Document:

Exhibit
10.4

 

Execution Version

 

 

AMENDED AND
RESTATED LOAN AND SECURITY AGREEMENT

 

 

GMAC COMMERCIAL
FINANCE LLC

(AS LENDER AND AS
AGENT)

 

 

and

 

THE LENDERS
SIGNATORY HERETO

FROM TIME TO TIME

(AS LENDERS)

 

with

 

 

EDGEN CARBON
PRODUCTS GROUP, L.L.C.

(AS A BORROWER)

EDGEN ALLOY
PRODUCTS GROUP, L.L.C.

(AS A BORROWER)

 

and

 

THE OTHER LOAN
PARTIES SIGNATORY HERETO

(AS LOAN PARTIES)

 

February 1,
2005

 

 

TABLE OF CONTENTS

 

 

	
  I.

  	
  DEFINITIONS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  1.1.

  	
  Accounting Terms

  	
   

  
	
   

  	
  1.2.

  	
  General
  Terms

  	
   

  
	
   

  	
  1.3.

  	
  UCC Terms

  	
   

  
	
   

  	
  1.4.

  	
  Certain Matters
  of Construction

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  II.

  	
  ADVANCES, PAYMENTS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  2.1.

  	
  Revolving Advances

  	
   

  
	
   

  	
  2.2.

  	
  Procedure for Borrowing

  	
   

  
	
   

  	
  2.3.

  	
  Disbursement
  of Revolving Advance Proceeds

  	
   

  
	
   

  	
  2.4.

  	
  Maximum Revolving
  Advances

  	
   

  
	
   

  	
  2.5.

  	
  Repayment of
  Revolving Advances

  	
   

  
	
   

  	
  2.6.

  	
  Repayment of Excess
  Advances

  	
   

  
	
   

  	
  2.7.

  	
  Statement of Account

  	
   

  
	
   

  	
  2.8.

  	
  Letters of Credit

  	
   

  
	
   

  	
  2.9.

  	
  Issuance of Letters
  of Credit

  	
   

  
	
   

  	
  2.10.

  	
  Requirements
  For Issuance of Letters of Credit

  	
   

  
	
   

  	
  2.11.

  	
  Additional Payments

  	
   

  
	
   

  	
  2.12.

  	
  Manner of
  Borrowing and Payment

  	
   

  
	
   

  	
  2.13.

  	
  Mandatory Prepayments

  	
   

  
	
   

  	
  2.14.

  	
  Use of Proceeds

  	
   

  
	
   

  	
  2.15.

  	
  Defaulting Lender

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  III.

  	
  INTEREST AND FEES

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  3.1.

  	
  Interest

  	
   

  
	
   

  	
  3.2.

  	
  Letter of
  Credit Fees; Cash Collateral

  	
   

  
	
   

  	
  3.3.

  	
  Loan
  Fees

  	
   

  
	
   

  	
  3.4.

  	
  Computation of
  Interest and Fees

  	
   

  
	
   

  	
  3.5.

  	
  Maximum Charges

  	
   

  
	
   

  	
  3.6.

  	
  Increased Costs

  	
   

  
	
   

  	
  3.7.

  	
  Basis
  For Determining Interest Rate Inadequate or Unfair

  	
   

  
	
   

  	
  3.8.

  	
  Capital Adequacy

  	
   

  
	
   

  	
  3.9.

  	
  Taxes

  	
   

  
	
   

  	
  3.10.

  	
  Additional Costs

  	
   

  
	
   

  	
  3.11.

  	
  Substitution of Lenders

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  IV.

  	
  COLLATERAL: GENERAL
  TERMS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  4.1.

  	
  Security
  Interest in the Collateral

  	
   

  
	
   

  	
  4.2.

  	
  Perfection of
  Security Interest

  	
   

  
	
   

  	
  4.3.

  	
  Disposition of
  Collateral

  	
   

  
	
   

  	
  4.4.

  	
  Preservation of
  Collateral

  	
   

  

 

i

 

 

	
   

  	
  4.5.

  	
  Ownership of Collateral

  	
   

  
	
   

  	
  4.6.

  	
  Defense
  of Agent’s and Lenders’ Interests

  	
   

  
	
   

  	
  4.7.

  	
  Books and Records

  	
   

  
	
   

  	
  4.8.

  	
  Financial Disclosure

  	
   

  
	
   

  	
  4.9.

  	
  Compliance with Laws

  	
   

  
	
   

  	
  4.10.

  	
  Inspection of Premises

  	
   

  
	
   

  	
  4.11.

  	
  Insurance

  	
   

  
	
   

  	
  4.12.

  	
  Failure to Pay
  Insurance

  	
   

  
	
   

  	
  4.13.

  	
  Payment of Taxes

  	
   

  
	
   

  	
  4.14.

  	
  Payment of
  Leasehold Obligations

  	
   

  
	
   

  	
  4.15.

  	
  Receivables

  	
   

  
	
   

  	
  4.16.

  	
  Inventory

  	
   

  
	
   

  	
  4.17.

  	
  Maintenance of
  Equipment

  	
   

  
	
   

  	
  4.18.

  	
  Exculpation of
  Liability

  	
   

  
	
   

  	
  4.19.

  	
  Environmental Matters

  	
   

  
	
   

  	
  4.20.

  	
  Financing Statements

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  V.

  	
  REPRESENTATIONS AND
  WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  5.1.

  	
  Authority

  	
   

  
	
   

  	
  5.2.

  	
  Formation and
  Qualification

  	
   

  
	
   

  	
  5.3.

  	
  Survival
  of Representations and Warranties

  	
   

  
	
   

  	
  5.4.

  	
  Tax
  Returns

  	
   

  
	
   

  	
  5.5.

  	
  Financial Statements

  	
   

  
	
   

  	
  5.6.

  	
  Loan Party Name

  	
   

  
	
   

  	
  5.7.

  	
  O.S.H.A.
  and Environmental Compliance

  	
   

  
	
   

  	
  5.8.

  	
  Solvency;
  No Litigation, Indebtedness, Violation or Default

  	
   

  
	
   

  	
  5.9.

  	
  Patents,
  Trademarks, Copyrights and Licenses

  	
   

  
	
   

  	
  5.10.

  	
  Licenses and Permits

  	
   

  
	
   

  	
  5.11.

  	
  No
  Defaults

  	
   

  
	
   

  	
  5.12.

  	
  No Burdensome Restrictions

  	
   

  
	
   

  	
  5.13.

  	
  No Labor Disputes, Etc

  	
   

  
	
   

  	
  5.14.

  	
  Margin Regulations.

  	
   

  
	
   

  	
  5.15.

  	
  Investment Company Act

  	
   

  
	
   

  	
  5.16.

  	
  Disclosure

  	
   

  
	
   

  	
  5.17.

  	
  Delivery
  of Senior Note Documents, Equity Documents and Subordinated Debt
  Documentation

  	
   

  
	
   

  	
  5.18.

  	
  Swaps

  	
   

  
	
   

  	
  5.19.

  	
  Conflicting Agreements

  	
   

  
	
   

  	
  5.20.

  	
  Application
  of Certain Laws and Regulations

  	
   

  
	
   

  	
  5.21.

  	
  Business
  and Property of Loan Parties

  	
   

  
	
   

  	
  5.22.

  	
  Material Contracts

  	
   

  
	
   

  	
  5.23.

  	
  Acquisition Agreement

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  VI.

  	
  AFFIRMATIVE COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  6.1.

  	
  Payment
  of Fees

  	
   

  
	
   

  	
  6.2.

  	
  Conduct
  of Business and Maintenance of Existence and Assets

  	
   

  

 

ii

 

 

	
   

  	
  6.3.

  	
  Violations

  	
   

  
	
   

  	
  6.4.

  	
  Government Receivables

  	
   

  
	
   

  	
  6.5.

  	
  Execution
  of Supplemental Instruments

  	
   

  
	
   

  	
  6.6.

  	
  Payment of Indebtedness

  	
   

  
	
   

  	
  6.7.

  	
  Standards of
  Financial Statements

  	
   

  
	
   

  	
  6.8.

  	
  Taxes and
  Other Governmental Charges

  	
   

  
	
   

  	
  6.9.

  	
  Revisions or
  Updates to Schedules

  	
   

  
	
   

  	
  6.10.

