acknowledge and agree to the amendments
set forth in Sections 2.14(d) and 2.17 of this Amendment and hereby covenant
and agree at any time and from time to time to execute and deliver to the
Lender amended and restated New LJH Term Notes evidencing payments and amounts
that have been paid in kind, capitalized and added to the outstanding principal
amounts of the Term Loans evidenced thereby.

	 	3.2	 	Execution and Delivery of Mortgage Assignments and Amendments. Each
Company that is a party to any Mortgage hereby (a) agrees to execute and deliver to the
Lender, within ten (10) Business Days after the Amendment Effective Date, an assignment
and amendment to such Mortgage in form and substance reasonably acceptable to the
Lender (each a “Mortgage Assignment and Amendment”) that assigns such Mortgage
to the Lender and amends such Mortgage to conform to the terms of the Financing
Agreement (as amended by this Amendment), and (b) authorizes the Lender to file and
record (or cause to be filed and recorded), at such Company’s sole cost and expense,
each such Mortgage Assignment and Amendment in the jurisdiction or jurisdictions where
the original Mortgage was recorded.
	 
	 	3.3	 	Execution and Delivery of IP Security Agreements. Each Company that
owns or holds any interest in any Copyright, Trademark or any Patent hereby (a)
covenants and agrees to deliver to the Lender a schedule describing all Copyrights,
Trademarks and Patents owned by such Company or in which such Company has any right,
title or interest within ten (10) Business Days after the Amendment Effective Date, (b)
agrees to execute and deliver to the Lender, within ten (10) Business Days after the
Amendment Effective Date, a Copyright Security Agreement, a Trademark Security
Agreement and a Patent Security Agreement (as applicable) covering the Copyrights,
Trademarks and Patents

15

 

owned by such Company or in which such Company has any right, title or interest,
each in form and substance reasonably acceptable to the Lender (each an “IP
Security Agreement”), and (c) authorizes the Lender to file and record (or cause
to be filed and recorded), at such Company’s sole cost and expense, each such IP
Security Agreement with the U.S. Copyright Office or the U.S. Patent and Trademark
Office (as applicable).

	 	3.4	 	Execution and Delivery of New CIT Intercreditor Agreement; Termination of
LJH Subordination Agreement. Each Company hereby agrees to execute and deliver an
acknowledgment and agreement to, and consents to the execution, delivery and
performance of, the Intercreditor and Subordination Agreement, dated as of April 20,
2006, between CIT and the Lender, and acknowledged and agreed by the Companies, in
substantially the form attached as Exhibit E (the “CIT Intercreditor
Agreement”). Upon execution and delivery by CIT and the Lender of the CIT
Intercreditor Agreement, the existing LJH Subordination Agreement shall terminate in
all respects.
	 
	 	3.5	 	Ratification of Obligations Under the Loan Documents. Each of the
Companies hereby (a) acknowledges and agrees that, immediately prior to the Assignment
and Acceptance Effective Date, (i) the outstanding principal amount of the Term Loan
A-1 is $8,158,314.57 and the aggregate amount of accrued and unpaid cash interest and
PIK interest in the Term Loan A-1 is $31,979.75, (ii) the outstanding principal amount
of the Term Loan A-2 is $7,138,507.47 and the aggregate amount of accrued and unpaid
cash interest and PIK interest on the Term Loan A-2 is $27,982.20, (iii) the
outstanding principal amount of the Term Loan B is $2,627,508.00 and the aggregate
amount of accrued and unpaid cash interest and PIK interest on the Term Loan B is
$9,496.71 and (iv) the aggregate amount of collateral management fees, legal fees and
expenses, and accrued and unpaid default interest on the Term Loans due and owing by
the Borrowers to Fortress, and paid by the Lender to the Existing Lender pursuant to
the Assignment and Acceptance Agreement, is $319,466.38 (collectively, the
“Existing Obligations”); (b) acknowledges and agrees that, upon the occurrence
of the Assignment and Acceptance Effective Date, the Lender shall be the “Lender” under
the Financing Agreement and the other Loan Documents in all respects and for all
purposes and the Existing Obligations and all other Obligations shall be due and
payable to (or required to be reimbursed to) the Lender as provided in the Loan
Documents (as amended, modified and supplemented by the Amendment Documents) without
any offset, deduction, defense or counterclaim; and (c) acknowledges and agrees that,
as of the Assignment and Acceptance Agreement Effective Date, notwithstanding any term
or provision in the Financing Agreement, (i) the outstanding principal amount of the
Term Loan A-1 is $8,190,294.32 and is subject to increase from time to time pursuant to
Section 8.1 of the Financing Agreement, (ii) the outstanding principal amount of the
Term Loan A-2 is $7,166,489.67, and is subject to increase from time to time pursuant
to Section 8.1 of the Financing Agreement, (iii) the outstanding principal amount of
the Term Loan B is $2,956,471.09 and is subject to increase from time to time pursuant
to Sections 8.1 and 13.14 of the Financing Agreement.

16

 

	 	3.6	 	Ratification of Collateral Documents and Liens. Each Company hereby
(a) acknowledges, confirms, ratifies and reaffirms all of the security interests and
liens created under the Collateral Documents in effect on the date hereof to which it
is a party; (b) represents and warrants and covenants and agrees that all of such
security interests and liens constitute valid, enforceable, perfected, first priority
(subject to the liens and security interests of CIT to the extent such liens and
security interests are senior in priority to the security interests and liens of the
Lender as expressly provided in the CIT Intercreditor Agreement and any Permitted
Encumbrances as expressly set forth in the Financing Agreement) security interests and
liens in and to the Collateral purported to be secured thereby in favor of the Lender,
and that each security interest and lien created by such Company under such Collateral
Documents in favor of Hilco Capital LP, the Original Lender or the Existing Lender
shall immediately upon the Assignment and Acceptance Effective Date be valid,
enforceable, perfected, first priority (subject to the liens and security interests of
CIT to the extent such liens and security interests are senior in priority to the
security interests and liens of the Lender to the security interests and liens of the
Lender as expressly provided in the CIT Intercreditor Agreement and any Permitted
Encumbrances as expressly set forth in the Financing Agreement) security interest and
liens in and to the Collateral in favor of the Lender; and (c) authorizes the Lender to
create (or cause to be created) and file or record (or cause to be filed or recorded),
in each case at such Company’s sole cost and expense, any and all UCC-3 amendments,
UCC-3 assignments, and UCC-1 financing statements in any jurisdiction to further
perfect, protect and preserve the security interests and liens created under the
Collateral Documents in favor of the Lender.
	 
	 	3.7	 	Schedules to Financing Agreement. The Parent acknowledges and agrees
that it shall deliver to the Lender, within ten (10) Business Days after the Amendment
Effective Date, updated schedules to the Financing Agreement and such other information
pertaining to the Collateral and the other Loan Documents as the Lender shall
reasonably request.
	 
	 	3.8	 	Limitation on Borrowings Under CIT Financing Agreement. Borrower
agrees that it will not borrow amounts under the CIT Financing Agreement which, when
made, would cause the aggregate principal amount of all outstanding CIT Revolving Loans
at such time to exceed the sum of (i) $6,000,000, plus (ii) the Revolver Balance,
unless (i) the Chief Executive Officer of the Parent has expressly authorized such
borrowing to be made, and (ii) Parent, on behalf of the Borrowers, promptly notifies
Lender that such approved borrowings have occurred. Further, Borrower agrees to provide
Lender with such periodic cash flow reports as are provided to its Board of Directors.
In the event that Borrower violates this provision, it shall not be deemed an Event of
Default. However, Lender shall be entitled to charge the Default Rate of Interest
(rather than the Term Loan C Interest Rate) on the outstanding balance owed by the
Borrowers under the Term Note C until such time as the aggregate principal amount of
all outstanding CIT Revolving Loans is reduced below the sum of (i) $6,000,000, plus
(ii) the Revolver Balance. As used in this Section 3.8, the term “Revolver 

17

 

Balance” shall mean the total amount outstanding under the CIT Revolving
Loan as of the close of business on April 21, 2006, as such amount is set forth on a
certificate of the Senior Vice President of Finance of the Parent delivered to the
Lender not later than April 25, 2006. Notwithstanding any term or provision in this
Section 3.8, the Borrowers agree that, between the Amendment Effective Date and the
date and time on which the certificate referenced in the definition of “Revolver
Balance” set forth in the immediately preceding sentence, no CIT Revolving
Credit Loans shall be made except for the purposes of (a) paying the CIT Term Loan
in full, which CIT Revolving Loan may be repaid with the Term Loan C proceeds, (b)
to pay costs and expenses (including legal fees) relating to the preparation,
negotiation, execution and delivery of the Amendment Documents, and (c) to pay
ordinary and necessary expenses of the Companies arising in the ordinary course of
business consistent with past practices.

	 	3.9	 	Waiver of Existing Defaults. Each Company hereby acknowledges and
agrees that one or more Defaults or Events of Default have occurred and are continuing
under the Financing Agreement by virtue of the Companies’ failure to comply with any of
the provisions of the Financing Agreement through the Amendment Effective Date
(collectively, the “Existing Defaults”). The Lender hereby waives, effective
as of the Amendment Effective Date, all Existing Defaults. This waiver shall be
effective only for the Defaults and Events of Default occurring or arising on or prior
to the Amendment Effective Date. Nothing in this Amendment shall constitute a waiver
of any other Default or Event of Default occurring or existing under the Loan Documents
after the Amendment Effective Date.

			
	SECTION 4.	 	Conditions to Effectiveness. This Amendment shall not become effective, and the
Lender shall have no obligation to make the Term C Loan to the Borrowers, until the date (the
“Amendment Effective Date”) on which all of the following conditions precedent have
been satisfied or waived by the Lender in writing:

	 	4.1	 	The Companies shall have executed and delivered to the Lender this Amendment.
	 
	 	4.2	 	The Lender shall have received each of the following (together with this
Amendment, the “Amendment Documents”):

	 	(a)	 	the New LJH Term Notes, executed by the Borrowers;
	 
	 	(b)	 	the Assignment and Acceptance Agreement, executed by the
Existing Lender, LJH, the Original Lender and Monroe Investments, Inc.;
	 
	 	(c)	 	the Amendment No. 4 to Financing Agreement, dated as of April
20, 2006, executed by the Companies and CIT, as Collateral and Administrative
Agent for the Lenders and as the sole Lender;
	 
	 	(d)	 	the CIT Intercreditor Agreement, executed by CIT and
acknowledged and agreed to by each Company;

18

 

	 	(e)	 	the LJH-Owl Creek Participation Agreement, in form and
substance satisfactory to the Lender, executed by LJH and Owl Creek Asset
Management;
	 
	 	(f)	 	the Existing Term Notes, together with Allonges in form and
substance satisfactory to the Lender, executed by the Original Lender; and
	 
	 	(g)	 	all Collateral held by or on behalf of the Existing Lender or
the Original Lender (including any certificated equity interests constituting
Collateral) with appropriate endorsements and stock powers executed in blank as
required by the Lender, in each case, except to the extent such Collateral is
held by CIT in accordance with the CIT Intercreditor Agreement.

	 	4.3	 	Each of the Companies shall have authorized, executed and delivered (as
applicable) to the Lender any and all such documents (including, without limitation,
UCC financing statement assignments, UCC financing statements and stock powers) and
taken all such other actions (including, without limitation, the filing of such UCC
financing statements and the delivery of stock certificates) as may have been requested
by or on behalf of the Lender, and in the form or manner as may have been so requested,
to perfect the security interests and liens created by the Collateral Documents to
which such Company is a party or by the Loan Documents as amended by this Amendment, in
each case with the priority contemplated by such Collateral Documents or the Loan
Documents as so amended.
	 
