Document:

Exhibit 10.1

WAIVER AND FOURTH AMENDMENT TO

LOAN AND SECURITY AGREEMENT

THIS
WAIVER AND FOURTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Waiver and Amendment”),
dated as of February 28, 2006, is entered into by and among Channell
Commercial Corporation, a Delaware corporation (the “Borrower Representative”),
Bank of America, N.A., as assignee of Banc of America Leasing and Capital, LLC,
successor-in-interest to Fleet Capital Corporation, as Administrative Agent
under the Loan Agreement referred to below (in such capacity, the “Administrative
Agent”), BABC Global Finance Inc., as assignee of Fleet Capital Global Finance,
Inc., as assignee of Fleet Capital Canada Corporation, as Canadian Agent under
the Loan Agreement referred to below (in such capacity, the “Canadian Agent”), Bank
of America, N.A., as successor-in-interest to Fleet National Bank, London U.K.
Branch, as UK Agent under the Loan Agreement referred to below (in such
capacity, the “UK Agent”), and the Lenders party to the Loan Agreement referred
to below, with reference to the following facts:

RECITALS

A.            The Borrower Representative and the other
Borrowers identified therein are parties to the Loan and Security Agreement,
dated as of September 25, 2002, as amended (collectively, the “Loan Agreement”),
with the Administrative Agent, the Canadian Agent, the UK Agent and the Lenders
party thereto, pursuant to which the Lenders have provided the Borrowers with
certain credit facilities.

B.            The Borrowers currently are in default
under Section 10.1.3 of the Loan Agreement due to their breach of Section
8.3 of the Loan Agreement by failing to maintain a Fixed Charge Coverage
Ratio of at least 1.15 to 1.00 as of December 31, 2005 (the Borrower’s
actual Fixed Charge Coverage Ratio as of December 31, 2005 was -1.21 to
1.00) — such Event of Default hereinafter is referred to as the “Existing Event
of Default”.

C.            The Borrowers have requested that the
Lenders waive the Existing Event of Default and amend the Loan Agreement to
delete the minimum Fixed Charge Coverage Ratio Covenant, in order to facilitate
the Borrower’s future compliance with the Loan Agreement.

D.            The Lenders are willing to waive the
Existing Event of Default and amend the Loan Agreement to eliminate the minimum
Fixed Charge Coverage Ratio Covenant, and the Borrowers and the Lenders also wish
to amend the Loan Agreement and certain other Loan Documents (i) to extend
the Term of the Loans from February 28, 2006 to March 31, 2007,
(ii) to reduce the Revolving Credit Maximum Amount from $25,000,000 to
$10,000,000, (iii) to make the Domestic Term Loan a stand-alone facility,
rather than a subfacility of the Domestic Revolving Credit Loans facility, and
(iv) to make certain other modifications, all as set forth below.

NOW,
THEREFORE, the parties hereby agree as follows:

1.             Defined Terms. 
Any and all initially-capitalized terms used in this Waiver and Amendment
(including, without limitation, in the recitals hereto) without definition
shall have the respective meanings specified in the Loan Agreement.

 

1

 

2.             Waiver of Existing Event of Default. 
The Lenders hereby waive the Existing Event of Default.  Such waiver by the Lenders shall constitute a
waiver of only the Existing Event of Default and shall not constitute a waiver
of any future breach of any provision of the Loan Agreement.

3.             Permanent Availability Reserve. 
Without limiting its right to impose additional discretionary Reserves
from time to time pursuant to Section 1.1.5 of the Loan Agreement, on
the effective date of this Waiver and Amendment, the Administrative Agent shall
impose a Reserve in the amount of $600,000 against borrowing availability under
the Revolving Credit Loans facility, which Reserve shall remain in effect
throughout the Term of the Loan Agreement.

4.             Domestic Term Loan as Stand-Alone
Facility.  Section 1.3.1 of the Loan Agreement is
hereby amended by deleting the words “The Domestic Term Loan shall constitute a
subfacility under the Domestic Revolving Credit Loans facility” from the third
sentence, so that such sentence hereinafter shall read in full as follows:

“The proceeds of the Domestic Term Loan shall be used
solely for the purposes that the Domestic Revolving Credit Loans are authorized
to be used.”

5.             Extension of Term of Credit Facilities.  Section
4.1 of the Loan Agreement is hereby amended to read in full as follows:

                “4.1 Term of Agreement.