  	
  Financial Statements

  	
   

  
	
   

  	
  6.11.

  	
  Perfection
  of Lien on Canadian Intercompany Obligations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  VII.

  	
  NEGATIVE COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  7.1.

  	
  Merger,
  Consolidation, Acquisition and Sale of Assets

  	
   

  
	
   

  	
  7.2.

  	
  Creation of Liens

  	
   

  
	
   

  	
  7.3.

  	
  Guarantees

  	
   

  
	
   

  	
  7.4.

  	
  Investments

  	
   

  
	
   

  	
  7.5.

  	
  Loanse

  	
   

  
	
   

  	
  7.6.

  	
  Dividends and
  Distributions

  	
   

  
	
   

  	
  7.7.

  	
  Indebtedness

  	
   

  
	
   

  	
  7.8.

  	
  Nature of Business

  	
   

  
	
   

  	
  7.9.

  	
  Transactions with
  Affiliates

  	
   

  
	
   

  	
  7.10.

  	
  Leases

  	
   

  
	
   

  	
  7.11.

  	
  Subsidiaries

  	
   

  
	
   

  	
  7.12.

  	
  Fiscal Year
  and Accounting Changes

  	
   

  
	
   

  	
  7.13.

  	
  Pledge of Credit

  	
   

  
	
   

  	
  7.14.

  	
  Amendment
  of Organizational Documents

  	
   

  
	
   

  	
  7.15.

  	
  Compliance with ERISA

  	
   

  
	
   

  	
  7.16.

  	
  Prepayment of
  Indebtedness

  	
   

  
	
   

  	
  7.17.

  	
  Senior
  Note Obligations; Subordinated Notes

  	
   

  
	
   

  	
  7.18.

  	
  State of Organization

  	
   

  
	
   

  	
  7.19.

  	
  Foreign Asset
  Control Regulations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  VIII.

  	
  CONDITIONS PRECEDENT

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  8.1.

  	
  Conditions to
  Initial Advances

  	
   

  
	
   

  	
  8.2.

  	
  Conditions to Each
  Advance

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  IX.

  	
  INFORMATION AS TO
  LOAN PARTIES

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  9.1.

  	
  Disclosure of
  Material Matters

  	
   

  
	
   

  	
  9.2.

  	
  Reporting

  	
   

  
	
   

  	
  9.3.

  	
  Environmental Reports

  	
   

  
	
   

  	
  9.4.

  	
  Litigation

  	
   

  
	
   

  	
  9.5.

  	
  Government Receivables

  	
   

  
	
   

  	
  9.6.

  	
  Annual Financial
  Statements

  	
   

  
	
   

  	
  9.7.

  	
  Quarterly
  Financial Statements

  	
   

  
	
   

  	
  9.8.

  	
  Monthly Financial
  Statements

  	
   

  
	
   

  	
  9.9.

  	
  Other
  Reports

  	
   

  
	
   

  	
  9.10.

  	
  Additional Information

  	
   

  

 

iii

 

	
   

  	
  9.11.

  	
  Projected Operating
  Budget

  	
   

  
	
   

  	
  9.12.

  	
  Variances From
  Operating Budget

  	
   

  
	
   

  	
  9.13.

  	
  ERISA Notices and Requests

  	
   

  
	
   

  	
  9.14.

  	
  Additional Documents

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  X.

  	
  EVENTS
  OF DEFAULT

  	
   

  
	
   

  	
   

  	
   

  
	
  XI.

  	
  AGENT’S
  AND LENDERS’ RIGHTS AND REMEDIES AFTER DEFAULT

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  11.1.

  	
  Rights and Remedies

  	
   

  
	
   

  	
  11.2.

  	
  Application of Proceeds

  	
   

  
	
   

  	
  11.3.

  	
  Agent’s Discretion

  	
   

  
	
   

  	
  11.4.

  	
  Setoff

  	
   

  
	
   

  	
  11.5.

  	
  Rights and
  Remedies not Exclusive

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  XII.

  	
  WAIVERS AND
  JUDICIAL PROCEEDINGS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  12.1.

  	
  Waiver of Notice

  	
   

  
	
   

  	
  12.2.

  	
  Delay

  	
   

  
	
   

  	
  12.3.

  	
  Jury
  Waiver

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  XIII.

  	
  EFFECTIVE DATE
  AND TERMINATION

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  13.1.

  	
  Term

  	
   

  
	
   

  	
  13.2.

  	
  Termination

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  XIV.

  	
  REGARDING
  AGENT

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  14.1.

  	
  Appointment

  	
   

  
	
   

  	
  14.2.

  	
  Nature of Duties

  	
   

  
	
   

  	
  14.3.

  	
  Lack
  of Reliance on Agent and Resignation

  	
   

  
	
   

  	
  14.4.

  	
  Certain Rights of Agent

  	
   

  
	
   

  	
  14.5.

  	
  Reliance

  	
   

  
	
   

  	
  14.6.

  	
  Notice of Default

  	
   

  
	
   

  	
  14.7.

  	
  Indemnification

  	
   

  
	
   

  	
  14.8.

  	
  Agent in its
  Individual Capacity

  	
   

  
	
   

  	
  14.9.

  	
  Delivery of Documents

  	
   

  
	
   

  	
  14.10.

  	
  Loan Parties’
  Undertaking to Agent

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  XV.

  	
  GUARANTY

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  15.1.

  	
  Guaranty

  	
   

  
	
   

  	
  15.2.

  	
  Waivers

  	
   

  
	
   

  	
  15.3.

  	
  No
  Defense

  	
   

  
	
   

  	
  15.4.

  	
  Guaranty of Payment

  	
   

  
	
   

  	
  15.5.

  	
  Liabilities Absolute

  	
   

  
	
   

  	
  15.6.

  	
  Waiver of Notice

  	
   

  
	
   

  	
  15.7.

  	
  Agent’s Discretion

  	
   

  
	
   

  	
  15.8.

  	
  Reinstatement

  	
   

  
	
   

  	
  15.9.

  	
  Action Upon Event
  of Default

  	
   

  

 

iv

 

	
   

  	
  15.10.

  	
  Statute of Limitations

  	
   

  
	
   

  	
  15.11.

  	
  Interest

  	
   

  
	
   

  	
  15.12.

  	
  Guarantor’s
  Investigation

  	
   

  
	
   

  	
  15.13.

  	
  Borrower or Guarantor

  	
   

  
	
   

  	
  15.14.

  	
  Termination

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  XVI.

  	
  JOINT AND SEVERAL
  BORROWINGS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  16.1.

  	
  Joint and Several
  Obligations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  XVII.

  	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  17.1.

  	
  Governing
  Law

  	
   

  
	
   

  	
  17.2.

  	
  Entire
  Understanding; Amendments

  	
   

  
	
   

  	
  17.3.

  	
  Successors
  and Assigns; Participations; New Lenders

  	
   

  
	
   

  	
  17.4.

  	
  Application of Payments

  	
   

  
	
   

  	
  17.5.

  	
  Indemnity

  	
   

  
	
   

  	
  17.6.

  	
  Notice

  	
   

  
	
   

  	
  17.7.

  	
  Survival

  	
   

  
	
   

  	
  17.8.

  	
  Waiver of Subrogation

  	
   

  
	
   

  	
  17.9.

  	
  Severability

  	
   

  
	
   

  	
  17.10.

  	
  Expenses

  	
   

  
	
   

  	
  17.11.

  	
  Injunctive Relief

  	
   

  
	
   

  	
  17.12.

  	
  Consequential Damages

  	
   

  
	
   

  	
  17.13.

  	
  Captions

  	
   

  
	
   

  	
  17.14.

  	
  Counterparts;
  Telecopied Signatures

  	
   

  
	
   

  	
  17.15.

  	
  Construction

  	
   

  
	
   

  	
  17.16.

  	
  Confidentiality;
  Sharing Information

  	
   

  
	
   

  	
  17.17.

  	
  Publicity

  	
   

  
	
   

  	
  17.18.

  	
  Amendment and
  Restatement

  	
   

  
	
   

  	
  17.19.