	 	4.4	 	The Lender shall have received a copy of the resolutions or consents, in form
and substance satisfactory to the Lender, of the Board of Directors or the General
Partner of each Company (other than the Parent) authorizing the execution, delivery and
performance by such Company of the Amendment Documents to which it is a party and any
borrowings to be made thereunder or under the Financing Agreement, and the creation and
perfection of any security interest and lien, contemplated by this Amendment and the
other Loan Documents (as amended by the applicable Amendment Documents), certified by
the Senior Vice President-Finance (or other authorized officer acceptable to the
Lender), or the General Partner, of such Company, as of the Amendment Effective Date,
which certification states that the resolutions and consents thereby certified have not
been amended, modified, revoked or rescinded as of the date of such certificate.
	 
	 	4.5	 	The Lender shall have received a closing certificate signed by the Senior Vice
President-Finance (or other authorized officer acceptable to the Lender), or the
General Partner, of each Company, dated the Amendment Effective Date, certifying that
(a) the representations and warranties set forth in Section 7.1 of the Financing
Agreement and in this Amendment are true and correct in all material respects on and as
of such date, (b) after giving effect to this Amendment, each Company is on such date
in compliance in all material respects with all of the terms and provisions set forth
in the Financing Agreement and the other Loan

19

 

	 	 	 	Documents, and (c) after giving effect to this Amendment, no Default or Event of
Default exists.

	 	4.6	 	A certificate of the Secretary or an Assistant Secretary or the Secretary or an
Assistant Secretary of the General Partner of each Company, dated the Amendment
Effective Date, certifying (a) that attached thereto are certificates of existence for
each Company issued by the secretary of state or other appropriate official of the
state of each Company’s state of formation, (b) that except as set forth therein there
have been no amendments, modifications, restatements or supplements to or of any
Company’s articles of formation or its bylaws, partnership or operating agreement or
other constituent documents, and (c) as to the incumbency and genuineness of the
signature of each officer or general partner of each Company executing this Amendment
and the other Amendment Documents executed in connection herewith.
	 
	 	4.7	 	All corporate, organizational and other proceedings, and all documents,
instruments and other legal matters in connection with the transactions contemplated by
this Amendment, the other Loan Documents, the Amendment Documents and the LJH
Transaction Documents shall be satisfactory in form and substance to the Lender, and
the Lender shall have received such other documents in respect of any aspect or
consequence of the transactions contemplated hereby or thereby as the Lender shall
reasonably request.

			
	SECTION 5.	 	Representations and Warranties. To induce the Lender to enter
into this Amendment and the Assignment and Acceptance Agreement
and to make the Term Loan C to the Borrowers, each Company
hereby represents and warrants to the Lender, as of the
Amendment Effective Date, that:

	 	5.1	 	Corporate Power; Authorization; Enforceable Obligations.

	 	(a)	 	Such Company has the corporate or other organizational power
and authority, and the legal right, to make, deliver the Amendment Documents to
which it is a party and to perform the Loan Documents to which it is a party,
as amended by the Amendment Documents, and has taken all necessary corporate or
other organizational action to authorize the execution, delivery and
performance of such Amendment Documents and the performance of such Loan
Documents, as so amended.
	 
	 	(b)	 	No authorization, consent, approval, license, or exemption
(other than such authorizations, consents, approvals, licenses or exemptions
that (i) exist under applicable law, (ii) are expressly permitted hereunder, or
(iii) have been made, obtained and delivered) of any person or entity, or
notice, filing or other registration with any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign is
required in connection with the execution and delivery of the Amendment
Documents to which such Company is a party or with the

20

 

	 	 	 	performance, validity or enforceability of the Loan Documents to which it is
a party, as amended by the Amendment Documents.

	 	(c)	 	Each Amendment Document to which such Company is a party has
been duly executed and delivered on behalf of such Company.
	 
	 	(d)	 	Each Amendment Document to which such Company is a party and
each Loan Document to which it is a party, as amended by the Amendment
Documents, constitutes a legal, valid and binding obligation of such Company
enforceable against such Company in accordance with its terms, except as
affected by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting the enforcement of
creditors’ rights generally, general equitable principles (whether considered
in a proceeding in equity or at law).

	 	5.2	 	No Legal Bar. The execution, delivery and performance of the Amendment
Documents to which such Company is a party and the performance of the Loan Documents to
which it is a party, as amended by the Amendment Documents, will not (a) violate the
provisions of, or constitute a default under (i) the charter or bylaws, operating
agreement or partnership agreement (as the case may be) of such Company or (ii) any
applicable law or any applicable regulation, order, writ, injunction or decree of any
Governmental Authority or (iii) any material agreement to which such Company is a party
or by which it is bound or to which it is subject, or (b) result in, or require, the
creation or imposition of any Lien on any of its or their respective properties or
revenues pursuant to any such applicable law, regulation, order, writ, injunction,
decree or agreement.
	 
	 	5.3	 	Loan Documents. The representations and warranties made by each
Company in the Loan Documents to which it is a party are true and correct on and as of
the Amendment Effective Date, before and after giving effect to the effectiveness of
this Amendment, as if made on and as of the Amendment Effective Date.
	 
	 	5.4	 	No Defaults. After giving effect to Section 4 of this Amendment, no
Default or Event of Default shall have occurred and be continuing.

SECTION 6. Miscellaneous.

	 	6.1	 	Payment of Costs and Expenses. Notwithstanding any term or provision
in the Financing Agreement (as amended by this Amendment), all costs and expenses
incurred by the Lender in connection with the preparation, negotiation, execution,
delivery and performance of the Amendment Documents, any other documents prepared in
connection herewith and the transactions contemplated hereby, including, without
limitation, the reasonable fees and disbursements of counsel to the Lender, shall be
payable by the Parent on the Amendment Effective Date to the Lender.
	 
	 	6.2	 	No Other Amendments; Confirmation. Except as expressly amended,
modified and supplemented hereby, the provisions of the Financing Agreement are and

21

 

	 	 	 	shall remain in full force and effect. This Amendment, the New LJH Term Notes, each
Mortgage Assignment and Amendment and each IP Security Agreement are and shall be
Loan Documents in all respects and for all purposes.

	 	6.3	 	Reaffirmation of Guarantees and Other Obligations. Each Company hereby
acknowledges and consents to the execution and delivery by it and each other Company of
the Amendment Documents and all of the other terms and conditions of, the Loan
Documents (as amended by the Amendment Documents), in all respects and for all
purposes. Without limiting the generality of the immediately preceding sentence, each
Guarantor hereby further acknowledges and agrees that the Term Loan C shall hereinafter
constitute part of the Obligations guaranteed by it pursuant to Section 12 of the
Financing Agreement and ratifies, confirms and reaffirms all of its respective
guarantees under Section 12 of the Financing Agreement.
	 
	 	6.4	 	No Set-Off, Etc. Each Company hereby acknowledges and agrees that
there is no basis nor set of facts on which any amount (or any portion thereof) owed by
such Company under any Loan Document could be reduced, offset, waived, or forgiven, by
rescission or otherwise; nor is there any claim, counterclaim, offset, or defense (or
other right, remedy, or basis having a similar effect) available to such Company with
regard thereto; nor is there any basis on which the terms and conditions of any of the
Obligations could be claimed to be other than as stated on the written instruments
which evidence such Obligations.
	 
	 	6.5	 	Release of Claims. Each Company, by executing this Amendment, hereby
acknowledges and agrees that it has no offsets, defenses, claims, or counterclaims
against the Lender or the Lender’s Related Parties (other than any other Company) with
respect to the Obligations, and that if such Company now has, or ever did have, any
offsets, defenses, claims, or counterclaims against the Lender or the Lender’s Related
Parties (other than any other Company), whether known or unknown, at law or in equity,
from the beginning of the world through this date and through the time of execution of
this Amendment, all of them are hereby expressly WAIVED, and each Company hereby
irrevocably and unconditionally RELEASES the Lender and the Lender’s Related Parties
(other than any other Company) from any liability thereof.
	 
	 	6.6	 	Further Assurances. Each Company shall, from and after the execution
of this Amendment, execute and deliver to the Lender all additional documents,
instruments, and agreements that the Lender may require in order to create, perfect or
establish the priority of any Liens created under the Collateral Documents and the
Collateral granted therein and to otherwise give effect to the terms and conditions of
this Amendment.
	 
	 	6.7	 	Interpretation. In connection with the interpretation of this
Amendment and all other documents, instruments, and agreements incidental hereto:

22

 

	 	(a)	 	The captions of this Amendment are for convenience purposes
only, and shall not be used in construing the intent of the Lender and the
Companies under this Amendment.
	 
	 	(b)	 	The Lender and the Companies have prepared this Amendment with
the assistance of their respective counsel. Accordingly, this Amendment shall
be deemed to have been drafted by the Lender and the Companies and shall not be
construed against either the Lender or the Companies.
	 
	 	(c)	 	Any determination that any provision or application of this
Amendment is invalid, illegal, or unenforceable in any respect, or in any
instance, shall not affect the validity, legality, or enforceability of any
such provision in any other instance, or the validity, legality, or
enforceability of any other provision of this Amendment.

	 	6.8	 	Additional Acknowledgements. Each Company acknowledges and agrees
that:

	 	(a)	 	it has been advised by counsel in the negotiation, execution
and delivery of this Amendment and has reviewed and understands all of the
terms and conditions of this Amendment;
	 
	 	(b)	 	it intends to be bound by the terms and conditions of this
Amendment;
	 
	 	(c)	 	is executing this Amendment freely and voluntarily, without
duress, after consultation with independent counsel of its own selection;
	 
	 	(d)	 	the Lender has no fiduciary relationship with or duty to any
Company arising out of or in connection with this Amendment, and the
relationship between the Lender, on the one hand, and the Companies, on the
other hand, in connection herewith is solely that of debtor and creditor; and
	 
	 	(e)	 	no joint venture is created hereby and or otherwise exists by
virtue of this Amendment.

	 	6.9	 	Binding Agreement. This Amendment shall be binding upon the Companies
and the Companies’ employees, representatives, successors, and assigns, and shall inure
to the benefit of the Lender and the Lender’s successors and assigns. This Amendment
and all documents, instruments, and agreements executed in connection herewith
incorporate all of the discussions and negotiations between the Borrowers and the
Lender, either expressed or implied, concerning the matters included herein and in such
other documents, instruments, and agreements, any statue, custom, or usage to the
contrary notwithstanding. No such discussions or negotiations shall limit, modify, or
otherwise affect the provisions hereof. No modification, amendment, or waiver of any
provision of this Amendment, or any provision of any other document, instrument, or
agreement between the Companies and the Lender shall be effective unless executed in
writing by the party to be charged with such modification, amendment, or waiver, and if
such party be the Lender, then by a duly authorized officer thereof.

23

 

	 	6.10	 	Waiver of Jury Trial. TO THE FULLEST EXTENT PROVIDED BY APPLICABLE
LAW, EACH COMPANY HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING ARISING OUT OF THIS AMENDMENT, THE LOAN DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREUNDER AND THEREUNDER. EACH COMPANY HEREBY IRREVOCABLY WAIVES PERSONAL
SERVICE OF PROCESS AND CONSENTS TO SERVICE OF PROCESS BY CERTIFIED OR REGISTERED MAIL,
RETURN RECEIPT REQUESTED. IN NO EVENT WILL THE LENDER BE LIABLE FOR LOST PROFITS OR
OTHER SPECIAL OR CONSEQUENTIAL DAMAGES.
	 