                Subject to the right of Lenders to cease
making Loans to Borrowers during the continuance of any Default or Event of Default,
this Agreement shall be in effect from the Closing Date through and including March 31,
2007 (the ‘Term’), unless terminated as provided in Section 4.2
hereof.”

6.             Amendment to Capital Expenditures
Covenant.  Section 8.2.8 of the Loan Agreement is
hereby amended to read in full as follows:

                “8.2.8. 
Capital Expenditures.  Make
Capital Expenditures (including, without limitation, by way of capitalized
leases (but counting in any fiscal year the full amount of the obligations
under each capitalized lease entered into during such fiscal year and counting
no amount in respect of capitalized leases entered into during any other fiscal
year)) which, in the aggregate, as to Borrowers and all of their Subsidiaries,
exceed $3,000,000 for any fiscal year of Domestic Borrower.”

7.             Amendment to Minimum Aggregate
Availability Covenant.  Section 8.2.18 of the
Loan Agreement is hereby amended to read in full as follows:

                “8.2.18  
Aggregate Availability. 
Permit Aggregate Availability to be less than $1,500,000 at any time.”

8.             Deletion of Minimum Fixed Charge Coverage
Ratio Covenant.  Exhibit 8.3 to the Loan Agreement is
hereby amended to read in full as follows:

 

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“EXHIBIT 8.3

FINANCIAL COVENANTS

 

                [Reserved].”

9.             Reduction of Revolving Credit Maximum
Amount.  Appendix A is hereby amended such that
the definition of “Revolving Credit Maximum Amount” shall read in full as
follows:

                “‘Revolving Credit Maximum Amount’
- $10,000,000, as such amount may be reduced from time to time pursuant to the
terms of this Agreement.”

10.           Amendment to Schedule of Commitments.  Schedule
1.1 to the Loan Agreement is hereby amended to read in full as set forth on
Schedule 1.1 to this Waiver and Amendment.

11.           Amendment and Extension Fee. 
In consideration of the Agreement of the Agents and the Lenders to enter
into this Waiver and Amendment, Domestic Borrower hereby agrees to pay to the
Administrative Agent on the Effective Date of this Waiver and Amendment, for
the sole account of the Domestic Lender, a one-time fee in the amount of $35,000
(the “Amendment Fee”), which fee shall be deemed fully-earned and
non-refundable once paid.  Domestic
Borrower hereby acknowledges and agrees that the Administrative Agent may
effect payment of the Amendment Fee by charging the full amount thereof to the
Domestic Loan Account.

12.           Conditions Precedent. 
The effectiveness of this Waiver and Amendment shall be subject to the
prior satisfaction of the following conditions:

(a)           This Waiver and Amendment. The Administrative Agent shall have
received, in form and substance satisfactory to the Administrative Agent, this Waiver
and Amendment, duly executed by the Borrower Representative, the Canadian
Agent, the Administrative Agent and Majority Lenders;

(b)           Replacement Domestic Revolving Note. 
The Administrative Agent shall have received a new Revolving Note in the
original principal amount of $10,000,000, executed by the Domestic Borrowers in
favor of the Domestic Lender and otherwise in form and substance satisfactory
to the Administrative Agent;

(c)           Replacement Domestic Term Note. 
The Administrative Agent shall have received a new Term Note in the original
principal amount of $1,649,200, executed by the Domestic Borrowers in favor of
the Domestic Lender and otherwise in form and substance satisfactory to the
Administrative Agent;

(d)           No Defaults.  The Borrowers
and all other Loan Parties shall be in compliance with all the terms and
provisions of the Loan Documents applicable to such Person or its Property and
no Default or Event of Default (other than the Existing Event of Default waived
hereby) shall have occurred and be continuing; and

 

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(e)           Accuracy of Representations and Warranties.  All
of the Borrowers’ representations and warranties contained herein shall be true
and correct on and as of the date of execution hereof.

13.           Representations and Warranties.

(a)           Reaffirmation of Prior Representations and Warranties. 
Each Borrower  hereby reaffirms
and restates as of the date hereof all of the representations and warranties
made by such Borrower in the Loan Agreement and the other Loan Documents, which
shall be true and correct in all material respects, except to the extent
such representations and warranties specifically relate to an earlier date.

(b)           No Default.  Except for
the Existing Event of Default, which is being waived hereby, no Default or
Event of Default has occurred and remains continuing under any of the Loan
Documents.