  	
  Confirmation
  and Ratification of Collateral Security and of Existing Other Documents

  	
   

  

 

v

 

List of Exhibits
and Schedules

 

	
  Exhibits

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
   

  	
  Borrowing Base
  Certificate

  
	
  Exhibit 2.1(a)

  	
   

  	
  Revolving Credit Note

  
	
  Exhibit 5.7(a)(iv)

  	
   

  	
  Environmental
  Attachments

  
	
  Exhibit 8.1(i)

  	
   

  	
  Financial Condition
  Certificate

  
	
  Exhibit 17.3

  	
   

  	
  Commitment Transfer
  Supplement

  
	
   

  	
   

  	
   

  
	
  Schedules

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule 4.5

  	
   

  	
  Equipment and Inventory
  Locations

  
	
  Schedule 4.15(c)

  	
   

  	
  Location of Executive
  Offices

  
	
  Schedule 4.19

  	
   

  	
  Real Property

  
	
  Schedule 5.2(a)

  	
   

  	
  States of Qualification
  and Good Standing

  
	
  Schedule 5.2(b)

  	
   

  	
  Subsidiaries

  
	
  Schedule 5.4

  	
   

  	
  Federal Tax
  Identification Number

  
	
  Schedule 5.6

  	
   

  	
  Loan Party Name and
  Prior Names

  
	
  Schedule 5.7

  	
   

  	
  Environmental

  
	
  Schedule 5.8(b)

  	
   

  	
  Litigation

  
	
  Schedule 5.8(d)

  	
   

  	
  Plans

  
	
  Schedule 5.9

  	
   

  	
  Intellectual Property,
  Source Code Escrow Agreements

  
	
  Schedule 5.10

  	
   

  	
  Licenses and Permits

  
	
  Schedule 5.11

  	
   

  	
  Defaults

  
	
  Schedule 5.13

  	
   

  	
  Labor Disputes

  
	
  Schedule 5.18

  	
   

  	
  Swaps

  
	
  Schedule 5.22

  	
   

  	
  Material Contracts

  
	
  Schedule 7.2

  	
   

  	
  Existing Liens

  
	
  Schedule 7.3

  	
   

  	
  Guarantees

  
	
  Schedule 7.9

  	
   

  	
  Transactions with
  Affiliates

  

 

vi

 

AMENDED AND
RESTATED LOAN AND SECURITY AGREEMENT

 

AMENDED AND RESTATED LOAN
AND SECURITY AGREEMENT dated February 1, 2005 among EDGEN CARBON PRODUCTS
GROUP, L.L.C., a limited liability company organized under the laws of the
State of Louisiana (“Edgen Carbon”), EDGEN ALLOY PRODUCTS GROUP, L.L.C.,
a limited liability company organized under the laws of the State of Louisiana
(“Edgen Alloy”) (Edgen Carbon and Edgen Alloy, each individually a “Borrower”
and collectively, the “Borrowers”), EDGEN CORPORATION, a corporation
organized under the laws of the State of Nevada (“Holdings”), EDGEN
LOUISIANA CORPORATION, a corporation organized under the laws of the State of
Louisiana (“Sub-Holdings” and, together with Holdings and each other
Person designated as such on the signature pages hereto, each a “Guarantor”
and collectively, the “Guarantors”), the financial institutions which
are now or which hereafter become a party hereto (each a “Lender” and
collectively, the “Lenders”) and GMAC COMMERCIAL FINANCE LLC, a limited
liability company organized under the laws of the State of Delaware (“GMAC
CF”), as agent for Lenders (GMAC CF, in such capacity, the “Agent”).

 

Borrowers, Guarantors,
Lenders and Agent are parties to a Loan and Security Agreement dated as of February 27,
2004 (as amended, modified and supplemented prior to the date hereof, the “Existing
Loan Agreement”) pursuant to which Lenders (the “Existing Lenders”)
and Agent provide the Borrowers thereunder with certain financial
accommodations.  This Agreement is being
entered into for the purpose of, among other things, amending and restating the
Existing Loan Agreement on the terms and conditions herein set forth.

 

IN CONSIDERATION
of the mutual covenants and undertakings herein contained, Loan Parties,
Lenders and Agent hereby agree as follows:

 

I.                                         DEFINITIONS.

 

1.1.                                                      Accounting
Terms.

 

As used in this Agreement, any Other Document, or any
certificate, report or other document made or delivered pursuant to this
Agreement, accounting terms not defined in Section 1.2 or elsewhere
in this Agreement and accounting terms partly defined in Section 1.2
to the extent not defined, shall have the respective meanings given to them
under GAAP.

 

1.2.                                                      General
Terms.

 

For purposes of this Agreement the following terms
shall have the following meanings:

 

“Accountants”
shall have the meaning set forth in Section 9.6.

 

“Acquired Indebtedness”
shall mean Indebtedness of a Person or any of its Subsidiaries existing at the time
such Person becomes a Subsidiary of a Loan Party or at the time it merges or
consolidates with or into a Loan Party or any of its Subsidiaries or assumed in
connection with the acquisition of assets from such Person and in each case not
incurred by such Person in connection with, or in anticipation or contemplation
of, such Person becoming a Subsidiary of a Loan

 

 

Party or such
acquisition, merger or consolidation and which Indebtedness is without recourse
to a Loan Party or any of its Subsidiaries or to any of their respective
properties or assets other than the Person or the assets to which such
Indebtedness related prior to the time such Person became a Subsidiary of a
Loan Party or the time of such acquisition, merger or consolidation; provided that Indebtedness of such Person that is redeemed,
defeased, retired or otherwise repaid at the time, or immediately upon
consummation, of the transaction by which such Person is merged with or into or
became a Subsidiary of a Loan Party shall not be Acquired Indebtedness.  Acquired Indebtedness shall be deemed to be
incurred on the date of any such acquisition, merger or consolidation or the
date the acquired Person becomes a Subsidiary.

 

“Acquisition”
shall mean the acquisition by Edgen Acquisition Corporation (“EAC”) of one
hundred percent of the issued and outstanding Capital Stock of Holdings,
followed by the merger of EAC with and in to Holdings, with Holdings being the
survivor, all pursuant to the terms of the Acquisition Agreement.

 

“Acquisition Agreement”
shall mean the Stock Purchase Agreement dated as of December 31, 2004
among EAC, Holdings, the stockholders signatory thereto and the Sellers
Representative (as defined therein).

 

“Acquisition Documents”
shall mean the Acquisition Agreement and all agreements, instruments and
documents entered into in connection therewith.

 

“Adjusted LIBOR Rate”
shall mean, with respect to any Eurodollar Rate Loan for any Interest Period a
rate of interest equal to:

 

(a)                                  the
offered rate for deposits in U.S. dollars in the London interbank market for
the relevant Interest Period which is published by the British Bankers’
Association and currently is reported by Bloomberg L.P. as of 11:00 a.m.
(London time) on the day which is two (2) Business Days prior to the first day
of such Interest Period for a term comparable to such Interest Period; provided,
however, that if such a rate ceases to be available from that or any
other source from the British Bankers’ Association, then the rate used shall be
a rate per annum equal to the offered rate for deposits in U.S. dollars in the
London interbank market for the relevant Interest Period that appears on
Reuters Screen LIBOR Page (or any successor page) as of 11:00 a.m. (London
time) on the day which is two (2) Business Days prior to the first day of such
Interest Period for a term comparable to such Interest Period, provided that if
more than one rate is specified on Reuters Screen LIBOR Page, then the rate
used shall be a rate per annum equal to the arithmetic mean of all such rates
(rounded upwards, if necessary, to the nearest 1/100 of 1%); provided, however,
that if, for any reason, such a rate is not published by the British Bankers’
Association or available on the Reuters Screen LIBOR Page, the rate used shall
be equal to a rate per annum equal to the average rate (rounded upwards, if
necessary, to the nearest 1/100 of 1%) at which Agent determines that U.S.
dollars in an amount comparable to the amount of the applicable Revolving
Advances are being offered to prime banks at approximately 11:00 a.m. (London
time) on the day which is two (2) Business Days prior to the first day of such
Interest Period for a term comparable to such Interest Period for settlement in
immediately available funds by leading banks in the London interbank market
selected by Agent; divided by

 

(b)                                 a
number equal to 1.0 minus the aggregate (but without duplication) of the
rates (expressed as a decimal fraction) of reserve requirements in effect on
the day

 

2

 

which is two (2) Business
Days prior to the beginning of such Interest Period (including, without
limitation, basic, supplemental, marginal and emergency reserves under any
regulations of the Board of Governors of the Federal Reserve System or other governmental
authority having jurisdiction with respect thereto, as now and from time to
time in effect) for Eurocurrency funding (currently referred to as “Eurocurrency
Liabilities” in Regulation D of such Board) which are required to be maintained
by a member bank of the Federal Reserve System; such rate (if greater than
zero) to be rounded upward to the next whole multiple of one-sixteenth of one
percent (.0625%).