	 	6.11	 	Counterparts. This Amendment may be executed in separate counterparts,
each of which when so executed and delivered shall be an original, and both of which
together shall constitute one instrument.
	 
	 	6.12	 	Governing Law. This Amendment and the rights and obligations of the
parties hereto shall be governed by, and construed and interpreted in accordance with,
the laws of the State of Illinois, without regard to principles of conflict of laws
thereof.

[remainder of page left intentionally blank]

24

 

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

	 	 	 	 	 
	 	BORROWERS:

AIRCRAFT INTERIOR DESIGN, INC.

 	 
	 	By:  	/s/
Kevin Carter
 	 
	 	 	Name:  	Kevin Carter 	 
	 	 	Title:  	Senior Vice President-Finance 	 
	 

	 	 	 	 	 
	 	BRICE MANUFACTURING COMPANY, INC.

 	 
	 	By:  	/s/
Kevin Carter
 	 
	 	 	Name:  	Kevin Carter 	 
	 	 	Title:  	Senior Vice President-Finance 	 
	 

	 	 	 	 	 
	 	TIMCO AVIATION SERVICES, INC.

 	 
	 	By:  	/s/
Kevin Carter
 	 
	 	 	Name:  	Kevin Carter 	 
	 	 	Title:  	Senior Vice President-Finance 	 
	 

	 	 	 	 	 
	 	TIMCO ENGINE CENTER, INC.

 	 
	 	By:  	/s/
Kevin Carter
 	 
	 	 	Name:  	Kevin Carter 	 
	 	 	Title:  	Senior Vice President-Finance 	 
	 

	 	 	 	 	 
	 	TIMCO ENGINEERED SYSTEMS, INC.

 	 
	 	By:  	/s/
Kevin Carter
 	 
	 	 	Name:  	Kevin Carter 	 
	 	 	Title:  	Senior Vice President-Finance 	 
	 

Second Amendment to Amended and Restated Financing Agreement — Signature Page

25

 

	 	 	 	 	 
	 	TRIAD INTERNATIONAL MAINTENANCE

CORPORATION

 	 
	 	By:  	/s/ Kevin Carter
 	 
	 	 	Name:  	Kevin Carter 	 
	 	 	Title:  	Senior Vice President-Finance 	 
	 

	 	 	 	 	 
	 	AVIATION SALES DISTRIBUTION

SERVICES COMPANY

 	 
	 	By:  	/s/ Kevin Carter
 	 
	 	 	Name:  	Kevin Carter 	 
	 	 	Title:  	Senior Vice President-Finance 	 
	 

	 	 	 	 	 
	 	AVIATION SALES LEASING COMPANY

 	 
	 	By:  	/s/ Kevin Carter
 	 
	 	 	Name:  	Kevin Carter 	 
	 	 	Title:  	Senior Vice President-Finance 	 
	 

	 	 	 	 	 
	 	AVIATION SALES PROPERTY

MANAGEMENT CORP.

 	 
	 	By:  	/s/ Kevin Carter
 	 
	 	 	Name:  	Kevin Carter 	 
	 	 	Title:  	Senior Vice President-Finance 	 
	 

	 	 	 	 	 
	 	AVS/CAI, INC.

 	 
	 	By:  	/s/ Kevin Carter
 	 
	 	 	Name:  	Kevin Carter 	 
	 	 	Title:  	Senior Vice President-Finance 	 
	 

Second Amendment to Amended and Restated Financing Agreement — Signature Page

26

 

	 	 	 	 	 
	 	AVS/M-1, INC.

 	 
	 	By:  	/s/ Kevin Carter
 	 
	 	 	Name:  	Kevin Carter 	 
	 	 	Title:  	Senior Vice President-Finance 	 
	 

	 	 	 	 	 
	 	AVS/M-2, INC.

 	 
	 	By:  	/s/ Kevin Carter
 	 
	 	 	Name:  	Kevin Carter 	 
	 	 	Title:  	Senior Vice President-Finance 	 
	 

	 	 	 	 	 
	 	AVS/M-3, INC.

 	 
	 	By:  	/s/ Kevin Carter
 	 
	 	 	Name:  	Kevin Carter 	 
	 	 	Title:  	Senior Vice President-Finance 	 
	 

	 	 	 	 	 
	 	AVSRE, L.P.

 	 
	 	By:  	Aviation Sales Property Management Corp.,
 	 
	 	 	its general partner 	 
	 	 	 	 
	 

	 	 	 	 	 
	 	 	 
	 	By:  	                  /s/ Kevin Carter
 	 
	 	 	Name:  	Kevin Carter 	 
	 	 	Title:  	Senior Vice President-Finance 	 
	 

	 	 	 	 	 
	 	HYDROSCIENCE, INC.

 	 
	 	By:  	/s/ Kevin Carter
 	 
	 	 	Name:  	Kevin Carter 	 
	 	 	Title:  	Senior Vice President-Finance 	 
	 

Second Amendment to Amended and Restated Financing Agreement — Signature Page

27

 

	 	 	 	 	 
	 	TMAS/ASI, INC.

 	 
	 	By:  	/s/ Kevin Carter
 	 
	 	 	Name:  	Kevin Carter 	 
	 	 	Title:  	Senior Vice President-Finance 	 
	 

	 	 	 	 	 
	 	WHITEHALL CORPORATION

 	 
	 	By:  	/s/ Kevin Carter
 	 
	 	 	Name:  	Kevin Carter 	 
	 	 	Title:  	Senior Vice President-Finance 	 
	 

Second Amendment to Amended and Restated Financing Agreement — Signature Page

28

 

	 	 	 	 	 
	 	LENDER:

LJH, LTD.

 	 
	 	By:  	DLH Management, L.L.C.,
 	 
	 	 	its general partner 	 
	 	 	 	 
	 

	 	 	 	 	 
	 	 	 
	 	By:  	
/s/ Lacy Harber
 	 
	 	 	Lacy Harber, President 	 
	 	 	 	 
	 

Second Amendment to Amended and Restated Financing Agreement — Signature Page

29Ex-10.138

 

EXHIBIT 10.138

INTERCREDITOR AND SUBORDINATION AGREEMENT

     THIS INTERCREDITOR AND SUBORDINATION AGREEMENT (this “Agreement”), made as of the 20th
day of April, 2006, by and between THE CIT GROUP/BUSINESS CREDIT, INC., a New York corporation
(“CITBC”), individually and in its capacity as agent (in such capacity, the
“Agent”) for the Senior Lenders under the Senior Lenders Loan Agreement, as hereinafter
further defined; and LJH, LTD., a Texas limited partnership (herein referred to as the
“Subordinated Lender”, as hereinafter further defined);

WITNESSETH:

     WHEREAS, Aircraft Interior Design, Inc., a Florida corporation, Brice Manufacturing Company,
Inc., a California corporation, TIMCO Aviation Services, Inc., a Delaware corporation, TIMCO Engine
Center, Inc., a Delaware corporation, TIMCO Engineered Systems, Inc., a Delaware corporation, and
Triad International Maintenance Corporation, a Delaware corporation (collectively, the
“Borrowers” and, individually, a “Borrower”); and Aviation Sales Distribution
Services Company, Aviation Sales Leasing Company, Aviation Sales Property Management Corp.,
AVS/M-1, Inc., AVS/M-2, Inc., AVS/M-3, Inc. and Whitehall Corporation, each a Delaware corporation,
AVS/CAI, Inc., a Florida corporation, AVSRE, L.P., a Delaware limited partnership, Hydroscience,
Inc., a Texas corporation, and TMAS/ASI, Inc., an Arkansas corporation, (collectively, the
“Guarantors” and, individually, a “Guarantor” and, together with the Borrowers,
collectively, the “Credit Parties” and, individually, a “Credit Party”), CITBC and
other lenders and financial institutions (the “Senior Lenders”, as hereinafter further
defined), and the Agent have each entered into a certain Financing Agreement, dated April 4, 2005,
as amended (such Financing Agreement, as amended, modified, supplemented or restated from time to
time, being herein called collectively the “Senior Lenders Loan Agreement” as hereinafter
further defined), pursuant to which the Senior Lenders have agreed to make or extend to the
Borrowers a $30.0 million revolving credit loan evidenced by the Borrowers’ promissory note, dated
of even date herewith, in the aggregate original principal amount of up to $30.0 million (the
“Senior Lenders Revolving Note”), upon the term and subject to the conditions set forth
therein (the Senior Lenders Loan Agreement, the Senior Lenders Revolving Note, and all related loan
and collateral documentation as in effect from time to time, being herein referred to as the
“Senior Lenders Documents”);

     WHEREAS, the Credit Parties and the Subordinated Lender (as successor by assignment from
Fortress Credit Opportunities I LP, Monroe Capital Advisors LLC and Monroe Investments, Inc.) have
each entered into a certain Amended and Restated Financing Agreement, dated as of April 8, 2005, as
amended by the First Amendment thereto, dated September 28, 2005, and by the Second Amendment
thereto, dated as of April 10, 2006 (such Amended and Restated Financing Agreement, as amended,
modified, restated or supplemented from time to time in accordance with the terms hereof, being
herein called the “Subordinated Lender Loan Agreement”), pursuant to which the Subordinated
Lender has (a) made a $8,190,294.32 term loan to the Borrowers (the “Subordinated Lender Term
Loan A-1”) evidenced by the Borrowers’ Amended and Restated Term Note A-1, dated April 10, 2006 (the
“Subordinated Lender Term Note A-1”), (b) made a $7,166,489.67 term loan to the Borrowers
(the “Subordinated Lender Term Loan A-2”) evidenced by the Borrowers’ Amended and Restated
Term Note A-1, dated

 

 

April 10, 2006 (the “Subordinated Lender Term Note A-2”), (c) made
$2,956,471.09 term loan to the Borrowers (the “Subordinated Lender Term Loan B”) evidenced
by the Borrowers’ Amended and Restated Term Note A-1, dated April 10, 2006 (the “Subordinated
Lender Term Note B”), and (d) agreed to make a $6.0 million term loan to the Borrowers (the
“Subordinated Lender Term Loan C”) evidenced by the Borrowers’ Term Note C, dated April 10,
2006 (the “Subordinated Lender Term Note C”), upon the terms and subject to the conditions
set forth therein (the Subordinated Lender Loan Agreement, the Subordinated Lender Term Note A-1,
the Subordinated Lender Term Note A-2, the Subordinated Lender Term Note B, the Subordinated Lender
Term Note C, and all related loan and collateral documentation as in effect from time to time,
being herein referred to as the “Subordinated Lender Documents”);

     WHEREAS, to induce the Subordinated Lender and the Senior Lenders to enter into the
Subordinated Lender Documents and the Senior Lenders Documents, respectively, and to make the
loans and extend the credit contemplated thereby, the Guarantors have executed guaranties as part
of the Subordinated Lender Documents and the Senior Lenders Documents thereby guaranteeing all of
the indebtedness and other obligations owing by the Borrowers to the Subordinated Lender and the
Agent and the Senior Lenders, respectively, thereunder;

     WHEREAS, pursuant to the Subordinated Lender Documents and the Senior Lenders Documents, the
Credit Parties have granted Liens in substantially all of their property to the Subordinated Lender
and the Agent for the benefit of the Senior Lenders, respectively; and

     WHEREAS, the Subordinated Lender and the Agent wish to enter into this Agreement for the
purpose of establishing the priorities of their respective Liens (as hereinafter defined) in the
property of the Credit Parties, and for the purpose of setting forth certain other agreements
between them with respect to their respective agreements with the Credit Parties;

     NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

     1. Certain Definitions. All capitalized terms used in this Agreement without
definition shall have the meanings ascribed to such terms in the Senior Lenders Loan Agreement. In
addition to the terms defined elsewhere in this Agreement, the following terms shall have the
following meanings for the purposes of this Agreement:

     “Blockage Notice” shall mean a written notice from the Agent to the Subordinated
Lender that a Senior Lenders Event of Default has occurred and is continuing and specifying such
Senior Lenders Event of Default.