14.           Miscellaneous.

(a)           Reference to Loan Agreement. 
The Loan Agreement, each of the other Loan Documents, and any and all
other agreements, documents or instruments now or hereafter executed and
delivered pursuant to the terms hereof, or pursuant to the terms of the Loan
Agreement as amended hereby, are hereby amended so that any reference therein
to the Loan Agreement shall mean a reference to the Loan Agreement as amended
by this Waiver and Amendment.

(b)           Loan Agreement Remains in Effect. 
The Loan Agreement and the other Loan Documents remain in full force and
effect and the Borrowers ratify and confirm their agreements and covenants
contained therein.

(c)           APPLICABLE LAW.  THIS WAIVER
AND AMENDMENT SHALL BE DEEMED TO HAVE BEEN MADE AND TO BE PERFORMABLE IN THE
STATE OF CALIFORNIA AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF CALIFORNIA.

(d)           Counterparts.  This Waiver
and Amendment may be executed in one or more counterparts, each of which when
so executed shall be deemed to be an original, but all of which when taken
together shall constitute one and the same instrument.

 

[Rest of
page intentionally left blank; signature pages follow]

 

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IN WITNESS WHEREOF, the parties have entered
into this Waiver and Amendment by their respective duly authorized officers as
of the date first above written.

	
  Borrower
  Representative:

  
	
   

  
	
  Channell Commercial Corporation,

  
	
  a Delaware corporation

  

 

 

	
  By:

  	
  /s/ Jerry Collazo

  
	
   

  	
  Jerry
  Collazo

  
	
   

  	
  Chief
  Financial Officer

  

 

5

 

	
  Bank
  of America, N.A.,

  
	
  (as
  assignee of Banc of America

  
	
  Leasing
  and Capital, LLC, successor-

  
	
  in-interest
  to Fleet Capital Corporation),

  
	
  as
  Administrative Agent and as sole

  
	
  Domestic
  Lender

  

 

	
  By:

  	
  /s/ John C. McNamara

  
	
   

  	
  John
  C. McNamara

  
	
   

  	
  Vice
  President

  

 

 

	
  BABC
  Global Finance Inc.,

  
	
  (as assignee
  of Fleet Capital Global Finance, Inc.,

  
	
  as
  assignee of Fleet Capital Canada Corporation),

  
	
  as
  Canadian Agent and as Canadian Lender

  

 

	
  By:

  	
  /s/ G.A. Bazaz

  
	
  Name:
  

  	
  G.A.
  Bazaz

  
	
  Title:

  	
  Sr.
  Vice President and Director

  

 

 

	
  Bank
  of America, N.A.

  
	
  (successor-in-interest
  to Fleet National Bank, 

  London U.K. Branch), as UK Agent and as UK 

  Lender

  

 

	
  By:

  	
  /s/ John C. McNamara

  
	
   

  	
  John
  C. McNamara

  
	
   

  	
  Vice
  President

  

 

6Exhibit 10.1

 

CONSULTING AGREEMENT FOURTH AMENDED ADDENDUM

 

This
Consulting Agreement Fourth Amended Addendum is entered into effective as of January 1,
2006 (except as otherwise provided herein), and is a supplement to, and
modification of, that certain Consulting Agreement (the “Original Agreement”)
by and between F.Y.I. Incorporated (n/k/a SOURCECORP,
Incorporated) (the “Company”) and David Lowenstein (“Consultant”), dated as of January 1,
2000.

 

1.             Change of Control. 
Effective January 1, 2006, sub-paragraphs 9(c) and (e) of
the Original Agreement are amended in their entirety to provide as follows:

 

9.  Change in Control.

 

(c)           Upon
a Change in Control, the Company or its successor shall (A) provide prompt
written notice to Consultant of the occurrence of the Change in Control, and (B) deliver
to an independent corporate trustee in an escrow account, upon terms reasonably
satisfactory to Consultant, an amount equal to the Consultant’s lump sum
termination payment and the Gross-up Payment to which he is entitled in
accordance with Section 9(g).  The
escrow agreement shall provide that, to the extent that Consultant for any
reason must report and pay federal, state, or local income tax or
self-employment or excise tax on the lump sum termination payment or the
Gross-up Payment, the escrow agent shall distribute to the Consultant the
amount necessary to pay all federal, state and local income tax,
self-employment tax and any excise tax as it becomes due. The Company shall
bear the costs of establishing and maintaining the escrow account.  In any Change in Control situation in which (i) Consultant
has received written notice from the successor to the Company that such pending
successor is willing to assume the Company’s obligation hereunder or (ii) Consultant
receives notice after the Change in Control that Consultant is being
terminated, Consultant may nonetheless, at his sole discretion, elect to
terminate this Agreement by providing written notice to the Company at any time
prior to closing of the transaction and, subject to the termination provisions
of paragraph 3 hereof, up to one (1) year after the closing of the
transaction giving rise to the Change in Control.  In such case, the amount of the lump-sum
termination payment due to Consultant shall be $1.5 million and the
non-competition provisions of paragraph 7 shall all apply.  Payment shall be made either at closing if
notice is served at least five (5) days before closing or within ten (10) days
of written notice by Consultant.