 

“Advances” shall
mean and include the Revolving Advances and the Letters of Credit.

 

“Advance Rates”
shall have the meaning set forth in Section 2.1(a).

 

“Affiliate” of any
Person shall mean (a) any Person (other than a Subsidiary) which, directly or
indirectly, is in control of, is controlled by, or is under common control with
such Person, or (b) any Person who is a director, managing member, general
partner or officer (i) of such Person, (ii) of any Subsidiary of such Person or
(iii) of any Person described in clause (a) above.  For purposes of this definition, control of a
Person shall mean the power, direct or indirect, (x) to vote 10% or more of the
securities having ordinary voting power for the election of directors (or
managing member or general partner, as appropriate) of such Person, or (y) to
direct or cause the direction of the management and policies of such Person
whether by contract or otherwise, provided, however, that the definition of “Affiliate”
shall exclude any portfolio company of an entity described in clauses (i) or
(ii) of the definition of “Jefferies Entities”.

 

“Agent” shall have
the meaning set forth in the preamble to this Agreement and shall include its
successors and assigns.

 

“Agreement” shall
mean this Amended and Restated Loan and Security Agreement, as amended,
restated, modified and supplemented from time to time.

 

“AmSouth” shall
mean AmSouth Bank, an Alabama banking corporation.

 

“Applicable Margin”
shall mean the applicable percentage specified below:

 

	
  TYPE
  OF REVOLVING

  ADVANCE

  	
   

  	
  APPLICABLE MARGIN

  FOR DOMESTIC RATE

  LOANS

  	
   

  	
  APPLICABLE MARGIN

  FOR EURODOLLAR RATE

  LOANS

  
	
  Revolving
  Advances

  	
   

  	
  Minus 0.50%

  	
   

  	
  1.50%

  

 

“Asset Acquisition”
means:

 

(1) an Investment
by Holdings or any Restricted Subsidiary of the Loan Parties in any other
Person pursuant to which such Person shall become a Restricted Subsidiary of
the Loan Parties  or any Restricted
Subsidiary of the Loan Parties, or shall be merged with or into Holdings or any
Restricted Subsidiary of the Loan Parties, or

 

(2) the
acquisition by Holdings or any Restricted Subsidiary of the Loan Parties of the
assets of any Person (other than a Restricted Subsidiary of the Loan Parties)
which

 

3

 

constitute all or
substantially all of the assets of such Person or comprise any division or line
of business of such Person or any other properties or assets of such Person
other than in the ordinary course of business.

 

“Asset Sale” means
any direct or indirect sale, issuance, conveyance, transfer, lease (other than
operating leases entered into in the ordinary course of business), assignment
or other transfer (other than a Lien in accordance with this Agreement) for
value by (x) Holdings or any of its Restricted Subsidiaries to any Person other
than a Loan Party or (y) a Foreign Restricted Subsidiary to any Person other
than Holdings or a Wholly Owned Restricted Subsidiary of the Loan Parties of:

 

(1)                  any Capital Stock of any Restricted Subsidiary of the
Loan Parties; or

 

(2)                  any other property or assets of Holdings or any
Restricted Subsidiary other than in the ordinary course of business; provided, however, that
Asset Sales shall not include:

 

(A)                              a transaction or series of related
transactions for which Holdings or its Restricted Subsidiaries receive
aggregate consideration of less than $1.0 million;

 

(B)                                the sale, lease, conveyance, disposition
or other transfer of all or substantially all of the assets of the Loan Parties
as permitted under Section 7.1;

 

(C)                                any dividend, distribution, purchase,
redemption or retirement of any Capital Stock permitted under Section 7.6,
any Investment permitted under Section 7.4 or loans permitted under Section 7.5;

 

(D)                               the sale or other disposition of Cash
Equivalents;

 

(E)                                 the sale or other disposition of used,
worn out, obsolete or surplus equipment;

 

(F)                                 the sale of an Unrestricted Subsidiary;

 

(G)                                dispositions of Investments or receivables in connection with the compromise, settlement or
collection thereof in the ordinary course of business or in a bankruptcy or
similar proceeding and exclusive of factoring or similar arrangements; and

 

(H)                               the licensing or sublicensing of
intellectual property or other general intangibles and licenses, leases or
subleases of other property in the ordinary course of business which do not
materially interfere with the business of the Loan Parties and their
Restricted Subsidiaries.

 

“Authority”
shall have the meaning set forth in Section 4.19(d).

 

“Base Rate” shall
mean a variable rate of interest per annum equal to the rate of interest from
time to time published by the Board of Governors of the Federal Reserve System
in Federal Reserve statistical release H.15 (519) entitled “Selected Interest
Rates” as the Bank Prime Loan Rate, such rate to be adjusted automatically,
without notice, on the effective date of any change in such rate.  Base Rate also includes rates published in
any successor publications of the Federal Reserve System reporting the Bank
Prime Loan Rate or its equivalent.  The
statistical release generally sets forth a Bank Prime Loan Rate for each
Business Day.  The applicable Bank Prime

 

4

 

Loan Rate for any date
not set forth in such statistical release or equivalent document shall be the
rate set forth for the last preceding date. 
In the event the Board of Governors of the Federal Reserve System ceases
to publish a Bank Prime Loan Rate or equivalent, the term “Base Rate” shall
mean a variable rate of interest per annum equal to the highest of the “prime
rate,” “reference rate,” “base rate” or other similar rate as determined by
Agent announced from time to time by any of the three largest banks (based on
combined capital and surplus) headquartered in New York, New York (with the
understanding that any such rate may merely be a reference rate and may not
necessarily represent the lowest or best rate actually charged to any customer
by such bank).

 

“Blocked Accounts”
shall have the meaning set forth in Section 4.15(h).

 

“Borrower” or “Borrowers”
shall have the meaning set forth in the preamble to this Agreement and shall
extend to all permitted successors and assigns of such Persons.

 

“Borrower’s Account”
shall have the meaning set forth in Section 2.7, and Borrowers’
Account shall mean both Borrower’s Accounts, collectively.

 

“Borrowing Base
Certificate” shall mean a certificate duly executed by an officer of each
Borrower appropriately completed and in substantially the form of Exhibit A.

 

“Business Day”
shall mean with respect to Eurodollar Rate Loans, any day on which commercial
banks are open for domestic and international business, including dealings in
Dollar deposit, in London, England and New York, New York and with respect to
all other matters, any day other than a day on which commercial banks in New
York are authorized or required by law to close.

 

“Capital Lease”
means any lease of any property (whether real, personal or mixed) that, in
accordance with GAAP consistently applied, should be accounted for as a capital
lease.

 

“Capitalized Lease
Obligation” means, as to any Person, the obligations of such Person under a
lease that are required to be classified and accounted for as capital lease
obligations under GAAP and, for purposes of this definition, the amount of such
obligations at any date shall be the capitalized amount of such obligations at
such date, determined in accordance with GAAP.

 

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

 

“Cash Equivalents”
shall mean: (a) marketable direct obligations issued or unconditionally
guaranteed by the United States Government or issued by any agency thereof and
backed by the full faith and credit of the United States, in each case maturing
within six (6) months from the date of acquisition thereof; (b) commercial
paper maturing no more than six (6) months from the date issued and, at the
time of acquisition, having a rating of at least A-1 from Standard & Poor’s
Corporation or at least P-1 from Moody’s Investors Service, Inc.; and (c)
certificates of deposit or bankers’ acceptances maturing within six (6) months
from the date of issuance thereof issued by, or overnight reverse repurchase
agreements from, any commercial bank organized under the laws of the

 

5

 

United States of America
or any state thereof or the District of Columbia having combined capital and
surplus of not less than $500,000,000 and whose debt obligations, or those of a
holding company of which it is a Subsidiary, are rated not less than A (or the
equivalent rating) by a nationally recognized investment rating agency and not
subject to setoff rights in favor of such bank.