     “Credit Parties” shall mean the Borrowers and the Guarantors and “Credit
Party” shall mean any of them.

     “Collateral” shall mean all of the assets, properties and interests in property of the
Credit Parties, whether now owned or hereafter acquired or arising, wherever located.

2

 

     “Default” shall mean an event or condition the occurrence of which would, with the
giving of notice or the passage of time or both, become a Senior Lenders Event of Default.

     “Deposit Account Collateral” shall mean that portion of the Collateral consisting of
“deposit accounts” (as such term is defined in the UCC) and the proceeds thereof.

     “Documents” shall mean the Subordinated Lender Documents and the Senior Lenders
Documents or any or all of them as the context may require.

     “Enforcement Action” shall mean the commencement by the Agent of a liquidation or
foreclosure of the Collateral.

     “Exercise Notice” shall have the meaning ascribed to such term in Section 10.1 of this
Agreement.

     “Insolvency Proceeding” shall mean any insolvency or bankruptcy case or proceeding or
any receivership, liquidation, reorganization or other similar case or proceeding in connection
therewith.

     “Insurance and Condemnation Proceeds” shall mean proceeds or payments payable to the
Credit Parties with respect to any loss, casualty or damage to, or condemnation of, the Collateral
or any part thereof.

     “Landlord Agreement” shall mean the Landlord’s Agreement executed by each landlord of
a facility or warehouse leased to a Credit Party constituting one of the Documents pursuant to
which such landlord grants certain assurances to each Lender with respect to its respective Lien
in such Credit Party’s leasehold estate in such facility or warehouse and the Collateral located
thereon.

     “Lenders” shall mean the Subordinated Lender, on the one hand, and the Agent for the
benefit of the Senior Lenders, on the other hand, and “Lender” shall mean either of them.

     “Liens” shall mean the liens and security interests granted by the Credit Parties or
any of them to each Lender under the Documents and a “Lien” shall refer to the liens and
security interests granted by the Credit Parties or any of them to one of the Lenders.

     “Obligations” shall mean the Senior Lenders Obligations and the Subordinated Lender
Obligations or any or all of them as the context may require.

     “Option Period” shall have the meaning ascribed to such term in Section 10.1 of this
Agreement.

     “Option Triggering Event” shall have the meaning ascribed to such term in Section 10.1
of this Agreement.

3

 

     “Permitted Junior Securities” shall have the meaning ascribed to such term in Section
19.3 of this Agreement.

     “Person” shall mean an individual, partnership, corporation, joint stock company,
land trust, business or unincorporated organization, or a government or agency or political
subdivision thereof.

     “Possessory Collateral” shall mean any Collateral in which the Agent’s Lien is
perfected by the Agent’s taking of possession of such Collateral pursuant to the provisions of the
UCC and other applicable law.

     “Second Amendment to LJH Financing Agreement” shall mean that certain Second Amendment
to Amended and Restated Financing Agreement, dated as of April 10, 2006, among the Credit Parties
and Subordinated Lender.

     “Senior Lenders” shall mean CITBC and the other lenders and financial institutions
that are parties to the Senior Lenders Loan Agreement from time to time, and any other lender or
lenders refinancing or refunding all or any portion of the Senior Lenders Obligations.

     “Senior Lenders Early Termination Fee” shall mean the “Early Termination Fee” as
defined in the Fee Agreement.

     “Senior Lenders Event of Default” shall mean an “Event of Default” as defined in the
Senior Lenders Loan Agreement as in effect on the date of this Agreement.

     “Senior Lenders Loan Agreement” shall mean the Financing Agreement, dated April 4,
2005, among the Credit Parties, the Agent and the Senior Lenders that are parties thereto, as in
effect on the date hereof, and as the same may be amended, restated, supplemented or otherwise
modified from time to time, and including any agreement with the same or other lenders extending
the maturity of, or restructuring, refinancing or replacing all or any portion of the indebtedness
and obligations owing to the Agent and the Senior Lenders thereunder.

     “Senior Lenders Obligations” shall mean all indebtedness, liabilities and obligations
of any and every kind now or hereafter owing by the Credit Parties to the Agent and the Senior
Lenders under the Senior Lenders Documents.

     “Subordinated Lender” shall mean LJH, Ltd., a Texas limited partnership, and its
successors and assigns, and any subsequent holder or holders of any of the Subordinated Lender
Obligations.

     “Subordinated Lender Obligations” shall mean all indebtedness, liabilities and
obligations of any and every kind now or hereafter owing by the Credit Parties to the Subordinated
Lender under the Subordinated Lender Documents.

     “Term Loan B Collateral” shall have the meaning ascribed to such term in Section 2.1
of this Agreement.

4

 

     “Term Loan C Exchange” means the exchange of the portion of the Subordinated Lender
Obligations consisting of the Subordinated Lender Term Loan C for common stock issued by Parent,
whether accomplished by exchange, conversion, exercise of rights or otherwise.

     “Term Loan C Obligations” means the portion of the Subordinated Lender Obligations
evidenced by the Subordinated Lender Term Note C.

     “Term Loan Exchange” means the exchange of the portion of the Subordinated Lender
Obligations for any common stock, partnership interests, limited liability company membership
interests, or other equity securities or equity interests of any Credit Party, whether accomplished
by exchange, conversion, exercise of rights or otherwise.

     “UCC” shall mean the Uniform Commercial Code as in effect from time to time in the
State of North Carolina.

     2. Lien Subordination.

          2.1 Collateral. The Lenders agree that at all times, whether before, after or during
the pendency of any Insolvency Proceeding, and notwithstanding the priorities which would
ordinarily result from the order of execution or granting of any Lien in the Collateral or the
order of filing of any financing statements or recording of any deeds of trust, mortgages or any
other security documents now or hereafter constituting part of the Subordinated Lender Documents or
the Senior Lenders Documents with respect to the Collateral, or any provision of the UCC or any
other applicable law to the contrary, the Liens of the Agent in the Collateral arising pursuant to
the Senior Lenders Documents as security for all of the Senior Lenders Obligations shall be at all
times first priority Liens in the Collateral, superior to the Liens of the Subordinated Lender in
the Collateral arising pursuant to the Subordinated Lender Documents, and the Liens of the
Subordinated Lender in the Collateral shall be junior and subordinate to the Liens of the Agent
therein as security for all of the Senior Lenders Obligations. All proceeds of the Collateral
shall be applied to the Obligations in accordance with the provisions of Section 5 hereof.
Notwithstanding the foregoing provisions of this Section 2.1, it is hereby agreed that (a) any
Collateral (herein, “Term Loan B Collateral”) purchased by any Borrower prior to the date of the Second Amendment to LJH Financing Agreement
with the proceeds of the Term Loan B (as defined in the Subordinated Lender Loan Agreement), shall
be at all times subject to a first priority Lien in favor of Subordinated Lender, superior to the
Liens of the Senior Lenders in such Term Loan B Collateral arising pursuant to the Senior Lenders
Documents, and (b) the Liens of the Senior Lenders in the Term Loan B Collateral shall be junior
and subordinate to the Liens of the Subordinated Lender therein as security for all of the
Subordinated Lender Obligations.

          2.2 No Waiver of Subordination Provisions.

          (a) No right of the Agent to enforce the provisions of this Agreement shall at any time or in
any way be prejudiced or impaired by any act or failure to act on the part of the Credit Parties or
by any act or failure to act by the Agent or the Senior Lenders, or by any non-

5

 

compliance by the
Credit Parties with the terms, provisions and covenants of any of the Subordinated Lender
Documents, regardless of any knowledge thereof the Agent or any Senior Lender may have or be
otherwise charged with.

          (b) No right of the Subordinated Lender to enforce the provisions of this Agreement as to the
Term Loan B Collateral shall at any time or in any way be prejudiced or impaired by any act or
failure to act on the part of the Credit Parties or by any act or failure to act by the
Subordinated Lender, or by any non-compliance by the Credit Parties with the terms, provisions and
covenants of any of the Senior Lenders Documents, regardless of any knowledge thereof the
Subordinated Lender may have or be otherwise charged with.

          (c) Without in any way limiting the generality of subsection (a) of this Section 2.2, the
Lenders may, at any time and from time to time, without the consent of or notice to the other
Lender, without incurring responsibility to the other Lender and without impairing or releasing the
lien subordination provided hereunder, do any one or more of the following:

     (i) Amend, modify, waive or consent to any term or provision set forth in any
of the Documents;

     (ii) Change the manner, place or terms of payment or extend the time of payment
of, or refund or refinance, or renew or alter, any of the Obligations;

     (iii) Sell, exchange, release or otherwise deal with any property pledged,
mortgaged or otherwise securing all or any portion of the Obligations in which such
Lender has a first priority;

     (iv) Release any Person liable in any manner for the payment or collection of
any of the Obligations owed to such Lender;

     (v) Exercise or refrain from exercising any rights against the Credit Parties
or any other Person; and

     (vi) Take any other action which might otherwise constitute a defense available
to, or a discharge of, such Lender in respect of its lien subordination as provided
pursuant to the terms of this Agreement.

          (c) The provisions of this Agreement shall continue to be effective or be reinstated, as the
case may be, if at any time payment of any Obligations is rescinded or must otherwise be returned
by a Lender upon the insolvency, bankruptcy or reorganization of a Credit Party, or otherwise, all
as though such payment had not been made.

     3. Appointment of the Agent as Collateral Agent. The Subordinated Lender hereby
appoints and designates the Agent, and the Agent agrees to act, as the Subordinated Lender’s
collateral agent within the meaning of the term “secured party” under Section 9-102(75) of the UCC
for the sole and limited purpose of perfecting the Liens granted to the Subordinated Lender in any
Deposit Account Collateral to the extent that the Agent is a party to, and the Subordinated

6

 

Lender is not a party to, a control agreement contemplated by Section 9-105(a)(2) of the UCC perfecting
the Liens of the Agent in such Deposit Account Collateral, and in any Possessory Collateral. In
connection with the Agent’s acting as such collateral agent for the Subordinated Lender hereunder,
the parties further agree as follows:

          3.1 No Liability of the Agent. All Liens held by the Agent in the Possessory
Collateral and the Deposit Account Collateral in its capacity as collateral agent for the
Subordinated Lender shall be subject to, and any proceeds of the Possessory Collateral and the
Deposit Account Collateral shall be distributed to the Lenders in accordance with, the provisions
of this Agreement. In its capacity as collateral agent, the Agent shall have no duties or
responsibilities of any kind or nature and it shall not be liable to the Subordinated Lender for
any action taken or omitted to be taken under or in connection with this Agreement or any of the
Documents.