 

(e)           A “Change in Control” shall be deemed
to have occurred if:

 

(i)            any
person, other than the Company or an employee benefit plan of the Company,
acquires directly or indirectly the Beneficial Ownership (as defined in Section 13(d) of
the Securities Exchange Act of 1934, as amended) of any voting security of the
Company and immediately after such acquisition such person is, directly or
indirectly, the Beneficial Owner of voting securities representing 30% or more
of the total voting power of all of the then-outstanding voting securities of
the Company;

 

 

(ii)           the individuals (A) who, as of
the closing date of the Company’s initial public offering, constitute the Board
of Directors of the Company (the “Original Directors”) or (B) who
thereafter are elected to the Board of Directors of the Company and whose
election, or nomination for election, to the Board of Directors of the Company
was approved by a vote of at least two-thirds (2/3) of the Original Directors
then still in office (such directors becoming “Additional Original Directors”
immediately following their election) or (C) who are elected to the Board
of Directors of the Company and whose election, or nomination for election, to
the Board of Directors of the Company was approved by a vote of at least
two-thirds (2/3) of the Original Directors and Additional Original Directors
then still in office (such directors also becoming “Additional Original
Directors” immediately following their election), cease for any reason to
constitute a majority of the members of the Board of Directors of the Company;

 

(iii)          stockholder approval of a merger,
consolidation, recapitalization or reorganization of the Company, a reverse
stock split of outstanding voting securities of the Company, or consummation of
any such transaction if stockholder approval is not sought or obtained, other
than any such transaction which would result in at least 75% of the total
voting power represented by the voting securities of the surviving entity
outstanding immediately after such transaction being Beneficially Owned by
holders of at least 75% of the outstanding voting securities of the Company
immediately prior to the transaction, with the voting power of each such
continuing holder relative to other such continuing holders not substantially
altered in the transaction; or

 

(iv)          stockholder approval of a complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or a substantial portion of the Company’s assets (i.e., 50% or
more of the total assets of the Company (including the Company’s subsidiaries))
or consummation of any such transaction if stockholder approval is not sought
or obtained.

 

2.             Gross-Up Payment. 
Effective January 1, 2006, paragraph 9(g) of the Original
Agreement is amended in its entirety to provide as follows:

 

(g)           If
any portion of the severance benefits, Change in Control benefits, termination
payment, or any other payment under this Agreement, or under any other
agreement with, or plan of the Company, including but not limited to stock
options, warrants, restricted stock awards and other long-term incentives (in
the aggregate “Total Payments”) would be subject to the excise tax imposed by Section 4999
of the Code, as amended (or any similar tax that may hereafter be imposed) or
any interest or penalties with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter collectively
referred to as the “Excise Tax”), then Consultant shall be entitled to receive
from the Company an additional payment (the “Gross-up Payment”) (i.e., in
addition to such other severance benefits, Change in Control benefits,
termination payment or any other payments under this Agreement) in an amount
such that the net amount of Total Payments and Gross-up Payment retained by the
Consultant, after the calculation and deduction of all Excise Tax on the Total
Payments and all federal, state and

 

2

 

local income
tax, self-employment tax and Excise Tax on the Gross-up Payment, shall be equal
to the Total Payments.

 

For purposes
of this paragraph, Consultant’s applicable Federal, state and local taxes shall
be computed at the maximum marginal rates, taking into account the effect of
any loss of personal exemptions or itemized deductions resulting from receipt
of the Gross-Up Payment.