 

“CERCLA” shall
mean the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended, 42 U.S.C. §§9601 et seq.

 

“Change of Control”
shall mean (a) the occurrence of any event (whether in one or more
transactions) which results in a transfer of control of any Loan Party to a
Person who is not one of the Jefferies Entities; (b) less than forty percent
(40%) of any class of the Capital Stock of Holdings is owned and controlled by
(including for the purposes of the calculation of percentage ownership, any
shares of Capital Stock into which any Capital Stock of Holdings is convertible
or for which any such shares of the Capital Stock of any Loan Party or of any
other Person may be exchanged and any shares of Capital Stock issuable upon
exercise of any warrants, options or similar rights which may at the time of
calculation be held by any Person) the Jefferies Entities; (c) except as
expressly permitted in this Agreement, the occurrence of any merger or
consolidation of or with Holdings or sale of all or substantially all of the
property or assets of Holdings; or (d) except as expressly permitted in this
Agreement, the sale by Holdings of any shares of the Capital Stock of any
Subsidiary; and provided, that in no event shall any transaction set
forth in clauses (c) or (d) of this definition constitute a Change of Control
so long as the surviving entity assumes all obligations of the other Loan Party
under and/or in connection with this Agreement. 
For purposes of clause (a) of this definition, “control of Loan
Party” shall mean the power, direct or indirect (x) to vote 50% or more of the
securities having ordinary voting power for the election of directors (or
managing member or general partner, as appropriate) of any Loan Party or (y) to
direct or cause the direction of the management and policies of any Loan Party
by contract or otherwise.  In addition,
the term “Change of Control” shall include such term as defined in the Senior
Note Agreement.

 

“Charge(s)” shall
mean all taxes, charges, fees, imposts, levies or other assessments, including,
without limitation, all net income, gross income, gross receipts, sales, use,
ad valorem, value added, transfer, franchise, profits, inventory, Capital
Stock, license, withholding, payroll, employment, social security,
unemployment, excise, severance, stamp, occupation and property taxes, custom
duties, fees, assessments, liens, claims and charges of any kind whatsoever,
together with any interest and any penalties, additions to tax or additional
amounts, imposed by any taxing or other authority, domestic or foreign
(including, without limitation, the PBGC or any environmental agency or
superfund), upon the Collateral, any Loan Party or, in the case of ERISA and
environmental “Charges”, any of such Loan Party’s Affiliates to the extent
resulting from controlled group liability.

 

“Closing Date”
shall mean February 1, 2005 or such other date as may be agreed to by the
parties hereto in writing.

 

“Code” shall mean
the Internal Revenue Code of 1986, as amended from time to time and the
regulations promulgated thereunder.

 

“Collateral” shall
mean and include:

 

(a)                                  all
Receivables;

 

6

 

(b)                                 all
Inventory;

 

(c)                                  all
of each Loan Party’s right, title and interest in and to (i) all merchandise
returned or rejected by Customers, relating to or securing any of the
Receivables; (ii) all of each Loan Party’s rights as a consignor, a
consignee, an unpaid vendor, mechanic, artisan, or other lienor, including
stoppage in transit, setoff, detinue, replevin, reclamation and repurchase;
(iii) all supporting obligations and all additional amounts due to any
Loan Party from any Customer relating to the Receivables; (iv)  all supply
agreements and agreements with Customers with respect to Receivables and
Inventory, indemnification claims under the Acquisition Documents solely to the
extent relating to Receivables and Inventory, and warranty claims relating to
any Inventory; (v) if and when obtained by any Loan Party, all real and
personal property of third parties in which such Loan Party has been granted a
lien or security interest as security for the payment or enforcement of
Receivables; (vi) any other goods, personal property or real property now
owned or hereafter acquired in which any Loan Party may in the future grant a
security interest to Agent hereunder, or in any amendment or supplement hereto
or thereto, or under any other agreement between Agent and any Loan Party
(excluding the Excluded Assets), (vii) commercial tort claims solely to the
extent related to any of the foregoing and (viii) all Term Intercompany Notes
required under the terms of  Section 6.11(ii)
to be secured by the security agreements described in such Section 6.11(ii);

 

(d)                                 all
of each Loan Party’s ledger sheets, ledger cards, files, correspondence,
records, books of account, business papers, computer software (owned by any
Loan Party or in which it has an interest), computer programs, tapes, disks and
documents relating to clauses (a), (b) and (c) of this definition; and

 

(e)                                  all
proceeds and products of clauses (a), (b), (c) and (d) of this
definition in whatever form, including, but not limited to: cash, deposit
accounts (whether or not comprised solely of proceeds), certificates of
deposit, insurance proceeds (including hazard, flood and credit insurance),
negotiable instruments and other instruments for the payment of money, chattel
paper, security agreements, documents, eminent domain proceeds, condemnation
proceeds and tort claim proceeds.

 

“Commitment Percentage”
of any Lender shall mean the percentage set forth below such Lender’s name on
the signature page hereof, as same may be adjusted upon any assignment by a
Lender pursuant to Section 17.3.

 

“Commitment Transfer
Supplement” shall mean a document in the form of Exhibit
17.3, properly completed and otherwise in form and substance
satisfactory to Agent by which the Purchasing Lender purchases and assumes a
portion of the obligation of Lenders to make Advances under this Agreement.

 

“Commitments”
shall mean, as to any Lender, its obligation to make Advances (including
participating in Letters of Credit) in an aggregate amount not to exceed at any
one time outstanding the amount set forth below such Lender’s name on the
signature page hereof under the heading “Commitment”, as same may be adjusted
in accordance with this Agreement.

 

“Commodity Agreement”
means any hedging agreement or other similar agreement or arrangement designed
to protect Loan Parties against fluctuations in commodity prices.

 

7

 

“Consents” shall
mean all filings and all material licenses, permits, consents, approvals,
authorizations, qualifications and orders of governmental authorities and other
third parties, domestic or foreign, necessary to carry on any Loan Party’s
business, including, without limitation, any Consents required under all
applicable federal, state or other applicable law.

 

“Consolidated EBITDA”
means, with respect to any Person, for any period, the sum (without
duplication) of:

 

(1)                   Consolidated Net Income; and

 

(2)                   to the extent Consolidated Net Income has been reduced
thereby:

 

(A)                              all income and franchise taxes of such
Person and its Restricted Subsidiaries paid or accrued in accordance with GAAP
for such period;

 

(B)                                Consolidated Fixed Charges;

 

(C)                                Consolidated Non-cash Charges;

 

(D)                               (a) customary fees
and expenses of the Holdings and its Restricted Subsidiaries payable in
connection with (i) the issuance and maintenance of the Senior Notes and the
related borrowing under this Agreement, (ii) any Equity Offering, (iii) the
incurrence, maintenance, termination or repayment of Indebtedness permitted by Section 7.7, (iv) the Acquisition and any acquisition
permitted under the Senior Note Agreement and (v) compliance with the Federal securities
laws and the Sarbanes-Oxley Act of 2002 for a period of 12 months following the
Closing Date, (b) extraordinary bonus payments payable to the officers and
employees of the Loan Parties pursuant to Loan Parties’ 2004 Bonus Plan in
respect of the Loan Parties’ 2004 fiscal year and (c) bonuses and fees payable
to existing stockholders, directors, officers and employees of Loan Parties,
lenders, financial advisors and other Persons in connection with the
Acquisition on or substantially contemporaneous with the Closing Date;

 

(E)                                 restructuring charges (as
determined in accordance with GAAP) relating to the consolidation of operations
or reduction in head-court;

 

(F)                                 any premium or penalty paid in
connection with redeeming or retiring Indebtedness of such Person and its
consolidated Restricted Subsidiaries prior to the stated maturity thereof
pursuant to the agreements governing such Indebtedness; and

 

(G)                                any increase in cost
of sales expense as a result of the Loan Parties’ adoption of the LIFO method of
costing inventory after the Closing Date,

 

all as determined on a consolidated basis for such Person and its
Restricted Subsidiaries in accordance with GAAP.

 

“Consolidated Fixed
Charge Coverage Ratio” means, with respect to any Person, the ratio of Consolidated
EBITDA of such Person during the four consecutive full fiscal quarters (the “Four Quarter Period”) most
recently ending on or prior to the date of the transaction or event giving rise
to the need to calculate the Consolidated Fixed Charge Coverage Ratio for which
internal

 

8

 

financial statements are
available (the “Transaction Date”) to
Consolidated Fixed Charges of such Person for the Four Quarter Period.