          3.2 No Warranties or Representations. Except as otherwise specifically set forth in
this Agreement, the Agent does not make to the Subordinated Lender any express or implied warranty,
representation or guarantee with respect to the Obligations, the Collateral, the Documents or any
Credit Party. The Agent shall not be responsible to the Subordinated Lender for (i) the execution,
validity, genuineness, effectiveness or enforceability of, any of the Documents; (ii) the validity,
genuineness, enforceability, collectibility, value, sufficiency or existence of any Collateral, or
the perfection or priority of any Lien therein; or (iii) the assets, liabilities, financial
condition, results of operations, business, creditworthiness or legal status of any Credit Party.

          3.3 Indemnity. The Subordinated Lender agrees to indemnify and defend the Agent (to
the extent not reimbursed by the Credit Parties, but without limiting the indemnification
obligations of the Credit Parties under the Documents), and to hold the Agent harmless from and against, any and all claims, demands, liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, proceedings, costs, expenses or disbursements of any
kind or nature whatsoever (including reasonable attorneys’ fees and expenses) which may be imposed
on, incurred by or asserted or initiated against the Agent in any way arising out of its acting as
collateral agent for the Subordinated Lender with respect to any of the Possessory Collateral and
the Deposit Account Collateral (and not arising out of the Agent’s acting in any other capacity),
provided that the Subordinated Lender shall not be liable to the Agent for any of the foregoing to
the extent that they result solely from the willful misconduct or gross negligence of the Agent.

          3.4 Exclusive Control Agreement Instructions of Subordinated Lender. After all of
the Senior Lenders Obligations have been paid and satisfied in full and the Agent’s and the Senior
Lenders’ commitments for the incurring of additional Senior Lenders Obligations have expired or
been irrevocably terminated in writing, the Agent shall (a) send to each bank that is a party to
any control agreement among the Agent, the Subordinated Lender and such bank, a notice or other
instruction as permitted by such control agreement that the bank is authorized to honor
instructions originated by the Subordinated Lender directing disposition of the funds in such
deposit account, and (b) execute an amendment to such control agreement, in form and substance
satisfactory to the Agent, the Subordinated Lender and such bank, as may be reasonably requested by
the Subordinated Lender to give effect to such notice or instruction.

7

 

     4. Notices of Default. The Agent shall give the Subordinated Lender notice of
default, termination, demand, acceleration, exercise of remedies and any other notice which is of a
like nature or required to be given under the Senior Lenders Documents or by law, and the
Subordinated Lender shall give the Agent notice of any default, termination, demand, acceleration,
exercise of remedies and any other notice which is of a like nature or required to be given under
the Subordinated Lender Documents or by law, in each case concurrently with the giving of such
notice to the Borrowers or any of the other Credit Parties; provided, however, that
no failure of either party to give such notice shall (a) affect the validity of such notice as to
the Credit Parties or affect the relative priorities of the Liens established in Section 2 hereof
or (b) create the basis for any liability of one Lender to the other Lender or the Agent to the
Subordinated Lender.

     5. Application of Proceeds of Collateral. All proceeds of the Collateral received by
or for the account of the Lenders (whether by sale, casualty, condemnation or other disposition of
the Collateral), shall be distributed to the Lenders and applied as follows:

     First, with respect to all Collateral other than Term Loan B Collateral, to
the Agent for application to all of the Senior Lenders Obligations;

     Second, with respect to all Term Loan B Collateral, to the Subordinated Lender
for application to the Subordinated Lender Obligations;

     Third, with respect to all Collateral other than Term Loan B Collateral, after
all of the Senior Lenders Obligations have been paid and satisfied in full and the
commitments of the Agent and the Senior Lenders under the Senior Lenders Documents
have expired or been irrevocably terminated in writing, to the Subordinated Lender
for application to the Subordinated Lender Obligations; and

     Fourth, with respect to all Term Loan B Collateral after all of the
Subordinated Lender Obligations have been paid and satisfied in full, to the Agent
for application to the Senior Lenders Obligations.

     6. Enforcement of Liens; Release of Liens.

          6.1 Enforcement of Liens in Favor of Senior Lenders. The Subordinated Lender agrees
that, except as expressly provided in this Agreement, unless and until all of the Senior Lenders
Obligations have been paid and satisfied in full and the and the commitments of the Agent and the
Senior Lenders under the Senior Lenders Documents have expired or been irrevocably terminated in
writing, without the prior written consent of the Agent, the Subordinated Lender will not take any
action with respect to the Collateral other than the Term Loan B Collateral, whether by judicial or
non-judicial foreclosure, notification to account debtors or other obligors on the Collateral other
than the Term Loan B Collateral, taking or obtaining possession of any of the Collateral other than
the Term Loan B Collateral, or otherwise realizing upon the whole or any part of the Collateral
other than the Term Loan B Collateral.

8

 

          6.2 Enforcement of Liens in Favor of Subordinated Lender. The Senior Lenders agree
that, unless and until all of the Subordinated Lender Obligations have been paid and satisfied in
full, without the prior written consent of the Subordinated Lender, neither the Agent nor the
Senior Lenders will take any action with respect to the Term Loan B Collateral, whether by judicial
or non-judicial foreclosure, taking or obtaining possession of any of the Term Loan B Collateral,
or otherwise realizing upon the whole or any part of the Term Loan B Collateral.

          6.3 Release of Liens by Subordinated Lender. If the Agent or the Senior Lenders shall
determine, in connection with any sale of Collateral other than the Term Loan B Collateral, that
the release of the lien of any Subordinated Lender Document on such Collateral in connection with
such sale is necessary or advisable, the Subordinated Lender shall execute such release documents
and instruments and shall take such further actions as the Agent or the Senior Lenders shall
request. If the Subordinated Lender fails or refuses to take the action requested by the Agent or
the Senior Lenders within ten (10) days of the receipt of a written request given in accordance
with Section 11 below, the Subordinated Lender hereby irrevocably constitutes and appoints the
Agent and any officer of Agent, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and stead of the Subordinated Lender and in the name of the Subordinated Lender or in the
Agent’s own name, from time to time in the Agent’s discretion, for the purpose of carrying out the
terms of this section, to take any and all appropriate action and to execute any and all documents
and instruments which may be necessary or desirable to accomplish the purposes of this section,
including, without limitation, any financing statements, endorsements, assignments or other
instruments of transfer or release. The Subordinated Lender hereby ratifies all that said
attorneys shall lawfully do or cause to be done pursuant to the power of attorney granted in this
paragraph.

          6.4 Release of Liens by Agent on behalf of Senior Lenders. If the Subordinated Lender
shall determine, in connection with any sale of the Term Loan B Collateral, that the release of the
lien of any Senior Lenders Document on such Term Loan B Collateral in connection with such sale is
necessary or advisable, the Agent on behalf of the Senior Lenders shall execute such release
documents and instruments and shall take such further actions as the Subordinated Lender shall
request. If the Agent fails or refuses to take the action requested by the Subordinated Lender
within ten (10) days of the receipt of a written request given in accordance with Section 11 below,
the Senior Lenders each hereby irrevocably constitutes and appoints the Subordinated Lender and any
officer of Subordinated Lender, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and stead of such Senior
Lender and in the name of the Agent or such Senior Lender or in the Subordinated Lender’s own name,
from time to time in the Subordinated Lender’s discretion, for the purpose of carrying out the
terms of this section, to take any and all appropriate action and to execute any and all documents
and instruments which may be necessary or desirable to accomplish the purposes of this section,
including, without limitation, any financing statements, endorsements, assignments or other
instruments of transfer or release. The Agent and each Senior Lender hereby ratifies all that said
attorneys shall lawfully do or cause to be done pursuant to the power of attorney granted in this
paragraph.

9

 

     7. Debt Subordination and Permitted Payments.

          7.1 Subordination of Subordinated Lender Obligations. The Subordinated Lender hereby
agrees that the Subordinated Lender Obligations are subordinate, and the payment thereof, directly
or indirectly, by any means whatsoever, is deferred, to the prior payment in full of all of the
Senior Lenders Obligations, to the extent and in the manner set forth in this Agreement.

          7.2 Prohibited Collection Actions. Except as set forth in Section 7.5 below, unless
and until the Senior Lenders Obligations shall have been fully paid and the Senior Lenders
Documents and all outstanding commitments of each Senior Lender for the incurring of additional
Senior Lenders Obligations shall have expired or been irrevocably terminated in writing, the
Subordinated Lender will not, without the prior written consent of the Senior Lenders, which
consent may be granted or withheld in the Senior Lenders’ sole discretion:

          (a) Accelerate (except in the event of an Insolvency Proceeding), ask, demand, sue for, take
or receive from or on behalf of any Credit Party, by setoff or in any other manner, the whole or
any part of any monies which may now or hereafter be owing to the Subordinated Lender on the
Subordinated Lender Obligations; or

          (b) Except as expressly provided in this Agreement, initiate or participate with others in
any suit, action or proceeding against any Credit Party, or otherwise take action against any
Credit Party or any of its assets, to enforce payment of or to collect the whole or any part of
the Subordinated Lender Obligations; or

          (c) Commence any bankruptcy, arrangement, reorganization or any other Insolvency Proceeding
against any Credit Party; or

          (d) Ask, demand, take or receive any additional security for any of the Subordinated Lender
Obligations other than that granted pursuant to the Subordinated Lender Documents other than
additional security provided to the Agent and the Senior Lenders;

provided, however, nothing herein shall be deemed to prohibit the Subordinated
Lender from (1) filing a proof of claim in any Insolvency Proceeding of a Credit Party or (2)
voting any claim or otherwise participating in any Insolvency Proceeding involving a Credit
Party, in each case subject to the other provisions of this Agreement.

          7.3 Incurring of Additional Senior Lender Obligations. The provisions of this
Agreement shall apply with respect to all of the Senior Lenders Obligations, regardless of whether
the Senior Lenders Obligations have already been incurred or may be incurred in the future by
future advances or other financial accommodations made or extended by one or more Senior Lenders to
a Credit Party pursuant to the Senior Lenders Documents.

          7.4 Actions in Violation of Agreement. If the Subordinated Lender in violation of
this Agreement shall commence, prosecute or participate in any suit, action or proceeding against
any Credit Party or shall attempt to enforce, foreclose or realize upon any

10

 

security for the
Subordinated Lender Obligations, including, without limitation, the Collateral, such Credit Party,
Agent or any Senior Lender may interpose as a defense or plea the making of this Agreement and
Agent or any Senior Lender may intervene and interpose such defense in its name or in the name of
such Credit Party, and such Credit Party, Agent or such Senior Lender may by virtue of this
Agreement restrain the enforcement thereof in the name of such Credit Party, Agent or such Senior
Lender.