 

All determinations required to be made under
this paragraph 9(g), including whether a Gross-Up Payment is required, and the
assumptions to be used in determining the Gross-Up Payment, shall be made by
the Company’s current independent accounting firm, or such other firm as the
Company may designate in writing prior to a Change in Control (the “Accounting
Firm”), which shall provide detailed supporting calculations both to the
Company and Consultant within twenty business days of the receipt of notice
from Consultant that there will likely be a Change in Control, or such earlier
time as is requested by the Company.  In
the event that the Accounting Firm is serving as accountant or auditor for the
party effecting the Change in Control or is otherwise unavailable, Consultant
(together with all employees with comparable appointment rights in their
respective employment agreements such that Consultant and all such employees
may collectively select a single accounting firm) may appoint another
nationally recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the Accounting
Firm hereunder).  All fees and expenses
of the Accounting Firm with respect to such determinations described above
shall be borne solely by the Company.

 

Consultant
agrees (unless requested otherwise by the Company) to use reasonable efforts to
contest in good faith any subsequent determination by the Internal Revenue
Service that Consultant owes an amount of Excise Tax greater than the amount
determined pursuant to this Section; provided, that Consultant shall be
entitled to reimbursement by the Company (on an after tax basis) of all fees
and expenses reasonably incurred by Consultant in contesting such
determination.  In the event the Internal
Revenue Service or any court of competent jurisdiction determines that
Consultant owes an amount of Excise Tax that is greater than the amount
previously taken into account and paid under this Agreement (such additional
Excise Tax being the “Additional Excise Tax”), the Company shall promptly pay
to Consultant the amount of such shortfall. 
In the case of any payment that the Company is required to make to
Consultant pursuant to the preceding sentence (a “Later Payment”), the Company
shall also pay to Consultant an additional amount such that after payment by
Consultant of all of Consultant’s applicable Federal, state and local taxes,
including any interest and penalties assessed by any taxing authority, on the
Later Payment, Consultant will retain from the Later Payment an amount equal to
the Additional Excise Tax, which Consultant shall use to pay the Additional
Excise Tax.

 

3.             Section 409A Provisions.  Effective January 1, 2006, the following provisions are added
as Paragraph 17 of the Agreement:

 

17.   Section 409A.

 

(a)         Notwithstanding
any provision of the Agreement to the contrary, if Consultant is a “specified
employee” as defined under Section 409A
(“Section 409A”) of the Internal Revenue Code of 1986, as amended or any
regulations or Treasury guidance

 

3

 

promulgated thereunder,
Consultant shall not be entitled to any payments or benefits upon a separation
from service until the earlier of (i) the date which is six months after
his separation from service as such term is defined under Section 409A for
any reason other than death or (ii) the date of his death.  The provisions of this paragraph 17 shall
only apply if required to comply with Section 409A.

 

(b)         If any provision of
this Agreement (or of any award of compensation, including equity compensation
or benefits) would cause Consultant to incur any additional tax or interest
under Section 409A, the Company shall, after promptly consulting with and
receiving the approval of Consultant (which shall not be unreasonably
withheld), reform such provision; provided that the Company agrees (both
in the application of this sub-paragraph (b) and the above sub-paragraph
(a)) to maintain, to the maximum extent practicable, the original intent and
economic benefit to Consultant of the applicable provision without violating
the provisions of Section 409A.

 

(c)           This paragraph 17
shall survive any termination of this Agreement.

 

4.             Governing
Laws.  This Fourth Amended
Addendum shall in all respect be construed according to the laws of the State
of Texas.

 

5.             Counterparts.  This
Fourth Amended Addendum may be executed simultaneously in two (2) or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instruments.

 

6.             Effect of Fourth Amended Addendum.  Except as specifically amended by this Fourth
Amended Addendum, all provisions of the Original Agreement (as amended by the
Consulting Agreement Amended Addendum entered into effective October 1,
2004, the Second Amended Addendum entered into effective December 18,
2004, and the Third Amended Addendum entered into effective January 1,
2005) remain in full force and effect in accordance with their express terms.

 

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IN WITNESS
WHEREOF, the parties hereto have executed this Fourth Amended Addendum as of
the day and year first above written.

 

	
  SOURCECORP,
  Incorporated

  (f/k/a/ F.Y.I. Incorporated)

  	
   

  	
  CONSULTANT

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Thomas
  C. Walker

  	
   

  	
  /s/ David
  Lowenstein

  	
   

  
	
   

  	
  Thomas C. Walker

  Chairman and Chief Development Officer

  	
   

  	
  David Lowenstein

  

 

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