 

In addition to and
without limitation of the foregoing, for purposes of this definition, “Consolidated
EBITDA” and “Consolidated Fixed Charges” shall be calculated after giving
effect on a pro forma basis for the period of such calculation to:

 

(1)                  the incurrence or repayment of any Indebtedness of
such Person or any of its Restricted Subsidiaries (and the application of the
proceeds thereof) giving rise to the need to make such calculation and any
incurrence or repayment of other Indebtedness (and the application of the
proceeds thereof), other than the incurrence or repayment of Indebtedness in
the ordinary course of business for working capital purposes pursuant to
working capital facilities, occurring during the Four Quarter Period or at any
time subsequent to the last day of the Four Quarter Period and on or prior to
the Transaction Date, as if such incurrence or repayment, as the case may be
(and the application of the proceeds thereof), occurred on the first day of the
Four Quarter Period;

 

(2)                  any Asset Sale or other disposition of operations or
Asset Acquisition (including, without limitation, any Asset Acquisition giving
rise to the need to make such calculation as a result of such Person or one of
its Restricted Subsidiaries (including any Person who becomes a Restricted
Subsidiary as a result of any such Asset Acquisition) incurring, assuming or
otherwise being liable for Acquired Indebtedness during the Four Quarter Period
or at any time subsequent to the last day of the Four Quarter Period and on or
prior to the Transaction Date), as if such Asset Sale or other disposition of
operations or Asset Acquisition (including the incurrence, assumption or
liability for any such Indebtedness or Acquired Indebtedness and also including
any Consolidated EBITDA associated with such Asset Acquisition) occurred on the
first day of the Four Quarter Period. If such Person or any of its Restricted
Subsidiaries directly or indirectly guarantees Indebtedness of a third Person,
the preceding sentence shall give effect to the incurrence of such guaranteed
Indebtedness as if such Person or any Restricted Subsidiary of such Person had
directly incurred or otherwise assumed such guaranteed Indebtedness;

 

(3)                  any Person that is a Restricted Subsidiary on the
Transaction Date (or would become a Restricted Subsidiary on such Transaction
Date in connection with the transaction requiring determination of such
Consolidated EBITDA) will be deemed to have been a Restricted Subsidiary at all
times during such Four Quarter Period; and

 

(4)                  any Person that is not a Restricted Subsidiary on the
Transaction Date (or would cease to be a Restricted Subsidiary on such
Transaction Date in connection with the transaction requiring determination of
such Consolidated EBITDA) will be deemed not to have been a Restricted
Subsidiary at any time during such Four Quarter Period.

 

Furthermore, in
calculating “Consolidated Fixed Charges” for purposes of determining the
denominator (but not the numerator) of this “Consolidated Fixed Charge Coverage
Ratio”:

 

(1)                  interest on outstanding Indebtedness determined on a
fluctuating basis as of the Transaction Date (including Indebtedness actually
incurred on the Transaction Date) and which will continue to be so determined
thereafter shall be deemed to have accrued at a fixed rate per annum equal to
the rate of interest on such Indebtedness in effect on the Transaction Date;
and

 

9

 

(2)                  notwithstanding clause (1) above, interest on
Indebtedness determined on a fluctuating basis, to the extent such interest is
covered by agreements relating to Interest Swap Obligations, shall be deemed to
accrue at the rate per annum resulting after giving effect to the operation of
such agreements.

 

“Consolidated
Fixed Charges” means, with respect to any Person for any period, the sum,
without duplication, of:

 

(1)                  Consolidated Interest Expense (excluding amortization
or write-off of deferred financing costs); plus

 

(2)                  the product of (x) the amount of all cash dividend
payments (other than dividends paid by Subsidiaries to Holdings or to Holdings’
Wholly-Owned Restricted Subsidiaries) on any class or series of Preferred Stock
of such Person paid or in the case of any such class or series of Preferred
Stock that is Disqualified Capital Stock, paid, accrued or scheduled to be paid
or accrued, in each case, during such period times
(y) a fraction, the numerator of which is one and the denominator of which is
one minus the then current effective consolidated federal, state and local tax
rate of such Person, as estimated in good faith by the chief financial officer
of the Loan Parties, expressed as a decimal.

 

“Consolidated Fixed
Charge Coverage Test” shall mean, after giving effect to the incurrence or
assumption of the subject Indebtedness, whether the Consolidated Fixed Charge
Coverage Ratio of the Loan Parties will be greater than: (i) 2.0 to 1.0 prior
to the first anniversary of the Closing Date and (ii) 2.25 to 1.0 on and after
the first anniversary of the Closing Date.

 

“Consolidated Interest
Expense” means, with respect to any Person for any period, the aggregate of
the interest expense of such Person and its Restricted Subsidiaries for such
period, on a consolidated basis, as determined in accordance with GAAP, and
including, without duplication, (a) all amortization or accretion of original
issue discount, (b) the interest component of Capitalized Lease Obligations
paid, accrued and/or scheduled to be paid or accrued by such Person and its
Restricted Subsidiaries during such period, and (c) net cash costs under all
Interest Swap Obligations (including amortization of fees), but excluding
amortization of debt issuance costs and excluding accrued dividends on
preferred stock that is reclassified as Indebtedness due to a change in
accounting principles.

 

“Consolidated Net
Income” means, with respect to any Person, for any period, the aggregate
net income (or loss) of such Person and its Restricted Subsidiaries for such
period on a consolidated basis, determined in accordance with GAAP; provided, however, that there
shall be excluded therefrom:

 

(1)                                  after-tax gains and losses from Asset
Sales or abandonments or reserves relating thereto;

 

(2)                                  after-tax items classified as
extraordinary gains or losses;

 

(3)                                  the net income (but not loss) of any
Restricted Subsidiary of the referent Person to the extent that the declaration
of dividends or similar distributions by that Restricted Subsidiary of that
income is restricted by a contract, operation of law or otherwise;

 

10

 

(4)                                  the net income of any Person, other than
the referent Person or a Restricted Subsidiary of the referent Person, except
to the extent of cash dividends or distributions paid to the referent Person or
to a Wholly Owned Restricted Subsidiary of the referent Person by such Person;

 

(5)                                  any restoration to income of any material
contingency reserve, except to the extent that provision for such reserve was
made out of Consolidated Net Income accrued at any time following the Closing
Date;

 

(6)                                  income or loss attributable to discontinued
operations (including, without limitation, operations disposed of during such
period whether or not such operations were classified as discontinued);

 

(7)                                  all gains and losses realized on or
because of the purchase or other acquisition by such Person or any of its
Restricted Subsidiaries of any securities of such Person or any of its
Restricted Subsidiaries;

 

(8)                                  the cumulative effect of a change in
accounting principles;

 

(9)                                  interest expense attributable to
dividends on Qualified Capital Stock pursuant to Statement of Financial
Accounting Standards No. 150, “Accounting for Certain Financial Instruments
with Characteristics of both Liabilities and Equity;” and

 

(10)                            non-cash charges resulting from the
impairment of intangible assets.

 

Notwithstanding the
foregoing, for purposes of calculating Consolidated Net Income for any period,
Consolidated Net Income for such period shall (except for purposes of
calculating Consolidated Net Income for such period as used in clause (1) of
the definition of the term “Consolidated EBITDA”) include, to the extent
Consolidated Net Income for such period has been reduced thereby, any non-cash
charges associated with the purchase accounting write-up of inventory,
including without limitation, pursuant to FAS 141.

 

“Consolidated Net
Tangible Assets” shall
mean, as of any date of determination and with respect to any Person, the total
assets, less goodwill and other intangibles (other than patents, trademarks,
copyrights, licenses and other intellectual property), shown on the balance
sheet of such Loan Party for the most recently ended fiscal quarter for which
internal financial statements are available, determined on a consolidated basis
in accordance with GAAP.