          7.5 Permitted Payments. Notwithstanding the provisions of Section 7.2 hereof, until
the giving by the Agent of a Blockage Notice to the Subordinated Lender, the Borrowers may pay to
the Subordinated Lender, and the Subordinated Lender may demand, accept and retain from the
Borrowers, the following permitted payments on the Subordinated Lender Obligations and no other
payments:

          (a) periodic payments of non-cash interest accruing on the Subordinated Lender Obligations at
the interest rates applicable thereto (which rate may include the “Default Rate of Interest” as
such term is defined in the Subordinated Lender Loan Agreement), as and when the same become due
under the terms of the Subordinated Lender Documents, which shall be paid in kind and added to the
outstanding principal amount of the notes evidencing the Subordinated Lender Obligations but which
shall not be payable in cash (which, for the avoidance of doubt, may be made irrespective of
whether a Senior Lenders Event of Default shall exist or whether a Blockage Notice shall have been
given by the Agent);

          (b) periodic payments of cash interest on the Subordinated Lender Obligations other than the
Term Loan C Obligations at the interest rates applicable thereto (which rate may include the
“Default Rate of Interest” as such term is defined in the Subordinated Lender Loan Agreement) made
at any time after the Agent shall have received the Credit Parties’ audited Consolidated Balance
Sheet, statements of profit and loss, cash flow and reconciliation of surplus for the Fiscal Year
ending December 31, 2006, together with the officer’s certificate with respect thereto, each as
required to be delivered to the Agent pursuant to Section 7.8 of the Senior Lenders Loan Agreement;
provided that each of the following conditions shall have first been satisfied with respect to each
such payment of cash interest: (1) both immediately before, and immediately after giving effect to
such cash interest payment, no Default and no Senior Lenders Event of Default has occurred and is
then continuing or will immediately result therefrom; and (2) the Subordinated Lender shall not
have received a Blockage Notice from the Agent. Upon the delivery by the Subordinated Lender of a
Blockage Notice to the Subordinated Lender, the subordination provisions of Section 7.2 shall
govern and control, and no payments of cash interest on the Subordinated Lender Documents (other
than as permitted by Section 7.5(a) hereof by a non-cash payment in kind) and no payments in cash
of fees, costs, expenses, indemnification amounts and other amounts (other than interest) (other
than as permitted by Section 7.5(c) hereof by a non-cash payment in kind) shall be made by the
Borrowers, or demanded, accepted or retained by the Subordinated Lender, until the earlier to occur
of the following:

          (i) The Senior Lenders Event of Default giving rise to such Blockage Notice
shall have been cured to the reasonable satisfaction of the Agent and the Senior
Lenders, or waived in writing or shall have ceased to exist, and

11

 

the Agent on
behalf of the Senior Lenders shall have delivered to the Subordinated Lender a
rescission of the Blockage Notice; or

     (ii) All of the Senior Lenders Obligations shall have been paid and satisfied
in full and the Agent and the Senior Lenders have no further obligation for the
incurring of additional Senior Lenders Obligations;

          (c) non-cash payment of fees, costs, expenses, indemnification amounts and other amounts
(other than interest and principal) payable by a Credit Party pursuant to the Subordinated Lender
Documents, payments of non-cash interest accruing on the Subordinated Lender Obligations, which
shall be paid in kind and added to the outstanding principal amount
of the Subordinated Lender Term Note B and which shall not be payable in cash (which, for the
avoidance of doubt, may be made irrespective of whether a Senior Lenders Event of Default shall
exist or whether a Blockage Notice shall have been given by the Agent); provided,
however, the foregoing prohibition of the payment of fees, costs and expenses shall not
apply to the payment in cash of the reasonable fees, costs and expenses (including reasonable
attorneys’ fees and expenses) incurred by the Subordinated Lender in connection with the Second
Amendment to LJH Financing Agreement and the assignment and assumption of the Subordinated Loan
Documents by Subordinated Lender.

     8. Exercise of Remedies. In the event of commencement of foreclosure under the Senior
Lenders Documents, the following provisions shall apply:

          8.1 Collateral. The Agent shall have the exclusive right to sell, transfer or
otherwise dispose of the Collateral (other than the Term Loan B Collateral) or exercise any other
right or remedy with respect to such Collateral as provided in the Senior Lenders Documents or by
applicable law in the manner deemed appropriate by the Agent without regard to the Subordinated
Lender’s Liens therein, and the Subordinated Lender will not hinder the Agent’s actions in
enforcing its remedies with respect to such Collateral.

          8.2 No Liability of the Agent, Senior Lenders or Subordinated Lender.

          (a) The Agent and the Senior Lenders shall have no liability to the Subordinated Lender for,
and the Subordinated Lender waives any claim which it may have at any time against the Agent and
the Senior Lenders, arising out of or related to any actions which the Agent or the Senior Lenders
take or omit to take with respect to the Collateral (other than the Term Loan B Collateral) or the
Senior Lenders Obligations secured thereby, except for such actions taken or omitted to be taken by
the Agent or the Senior Lenders in violation of this Agreement or through willful misconduct or
gross negligence of the Agent, any Senior Lender or their respective agents or employees. Without
limiting the generality of the foregoing, the Agent and the Senior Lenders may, without regard to
the existence of any rights the Subordinated Lender may now or hereafter have in and to any of the
Collateral (other than the Term Loan B Collateral and other than the rights of the Subordinated
Lender to notices under this Agreement or as may be required by applicable law): (a) compromise,
settle, adjust and in general deal in any manner with the Collateral, other than the Term Loan B
Collateral, including, without limitation, the account debtors and other obligors indebted thereon,
as the Agent may deem

12

 

appropriate, upon such terms and conditions (including the length of time
incidental thereto) as the Agent may deem appropriate, (b) engage third parties to assist the Agent
and the Senior Lenders in the effectuation of the liquidation, collection or foreclosure of the
Collateral, other than the Term Loan B Collateral, and (c) incur such reasonable out-of-pocket
costs and expenses incidental thereto as the Agent and/or the Senior Lenders may deem appropriate,
including, without limitation, reasonable fees and disbursements of counsel to the Agent and the
Senior Lenders and any other third party professionals engaged by any of them. The Subordinated
Lender irrevocably waives any right it may have, whether at law or in equity, to assert any claim
or bring any action, suit or proceeding against the Agent or the
Senior Lenders or to raise any affirmative defense, claim or counterclaim in any action brought
against it by the Agent or the Senior Lenders, the effect of which is to contest the commercial
reasonableness of the decisions or actions of the Agent or the Senior Lenders (whether made or
taken alone or through any of its agents or representatives) with respect to the Collateral.

          (b) The Subordinated Lender shall have no liability to the Agent and the Senior Lenders for,
and the Agent and the Senior Lenders waive any claim which they may have at any time against the
Subordinated Lender, arising out of or related to any actions which the Subordinated Lender take or
omit to take with respect to the Term Loan B Collateral or the Subordinated Lender Obligations
secured thereby, except for such actions taken or omitted to be taken by the Subordinated Lender in
violation of this Agreement or arising from through willful misconduct or gross negligence of the
Subordinated Lender or any of its agents or employees. Without limiting the generality of the
foregoing, the Subordinated Lender may, without regard to the existence of any rights the Agent and
the Senior Lenders may now or hereafter have in and to any of the Term Loan B Collateral (other
than the rights of the Agent and the Senior Lenders to notices under this Agreement or as may be
required by applicable law): (a) compromise, settle, adjust and in general deal in any manner with
the Term Loan B Collateral, including, without limitation, the account debtors and other obligors
indebted thereon, as the Agent may deem appropriate, upon such terms and conditions (including the
length of time incidental thereto) as the Agent may deem appropriate, (b) engage third parties to
assist the Subordinated Lender in the effectuation of the liquidation, collection or foreclosure of
the Term Loan B Collateral, and (c) incur such reasonable out-of-pocket costs and expenses
incidental thereto as the Subordinated Lender may deem appropriate, including, without limitation,
reasonable fees and disbursements of counsel to the Subordinated Lender and any other third party
professionals engaged by any of them. The Agent and the Senior Lenders irrevocably waive any right
any of them may have, whether at law or in equity, to assert any claim or bring any action, suit or
proceeding against the Subordinated Lender or to raise any affirmative defense, claim or
counterclaim in any action brought against it by the Subordinated Lender, the effect of which is to
contest the commercial reasonableness of the decisions or actions of the Subordinated Lender
(whether made or taken alone or through any of its agents or representatives) with respect to the
Term Loan B Collateral.

          8.3 Preservation of Liens. Nothing contained in this Agreement shall be deemed to
prohibit the Subordinated Lender from intervening or participating in any judicial proceeding to
the extent necessary to establish, protect or preserve its Liens in the Collateral, so long as such
intervention or participation does not interfere with the foregoing rights of the Agent and the
Senior Lenders, or from bidding or being the buyer of any Collateral at any private or public
foreclosure sale conducted by the Agent under the Senior Lenders Documents.

13

 

     9. Receipt of Monies.

          9.1 By the Subordinated Lender. The Subordinated Lender agrees that should it receive
contrary to the provisions of this Agreement any monies from the sale, liquidation,
casualty or other disposition of or as a result of its Lien in the Collateral (other than the Term
Loan B Collateral), it will (unless otherwise restricted by law) hold the same for the Senior
Lenders and promptly pay over the same to the Agent for application to the Senior Lenders
Obligations in accordance with the provisions of Section 5 of this Agreement.

          9.2 By the Agent. The Agent agrees that should it receive contrary to the provisions
of this Agreement any monies from the sale, liquidation, casualty or other disposition of or as a
result of its Lien in the Collateral, it will (unless otherwise restricted by law) hold the same
for the Subordinated Lender and promptly pay over the same to the Subordinated Lender for
application to the Subordinated Lender Obligations in accordance with the provisions of Section 5
of this Agreement.

     10. Option to Purchase Senor Lenders Obligations.

          10.1 Purchase of Senior Lenders Obligations. If (a) there shall occur a Senior Lenders
Event of Default and, in consequence thereof, the Agent shall accelerate and declare immediately
due and owing the Senior Lender Obligations and commence an Enforcement Action, or (b) there shall
occur a Senior Lenders Event of Default arising from an Insolvency Proceeding, or (c) the Agent
shall deliver a Blockage Notice to the Subordinated Lender pursuant to the provisions of Section
7.5(b) hereof (each of the foregoing, an “Option Triggering Event”), then the Subordinated
Lender shall have the option, exercisable by a written notice (an “Exercise Notice”) given
by the Subordinate Lender to the Agent no later than thirty (30) days after the occurrence of such
Option Triggering Event (such thirty (30) day period, the “Option Period”), to purchase all
(but not less than all) of the Senior Lenders Obligations which are owing by the Credit Parties to
the Agent and the Senior Lenders and the Senior Lenders Documents. Once given, an Exercise Notice
shall be irrevocable. The option granted hereby to the Subordinated Lender shall lapse and be of no
further force and effect unless exercised by the Subordinated Lender before the expiration of the
Option Period.

          10.2 Sale of Senior Lenders Obligations. On a closing date (the “Closing
Date”) specified in the Exercise Notice (which shall be no earlier than five (5) Business Days
nor more than thirty (30) days after the giving by the Subordinated Lender of the Exercise Notice,
the Agent and the Senior Lenders shall sell, and the Subordinated Lender shall purchase, for a
purchase price and otherwise on terms and conditions as set forth in this Section 10, all (but not
less than all) of the Senior Lenders Obligations then owing to the Agent and the Senior Lenders and
the Senior Lenders Documents.

          10.3 Closing of Purchase of Senior Lenders Obligations. On the Closing Date, the
Subordinated Lender shall (i) pay to the Agent and the Senior Lenders as the purchase price the
full amount of all the Senior Lenders Obligations owing to the Agent and the Senior Lenders which
are then outstanding and unpaid (including principal, reimbursement obligations, interest,

14

 

any applicable Senior Lenders Early Termination Fee, fees, and expenses, including reasonable
attorneys’ fees and legal expenses, (ii) either (1) furnish cash collateral to the Agent and the
Senior Lenders in such amounts as the Agent determines is
reasonably necessary to secure the Agent and the Senior Lenders in connection with any issued
and outstanding letter of credit accommodations provided by the Agent and the Senior Lenders to or
for the account of the Credit Parties (but not in any event in an amount greater than 105% of the
aggregate undrawn face amount of such letters of credit), or (2) cause all issued and outstanding
letters of credit and letters of credit guaranties to be cancelled and terminated, and (iii) agree
to reimburse the Agent and the Senior Lenders for any loss, cost, damage, or expense (including
reasonable attorneys’ fees and legal expenses) in connection with any commissions, fees, costs, or
expenses related to any issued and outstanding letters of credit as described above and any checks
or other payments provisionally credited to the Senior Lenders Obligations owing to the Agent and
the Senior Lenders, and/or as to which the Agent and the Senior Lenders have not yet received final
payment. Such purchase price and cash collateral shall be remitted by wire transfer in federal
funds to such bank account of the Agent, as the Agent may designate in writing to the Subordinated
Lender for such purpose. Interest shall be calculated to, but excluding, the Business Day on which
such purchase and sale shall occur if the amounts so paid by the Subordinated Lender to the bank
account designated by the Agent are received in such bank account prior to 1:00 p.m., Eastern time,
and interest shall be calculated to, and including, such Business Day if the amounts so paid by the
Subordinated Lender to the account designated by the Agent are received in such bank account later
than 1:00 p.m., Eastern time. On the Closing Date, the Agent and the Senior Lenders shall also
execute and deliver such assignments, documents or other instruments, each in form reasonably
satisfactory to the Agent and the Subordinated Lender, that are necessary or reasonably requested
by the Subordinated Lender to evidence or confirm the sale, assignment and transfer to the
Subordinated Lender of the Senior Lenders Obligations owing to the Agent and the Senior Lenders and
the Senior Lenders Documents.

          10.4 Limited Representations and Warranties. Such purchase shall be expressly made
without representation or warranty of any kind by the Agent and the Senior Lenders as to the Senior
Lenders Obligations owing to the Agent and the Senior Lender, the Senior Lenders Documents, or
otherwise, and without recourse to the Agent and the Senior Lenders, except for representations and
warranties as to the following: (i) the amount of the Senior Lenders Obligations being purchased
(including, without limitation, as to the principal of and accrued and unpaid interest on such
Senior Lenders Obligations, fees and expenses thereof), (ii) that the transfer of the Senior
Lenders Obligations and the Senior Lenders Documents is free and clear of any Liens, and (iii) the
Agent and the Senior Lenders have the full right and power to assign the Senior Lenders
Obligations, such assignment has been duly authorized, and no approval of any governmental
authority, other regulatory body, or other Person is required in connection with such assignment.

          10.5 No Approval Required. The Agent hereby represents and warrants to the
Subordinated Lender that, as of the date hereof, no approval of any governmental authority, other
regulatory body, or other person is required for sale made by it pursuant to the provisions of this
Section 10.

15

 

     11. Notices. All notices, requests and demands to or upon a Lender, to be effective,
shall be in writing and shall be sent by certified or registered mail, return receipt requested, by
overnight air courier or by facsimile, and shall be deemed to have been received by the other
Lender when sent during customary business hours by facsimile, transmission confirmed (or, if sent
after 5:00 p.m., eastern standard time or eastern daylight savings time, as the case may be, on the
following Business Day), when delivered against a receipt, if sent by overnight air courier, and
three (3) Business Days after mailing, if sent by certified or registered mail. Notices shall be
addressed as follows:

	 	 	 
	If to Subordinated Lender:

	 	LJH, Ltd.

377 Neva Lane

Dennison, Texas 75020

Attention: Lacy Harber

Facsimile No. 903-465-6514
	 
	 	 
	With a copy to:

	 	Bracewell & Giuliani, LLP

500 North Akard, Suite 4000

Dallas, Texas 75201

Attention: Christopher D. Olive, Esq.

Facsimile No. 214-758-8392
	 
	 	 
	If to the Agent:

	 	The CIT Group/Business Credit, Inc.

900 Ashwood Parkway, Suite 610r

Atlanta, Georgia 30338

Attention: TIMCO Account Manager

Facsimile No. 770-522-7673
	 
	 	 
	With a copy to:

	 	Carruthers & Roth, P.A.

235 North Edgeworth Street

Greensboro, North Carolina 27401

Attention: June L. Basden, Esq.

Facsimile No. 336-273-7885

or to such other address as either Lender may designate for itself by notice given in accordance
with this Section 11.

     12. Relationship of Parties. This Agreement is entered into solely for the purposes
set forth above, and neither Lender assumes any responsibility to the other Lender to advise the
other Lender of information known to such Lender regarding the financial condition of the Credit
Parties, or regarding the Collateral, or of any other circumstances bearing upon the risk of
nonpayment of the Obligations of the Credit Parties under the Senior Lenders Documents and the
Subordinated Lender Documents, respectively. Each Lender shall be responsible for managing its
relationship with the Credit Parties, and, except as otherwise specifically set forth herein,
neither Lender shall be deemed the agent of the other for any purpose.

16

 

     13. Waiver of Marshalling. Each Lender hereby waives any right to require the other
Lender to marshall any security or collateral or otherwise to compel the other Lender to seek
recourse against or satisfaction of the indebtedness and obligations owed to it from one source
before seeking recourse or satisfaction from another source.

     14. Provisions Concerning Insurance, Condemnation and Landlord’s Agreements.
Notwithstanding any contrary provision of any of the Documents, the Lenders agree as follows with
respect to any Insurance or Condemnation Proceeds and the Landlord’s Agreements:

          14.1 Insurance Insuring the Collateral Generally. Each Lender agrees that the other
Lender shall be entitled to obtain loss payee endorsements and additional insured status with
respect to all policies of insurance now or hereafter obtained by the Credit Parties insuring
casualty or other loss to any Collateral. The Agent shall have the sole and exclusive right, as
against the Subordinated Lender, to file claims, make adjustments and settlements of insurance
claims and take any and all other actions in regard thereto in the event of any covered loss, theft
or destruction of any Collateral (other than Term Loan B Collateral), and the Subordinated Lender
shall have the sole and exclusive right, as against the Agent, to file claims, make adjustments and
settlements of insurance claims and take any and all other actions in regard thereto in the event
of any covered loss, theft or destruction of any Term Loan B Collateral. The rights and priorities
of the Lenders to any Insurance or Condemnation Proceeds shall be as provided in this Agreement.

          14.2 Insurance or Condemnation Proceeds.

          (a) Any Insurance or Condemnation Proceeds with respect to the Collateral shall be deemed part
of the Collateral, and the rights and priorities of the Lenders to any Insurance or Condemnation
Proceeds with respect to the Collateral shall be the same as with respect to the Collateral.

          (b) All Insurance or Condemnation Proceeds with respect to Collateral (other than Term Loan B
Collateral) shall be paid to the Agent and the Subordinated Lender shall cooperate (if necessary)
in a reasonable manner in effecting the payment of Insurance or Condemnation Proceeds to the Agent.
In the event the Agent, in its sole discretion or pursuant to agreement with the Credit Parties,
permits the Credit Parties to utilize all or any Insurance or Condemnation Proceeds to replace
Collateral (other than Term Loan B Collateral), the consent of the Agent thereto shall be deemed to
include the consent of the Subordinated Lender. The Subordinated Lender agrees to execute such
consents, releases, endorsements and other documents as may be reasonably necessary to accomplish
the application of such Insurance or Condemnation Proceeds, all without any additional
consideration or payment to the Subordinated Lender.

          (c) All Insurance or Condemnation Proceeds with respect to Term Loan B Collateral shall be
paid to the Subordinated Lender and the Agent shall cooperate (if necessary)
in a reasonable manner in effecting the payment of Insurance or Condemnation Proceeds to the
Subordinated Lender. In the event the Subordinated Lender, in its sole discretion or pursuant to
agreement with the Credit Parties, permits the Credit Parties to utilize all or any Insurance or

17

 

Condemnation Proceeds to replace Term Loan B Collateral, the consent of the Subordinated Lender
thereto shall be deemed to include the consent of the Agent and the Senior Lenders. The Agent on
behalf of the Senior Lenders agrees to execute such consents, releases, endorsements and other
documents as may be reasonably necessary to accomplish the application of such Insurance or
Condemnation Proceeds, all without any additional consideration or payment to the Agent.

          14.3 Landlord Agreements. All consents granted and decisions made by the Agent under
each Landlord Agreement shall be conclusive and binding upon the Subordinated Lender. The
Subordinated Lender agrees to execute such consents, releases, and other documents as may be
reasonably necessary to accomplish or implement any decisions made by the Agent under a Landlord
Agreement, all without any additional consideration or payment to the Subordinated Lender.

     15. Further Assurances. The Credit Parties and the Lenders shall each execute and
deliver such additional documents and take such additional actions as may be reasonably necessary
to effectuate the provisions and purposes of this Agreement. Without limiting the generality of
the foregoing, if the Subordinated Lender purchases the Senior Lenders Obligations pursuant to
Section 10 hereof, then the Agent shall take such action as may be reasonably requested by the
Subordinated Lender to aid and assist, or join with the Subordinated Lender, in the enforcement or
collection of the transferred Senior Lenders Obligations or the Liens securing the same. All out
of pocket expenses of the Agent incurred in connection therewith shall be additional Senior Lenders
Obligations owing by the Credit Parties to the Agent and the Senior Lenders and secured by the
Collateral. If requested by a Lender, the Lenders shall execute filings to be recorded in
accordance with the Uniform Commercial Code provisions in the appropriate locations reflecting the
provisions of this Agreement.

     16. Parties; Successors and Assigns. No Lender shall transfer or assign any of the
Obligations owing to such Lender except upon receipt of a written acknowledgment and agreement from
such transferee or assignee which acknowledgment and agreement shall be reasonably acceptable in
form and substance to the other Lender and bind such assignee and transferee and all successive
assignees and transferees to the terms and conditions of this Agreement. This Agreement shall be
binding upon, and shall inure to the benefit of, the Lenders and their respective successors and
assigns.

     17. No Third Party Beneficiaries. This Agreement is for the sole and exclusive
benefit of the Lenders and no other Person (including each Credit Party), and their respective
successors and assigns, shall have standing to require satisfaction of the provisions hereof or be
entitled to assume compliance herewith, and no other Person (including each Credit Party) shall
under any circumstances be deemed to be a beneficiary of any of the terms hereof or be
entitled to assume that the Lenders will insist upon strict compliance with any of such terms, any
or all of which may be freely waived or amended in whole or in part by the Lenders at any time if
they in their sole discretion deem it advisable to do so.

     18. Injunctive Relief. Each Lender agrees that in the event it is in breach of any of
its obligations hereunder, the other Lender may obtain an injunction in a court of competent

18

 

jurisdiction against any act or acts constituting such breach, and both Lenders consent to be bound
thereby. Such injunction shall be without prejudice to the enjoining Lender’s rights to seek
additional remedies at law or at equity.

     19. Post Bankruptcy Issues.

          19.1 This Agreement shall continue in full force and effect during the term set forth herein,
notwithstanding the commencement by or against a Credit Party of an Insolvency Proceeding during
the pendency of which, so long as the Subordinated Lender Obligations and the Senior Lenders
Obligations have not been fully and indefeasibly paid and satisfied, all of the terms and
provisions hereof shall remain and continue in full force and effect.