 

“Consolidated Non-cash
Charges” means, with respect to any Person, for any period, the aggregate
depreciation, amortization and other non-cash items and expenses of such Person
and its Restricted Subsidiaries to the extent they reduce Consolidated Net
Income of such Person and its Restricted Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP (A) including, but
not limited to, (i) non-cash charges attributable to the grant, exercise or
repurchase of options for or shares of Qualified Capital Stock to or from
employees of such Person and its consolidated subsidiaries, (ii) unrealized
losses resulting solely from the marking to market of derivative securities or
securities held in deferred compensation plans, (iii) non-cash charges
associated with the amortization or write-off of deferred financing costs and
debt issuance costs of such Person and its consolidated subsidiaries during
such period, (iv) amortization expense associated with the purchase accounting
write-up of tangible and intangible assets and (v) non-cash

 

11

 

charges associated with
the purchase accounting write-up of inventory, including, without limitation,
pursuant to FAS 141, but (B) excluding any such charges constituting an
extraordinary item or loss or any such charge which requires an accrual of or a
reserve for cash charges for any future period.

 

“Controlled Group”
shall mean all members of a controlled group of corporations and all trades or
businesses (whether or not incorporated) under common control which, together
with any Loan Party, are treated as a single employer under Section 414 of
the Code.

 

“Currency Agreement”
means any foreign exchange contract, currency swap agreement or other similar
agreement or arrangement designated to protect Loan Parties against
fluctuations in currency values.

 

“Customer” shall
mean and include the account debtor with respect to any Receivable and/or the
prospective purchaser of goods, services or both with respect to any contract
or contract right, and/or any party who enters into or proposes to enter into
any contract or other arrangement with any Loan Party, pursuant to which such
Loan Party is to deliver any personal property or perform any services.

 

“Customs” shall
mean the U.S. Customs Service and any successor thereto.

 

“Default” shall
mean an event which, with the giving of notice or passage of time or both,
would constitute an Event of Default.

 

“Default Rate”
shall have the meaning set forth in Section 3.1.

 

“Defaulting Lender”
shall have the meaning set forth in Section 2.15(a).

 

“Disqualified Capital
Stock” means that portion of any Capital Stock which, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable at the option of the holder thereof), or upon the happening of any
event (other than an event that would constitute a Change of Control), matures
or is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or is redeemable at the sole option of the holder thereof (except in
each case, upon the occurrence of a Change of Control) on or prior to the first
anniversary of the Original Term for cash or is convertible into or
exchangeable for debt securities of Loan Parties at any time prior to such
anniversary.

 

“Documentary Letters
of Credit” shall mean all Letters of Credit issued in connection with this
Agreement to pay the purchase price for Inventory purchased by a Borrower.

 

“Dollar” and the
sign “$” shall mean lawful money of the United States of America.

 

“Domestic Rate Loan”
shall mean any Revolving Advance that bears interest based upon the Base Rate.

 

“Domestic Restricted
Subsidiary” means, with respect to any Person, a Domestic Subsidiary of
such Person that is a Restricted Subsidiary of such Person.

 

“Domestic Subsidiary”
means, with respect to any Person, a Subsidiary of such Person that is not a
Foreign Subsidiary of such Person.

 

12

 

 

“Edgen Alloy”
shall have the meaning set forth in the preamble to this Agreement.

 

“Edgen Canada”
shall mean Edgen Canada Corp., a Canadian corporation and a wholly-owned
Subsidiary of Holdings.

 

“Edgen Carbon”
shall have the meaning set forth in the preamble to this Agreement.

 

“Eligible Inventory”
shall mean and include Inventory (excluding work in process) owned by a
Borrower, located at any of those locations listed on Schedule 4.5
and which is either in the possession of a Borrower or is subject to a bailee
waiver, as applicable, and which is subject to a landlord waiver (to the extent
it is located on premises leased by a Borrower), in each case acceptable in
form and substance to Agent, which is not, in Agent’s opinion, obsolete,
slow-moving or unmerchantable and which Agent, in the good faith exercise of
its reasonable judgment, shall not deem ineligible Inventory, based on such
considerations as Agent may from time to time deem appropriate including,
without limitation, whether the Inventory is subject to a perfected, first
priority security interest in favor of Agent and no other Lien (other than Permitted
Encumbrances described in clauses (a), (b) (f), (i), (j) and (k) of the
definition thereof that in each case are subordinate to the Lien of Agent) and
whether the Inventory conforms to all standards imposed by any governmental
agency, division or department thereof which has regulatory authority over such
goods or the use or sale thereof. 
Eligible Inventory shall not include licensed or private label
Inventory, unless (i) a Loan Party is the owner of such license or private
label, or (ii) a consent, in form and substance satisfactory to Agent, has been
obtained from the owner of such license or private label with respect to Agent’s
security interest in such Inventory.  The
inclusion of Inventory in Eligible Inventory notwithstanding the absence of a
landlord waiver or bailee waiver, as applicable, shall not limit Agent’s
ability to exclude such Inventory from Eligible Inventory in the future.

 

“Eligible Receivables”
shall mean and include with respect to each Borrower, each Receivable of such
Borrower arising in the ordinary course of such Borrower’s business and which
Agent, in the good faith exercise of its reasonable judgment, shall deem to be
an Eligible Receivable, based on such considerations as Agent may from time to
time deem appropriate.  A Receivable
shall not be deemed eligible unless such Receivable is subject to Agent’s first
priority perfected security interest and no other Lien (other than Permitted
Encumbrances described in clauses (a), (b) (f), (i), (j) and (k) of the
definition thereof that in each case are subordinate to the Lien of Agent), and
is evidenced by an invoice or other documentary evidence satisfactory to
Agent.  In addition, no Receivable shall
be an Eligible Receivable if:

 

(a)                                  it
arises out of a sale made by any Borrower to a Subsidiary, another Borrower or
an Affiliate of any Borrower or to a Person controlled by a Subsidiary or an
Affiliate of any Borrower;

 

(b)                                 it
is due or unpaid more than sixty (60) days after the original due date, not to
exceed ninety (90) days after the original invoice date;

 

(c)                                  fifty
percent (50%) or more of the Receivables owing to any Borrower or to Borrowers
in the aggregate from such Customer are not deemed Eligible Receivables
hereunder;

 

13

 

(d)                                 any
covenant, representation or warranty contained in this Agreement with respect
to such Receivable has been breached;

 

(e)                                  the
applicable Customer shall (i) apply for, suffer, or consent to the appointment
of, or the taking of possession by, a receiver, custodian, trustee or
liquidator of itself or of all or a substantial part of its property or call a
meeting of its creditors, (ii) admit in writing its inability, or be generally
unable, to pay its debts as they become due or cease operations of its present
business, (iii) make a general assignment for the benefit of creditors, (iv)
commence a voluntary case under any state, federal or foreign bankruptcy laws
(as now or hereafter in effect), (v) be adjudicated a bankrupt or insolvent,
(vi) file a petition seeking to take advantage of any other law providing for
the relief of debtors, (vii) acquiesce to, or fail to have dismissed, any
petition which is filed against it in any involuntary case under such
bankruptcy laws, or (viii) take any action for the purpose of effecting any of
the foregoing;

 

(f)                                    the
underlying sale is to a Customer outside the United States of America or
Canada, unless such sale is on letter of credit, guaranty, acceptance terms or
supported by credit insurance, in each case acceptable to Agent in its
reasonable discretion;

 

(g)                                 the
underlying sale to the Customer is on a bill-and-hold basis or is a guaranteed
sale or is on a sale-and-return, sale on approval, consignment or any other
repurchase or return basis or is evidenced by chattel paper; provided, however,
that Receivables that arise from bill-and-hold sales with no more than four (4)
Customers at any one time (in a maximum aggregate amount of $1,000,000 for such
four (4) Customers taken in the aggregate) shall not be excluded from Eligible
Receivables under this clause (g) if, with respect to such Receivables,
the applicable Borrower provides Agent with a letter to such Borrower and Agent
from the applicable Customer which sets forth the agreement of such Customer to
pay such Receivables in form and substance satisfactory to Agent in its sole
discretion;

 

(h)                                 Agent
believes, in the good faith exercise of its reasonable judgment, that
collection of such Receivable is insecure or that such Receivable may not be
paid by reason of the Customer’s financial inability to pay;

 

(i)                                     the
applicable Customer is the United States of America, any state or any
department, agency or instrumentality of any of them, unless the applicable
Borrower assigns its right to payment of such Receivable to Agent pursuant to
the Assignment of Claims Act of 1940, as amended (31 U.S.C. Sub-Section 3727
et seq. and 41 U.S.C. Sub-Section 15 et  seq.) or has
otherwise complied with other applicable statutes or ordinances;