          19.2 In an Insolvency Proceeding, the Subordinated Lender shall not, until the Senior Lenders
Obligations have been paid and satisfied in full and the commitments of the Senior Lenders for the
incurring of additional Senior Lenders Obligations, any DIP financing or any use of the Senior
Lenders’ cash collateral, have expired or been irrevocably terminated in writing, contest (or
support any other party contesting) any request of any Credit Party made with the consent of the
Agent for use of cash collateral or for approval of any DIP financing to be provided in good faith
by the Senior Lenders to such Credit Party, on the grounds of a failure to provide “adequate
protection” for the Liens of the Subordinated Lender (i) if the Subordinated Lender, in its
discretion, chooses not to contest any such use or approval, or (ii) so long as (a) the
Subordinated Lender is provided with replacement Liens on the same types and items of property
included in the Collateral that existed before the commencement of the Insolvency Proceeding, (b)
the Liens granted to the Agent and the Subordinated Lender in the Insolvency Proceeding have the
same priority, and are otherwise subject to, and have the benefit of, the same terms, limitations,
and restrictions, that are set forth in this Agreement, and (c) in the case of any DIP financing to
be provided by the Agent and the Senior Lenders in such Insolvency Proceeding, the DIP financing to
be provided thereunder shall not be provided on terms and conditions not inconsistent with the
financing provided pursuant to the Senior Lenders Loan Agreement, as limited by the terms of this
Agreement. Notwithstanding the foregoing, the Subordinated Lender shall be entitled to file any
necessary responsive or defensive pleadings in opposition to any motion, claim, adversary
proceeding or other pleading made by any Person objecting to or otherwise seeking the disallowance
of the claims of the Subordinated Lender, including, without limitation, any claims secured by the
Collateral. Consistent with the terms of this Agreement, the Subordinated Lender shall be entitled
to file any other pleadings, objections, motions or agreements which assert the rights or interests
available to unsecured creditors of any Credit Party arising under either the Bankruptcy Code or
applicable non-bankruptcy law.

          19.3 In the event of (i) any Insolvency Proceeding, or any receivership, liquidation,
reorganization or other similar case or proceeding in connection therewith, relative to any Credit
Party or its assets, or (ii) any liquidation, dissolution or other winding up of any Credit Party,
whether voluntary or involuntary, and whether or not involving insolvency or bankruptcy, or (iii)
any assignment for the benefit of creditors or any other marshalling of assets or liabilities of
any Credit Party, then (a) in any such event, the provisions of Section 2 of this Agreement shall
continue to apply, and (b) in the case of the foregoing clauses (ii) and (iii) all of the
provisions of this Agreement shall continue to apply (excluding the payment to Subordinated

19

 

Lender in securities of any Credit Party provided for by a plan of reorganization or readjustment that are
equity securities or are subordinated in right of payment to all indebtedness of each Credit Party
issued to Senior Lenders in such plan of reorganization or readjustment to substantially the same
extent as, or to a greater extent than, the Subordinated Lender Obligations are subordinated to the
Senior Lenders Obligations as provided in this Agreement) (such equity securities or subordinated
securities being herein called the “Permitted Junior Securities”).

     20. Liens Following Term Loan C Exchange or Other Term Loan Exchange. Upon the
consummation of the Term Loan C Exchange or any other Term Loan Exchange as contemplated by the
Subordinated Lender Loan Agreement, the Agent and the Senior Lenders shall have no Lien in any of
the common stock, preferred stock, partnership interests, limited liability company membership
interests, warrants or other equity securities or equity interests collected or received by or
distributed to Subordinated Lender as a result of any Term Loan C Exchange or any such other Term
Loan Exchange.

     21. Term of Agreement. This Agreement shall continue in full force and effect and
shall be irrevocable by either Lender until the earliest to occur of the following: (i) the Lenders
in writing mutually agree to terminate this Agreement; (ii) the Senior Lenders Obligations have
been fully paid and discharged and the Agent and the Senior Lenders shall have no further
obligation for the incurring of additional Senior Lenders Obligations, and the Agent shall have
fully paid and performed its obligations under this Agreement; or (iii) the Subordinated Lender
Obligations have been fully paid and discharged and the Subordinated Lender shall have no further
obligation for the incurring of additional Subordinated Lender Obligations, and the Subordinated
Lender shall have fully paid and performed its obligations under this Agreement.

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

     23. Governing Law. This Agreement shall be interpreted, and the rights and
liabilities of the parties hereto determined, in accordance with the laws and decisions of the
State of North Carolina.

     24. Counterparts; Facsimile Execution. This Agreement may be executed in any number
of counterparts with the same effect as if all of the signatures on such counterparts appeared on
one document, and each such counterpart shall be deemed to be an original. Delivery of an executed
counterpart of this Agreement by facsimile or electronic transmission shall be as effective as
delivery of a manually executed counterpart hereof.

     25. Authority. Each Lender represents to the other Lender that it has all necessary
right, power and authority to enter into this Agreement and perform and observe all of its
covenants and agreements herein contained and that this Agreement is valid and binding upon it and
enforceable against it in accordance with its terms, subject to bankruptcy, insolvency and similar
laws affecting enforcement rights generally.

20

 

     26. Miscellaneous. This Agreement constitutes the entire understanding of the Lenders
with respect to the subject matter hereof and any prior agreements, whether oral or written, with
respect thereto are superseded hereby. In the event of any inconsistency between the terms of this
Agreement and the terms of any of the Documents, the terms of this Agreement shall govern and
control. The invalidity, illegality or unenforceability of any provision in or obligation under
this Agreement shall not affect or impair the validity, legality or enforceability of the remaining
provisions or obligations under this Agreement.

     27. CONSENT TO FORUM. EACH LENDER HEREBY CONSENTS AND AGREES THAT THE SUPERIOR
COURT OF GUILFORD COUNTY, NORTH CAROLINA, OR THE UNITED STATES DISTRICT COURT FOR THE
MIDDLE DISTRICT OF NORTH CAROLINA, GREENSBORO DIVISION, SHALL HAVE EXCLUSIVE JURISDICTION
TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE LENDERS PERTAINING TO THIS
AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT. EACH PARTY
EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION, AND HEREBY WAIVES ANY
OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR
FORUM NON CONVENIENS .

     28. WAIVERS OF TRIAL BY JURY. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE
LENDERS HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT TO TRIAL BY JURY THE
LENDERS MAY HAVE IN ANY ACTION OR PROCEEDING, IN LAW OR IN EQUITY, IN CONNECTION WITH THIS
AGREEMENT.

21

 

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement UNDER SEAL on the day and
year first above written.

	 	 	 	 	 
	 

	 	Subordinated Lender:
	 
	 	 	 	 
	 

	 	LJH, LTD.
	 

	 

	 	By: DLH Management, L.L.C.,

        its general partner
	 
	 	 	 	 
	 

	 	By:	 	/s/ Lacy Harber 
	 

	 	 	 	 
	 

	 	 	 	Lacy Harber, President
	 
	 	 	 	 
	 

	 	CITBC:
	 
	 	 	 	 
	 

	 	THE CIT GROUP/BUSINESS CREDIT, INC.,

individually and as agent
	 
	 	 	 	 
	 

	 	By:	 	/s/ Kenneth B. Butler 
	 

	 	 	 	 
	 

	 	 	 	Title: Vice President

22

 

ACKNOWLEDGMENT AND AGREEMENT

OF THE CREDIT PARTIES

     The undersigned Credit Parties each does hereby accept, and acknowledge receipt of a copy of,
the foregoing Intercreditor and Subordination Agreement and each consents to and agrees to be bound
by all of the provisions thereof, as the same may be amended, modified, restated or supplemented
from time to time in accordance with the terms thereof.

     IN WITNESS WHEREOF, each Credit Party has caused this Acknowledgement and Agreement to be duly
executed under seal on the day and year first above written.

	 	 	 	 	 
	 

	 	Credit Parties:
	 
	 	 	 	 
	 

	 	AIRCRAFT INTERIOR DESIGN, INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Kevin Carter 
	 

	 	 	 	 
	 

	 	 	 	Name: Kevin Carter

Title: Senior Vice President — Finance
	 
	 	 	 	 
	 

	 	BRICE MANUFACTURING COMPANY, INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Kevin Carter 
	 

	 	 	 	 
	 

	 	 	 	Name: Kevin Carter

Title: Senior Vice President — Finance
	 
	 	 	 	 
	 

	 	TIMCO ENGINE CENTER, INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Kevin Carter 
	 

	 	 	 	 
	 

	 	 	 	Name: Kevin Carter

Title: Senior Vice President — Finance
	 
	 	 	 	 
	 

	 	TIMCO ENGINEERED SYSTEMS, INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Kevin Carter 
	 

	 	 	 	 
	 

	 	 	 	Name: Kevin Carter

Title: Senior Vice President — Finance

 

 

	 	 	 	 	 
	 

	 	TRIAD INTERNATIONAL MAINTENANCE CORPORATION
	 
	 	 	 	 
	 

	 	By:	 	/s/ Kevin Carter 
	 

	 	 	 	 
	 

	 	 	 	Name: Kevin Carter

Title: Senior Vice President — Finance
	 
	 	 	 	 
	 

	 	TIMCO AVIATION SERVICES, INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Kevin Carter 
	 

	 	 	 	 
	 

	 	 	 	Name: Kevin Carter

Title: Senior Vice President — Finance
	 
	 	 	 	 
	 

	 	AVIATION SALES DISTRIBUTION SERVICES COMPANY
	 
	 	 	 	 
	 

	 	By:	 	/s/ Kevin Carter 
	 

	 	 	 	 
	 

	 	 	 	Name: Kevin Carter

Title: Senior Vice President — Finance
	 
	 	 	 	 
	 

	 	AVIATION SALES LEASING COMPANY
	 
	 	 	 	 
	 

	 	By:	 	/s/ Kevin Carter 
	 

	 	 	 	 
	 

	 	 	 	Name: Kevin Carter

Title: Senior Vice President — Finance
	 
	 	 	 	 
	 

	 	AVIATION SALES PROPERTY MANAGEMENT CORP.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Kevin Carter 
	 

	 	 	 	 
	 

	 	 	 	Name: Kevin Carter

Title: Senior Vice President — Finance
	 
	 	 	 	 
	 

	 	AVS/CAI, INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Kevin Carter 
	 

	 	 	 	 
	 

	 	 	 	Name: Kevin Carter

Title: Senior Vice President — Finance

2

 

	 	 	 	 	 
	 

	 	AVS/M-1, INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Kevin Carter 
	 

	 	 	 	 
	 

	 	 	 	Name: Kevin Carter

Title: Senior Vice President — Finance
	 
	 	 	 	 
	 

	 	AVS/M-2, INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Kevin Carter 
	 

	 	 	 	 
	 

	 	 	 	Name: Kevin Carter

Title: Senior Vice President — Finance
	 
	 	 	 	 
	 

	 	AVS/M-3, INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Kevin Carter 
	 

	 	 	 	 
	 

	 	 	 	Name: Kevin Carter

Title: Senior Vice President — Finance
	 
	 	 	 	 
	 

	 	AVSRE, L.P.
	 
	 	 	 	 
	 

	 	By: Aviation Sales Property Management Corp.,

        its general partner
	 
	 	 	 	 
	 

	 	By:	 	/s/ Kevin Carter 
	 

	 	 	 	 
	 

	 	 	 	Name: Kevin Carter

Title: Senior Vice President — Finance
	 
	 	 	 	 
	 

	 	HYDROSCIENCE, INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Kevin Carter 
	 

	 	 	 	 
	 

	 	 	 	Name: Kevin Carter

Title: Senior Vice President — Finance

3

 

	 	 	 	 	 
	 

	 	TMAS/ASI, INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Kevin Carter 
	 

	 	 	 	 
	 

	 	 	 	Name: Kevin Carter

Title: Senior Vice President — Finance
	 
	 	 	 	 
	 

	 	WHITEHALL CORPORATION
	 
	 	 	 	 
	 

	 	By:	 	/s/ Kevin Carter 
	 

	 	 	 	 
	 

	 	 	 	Name: Kevin Carter

Title: Senior Vice President — Finance

4

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