 

(j)                                     the
goods giving rise to such Receivable have not been shipped and delivered to and
accepted by the Customer or the services giving rise to such Receivable have
not been performed by the applicable Borrower and accepted by the Customer or
the Receivable otherwise does not represent a final sale;

 

(k)                                  such
Receivable is subject to any offset, deduction, defense, dispute, or
counterclaim, the Customer is also a creditor or supplier of any Borrower or
such Receivable is contingent in any respect or for any reason;

 

14

 

(l)                                     the
applicable Borrower has made any agreement with any Customer for any deduction
therefrom, except for discounts or allowances made in the ordinary course of
business for prompt payment, all of which discounts or allowances are reflected
in the calculation of the face value of each respective invoice related
thereto;

 

(m)                               any
return, rejection or repossession of the applicable merchandise has occurred;

 

(n)                                 such
Receivable is not payable to the applicable Borrower;

 

(o)                                 (i)
such Receivables are with respect to a Customer located in New Jersey,
Minnesota, or any other state denying creditors access to its courts in the
absence of a Notice of Business Activities Report or other similar filing,
unless the applicable Borrower is incorporated under the laws of such state or
has either qualified as a foreign corporation authorized to transact business
in such state or has filed a Notice of Business Activities Report or similar
filing with the applicable state agency for the then current year or the Agent
is not in fact denied access to the courts of such jurisdiction and (ii) Agent,
in its good faith exercise of its reasonable discretion, deems such Receivables
to not be Eligible Receivables; or

 

(p)                                 such
Receivable is not otherwise satisfactory to Agent as determined in good faith
by Agent in the exercise of its reasonable judgment.

 

“Environmental
Complaint” shall have the meaning set forth in Section 4.19(d).

 

“Environmental Laws”
shall mean all federal, state and local environmental, land use, zoning,
health, chemical use, safety and sanitation laws, statutes, ordinances and
codes relating to the protection of the environment and/or governing the use,
storage, treatment, generation, transportation, processing, handling,
production or disposal of Hazardous Substances and the rules, regulations,
policies, guidelines, authoritative interpretations, decisions, orders and
directives of federal, state and local governmental agencies and authorities
with respect thereto.

 

“Equipment” shall
mean and include as to each Loan Party all of such Loan Party’s goods (other
than Inventory) whether now owned or hereafter acquired and wherever located
including, without limitation, all equipment, machinery, apparatus, motor
vehicles, fittings, furniture, furnishings, fixtures, parts, accessories and
all replacements and substitutions therefor or accessions thereto.

 

“Equity Documents”
shall mean the (i) Securities Holders Agreement dated as of February 1,
2005 by and among EAC, ING Furman Selz Investors III, L.P., ING Barings Global
Leveraged Equity Plan Ltd., ING Barings U.S. Leveraged Equity Plan LLC and the
other Investors named therein, (ii) the Securities Purchase Agreement dated as
of February 1, 2005 by and among EAC and the Management Investors (as
defined therein) named therein, and (iii) the Securities Purchase Agreement
dated as of February 1, 2005 by and among EAC, ING Furman Selz Investors
III, L.P., ING Barings Global Leveraged Equity Plan Ltd. and ING Barings U.S.
Leveraged Equity Plan LLC.

 

15

 

“Equity Offerings”
means any private or public offering of Capital Stock of Holdings or any
holding company of Holdings to any Person (other than issuances upon exercise
of options by employees of any holding company, Holdings or any of the
Restricted Subsidiaries).

 

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

 

“Eurodollar Rate”
shall mean for any Eurodollar Rate Loan for the then current Interest Period
relating thereto the rate per annum (such Eurodollar Rate to be adjusted to the
next higher 1/100 of one percent (1%)) equal to the Adjusted LIBOR Rate.

 

“Eurodollar Rate Loan”
shall mean a Revolving Advance at any time that bears interest based on the
Adjusted LIBOR Rate.

 

“Event of Default”
shall mean the occurrence and continuance of any of the events set forth in Article X.

 

“Exchange Act”
shall mean the Securities Exchange Act of 1934, as amended.

 

“Excluded Assets”
shall mean:

 

(1)                                  any lease, license, contract, property right or
agreement to which any Loan Party is a party or any of its rights or interests
thereunder if and only for so long as the grant of a Lien under this Agreement
and the Other Documents (i) is prohibited by applicable law or would constitute
or result in the abandonment, invalidation or unenforceability of any right,
title or interest of the grantor of such Lien therein pursuant to applicable
law, or (ii) would require the consent of third parties and such consent shall
not have been obtained, or (iii) would constitute or result in a breach,
termination or default under any such lease, license, contract, property right
or agreement (other than to the extent that any such consent requirement or
other term thereof would be rendered ineffective pursuant to Sections 9-406,
9-407, 9-408 or 9-409 of the Uniform Commercial Code of any relevant
jurisdiction or any other applicable law or principles of equity); provided that such lease, license, contract,
property right or agreement will be an Excluded Asset only to the extent and
for so long as the consequences specified above will result and will cease to
be an Excluded Asset and will become subject to the Lien of Agent, immediately
and automatically, at such time as such consequences will no longer result;

 

(2)                                  leasehold interests in real property with respect
to which any Loan Party is a tenant or subtenant;

 

(3)                                  Capital Stock of each Loan Party and each
Subsidiary of each Loan Party;

 

(4)                                  property and assets owned by any Loan Party that
are the subject of Permitted Encumbrances 
described in clause (g) of the definition hereof for so long as such
Permitted Encumbrances are in effect; and

 

(5)                                  Motor Vehicles with a fair market value of less
than $50,000.

 

16

 

“Existing Other
Documents” shall mean all promissory notes, guaranties, security agreements
and any and all other agreements, instruments and documents executed by any
Loan Party and/or delivered to Agent, any Lender or any Issuer in connection
with the Existing Loan Agreement (excluding any pledge agreements or other
agreements that are expressly modified by Agent under Section 17.19 of
this Agreement).

 

“Fair Market Value”
means, with respect to any asset or property, the price which could be
negotiated in an arm’s length transaction, for cash, between a willing seller
and a willing and able buyer, neither of whom is under undue pressure or
compulsion to complete the transaction. Fair Market Value shall be determined
by the Board of Directors of Holdings acting in good faith and shall be
evidenced by a Board Resolution of the Board of Directors of Holdings; provided, however, that with respect to any
price less than $2.5 million only the good faith determination by Holdings’
senior management shall be required.

 

“Federal Funds Rate”
shall mean, for any day, the weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System arranged by
Federal funds brokers, as published for such day (or if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or if such rate is not so published for any day which is a
Business Day, the average of quotations for such day on such transactions
received by Agent from three Federal funds brokers of recognized standing
selected by Agent.

 

“Fee Letter” shall
mean the fee letter agreement dated as of the date hereof, among Loan Parties
and GMAC CF.

 

“Foreign Restricted
Subsidiary” means any Restricted Subsidiary that is organized under the
laws of any jurisdiction other than the United States of America, any state
thereof or the District of Columbia.

 

“Foreign Subsidiary”
shall mean, with respect to any Person, any Subsidiary of such Person that is
organized under the laws of any jurisdiction other than the United States of
America, any state thereof or the District of Columbia.

 

“Formula Amount”
shall have the meaning set forth in Section 2.1(a).

 

“Four Quarter Period” shall have the meaning
set forth, in the definition of Consolidated Fixed Charge Coverage Ratio.

 

“GAAP” shall mean
generally accepted accounting principles in the United States of America in
effect from time to time.

 

“GMAC CF” shall
have the meaning set forth in the preamble to this Agreement and shall include
its successors and assigns.

 

“Governmental Body”
shall mean any nation or government, any state or other political subdivision
thereof or any entity exercising the legislative, judicial, regulatory or administrative
functions of or pertaining to a government.

 

17

 

“Guarantor” or “Guarantors”
shall have the meaning set forth in the preamble to this Agreement and shall
extend to all permitted successors and assigns of such Persons.

 

“Guaranty” shall
mean the guaranty set forth in Article XV of this Agreement and any
other guaranty of the obligations of Borrowers executed by a Guarantor in favor
of Agent for its benefit and for the ratable benefit of Lenders.

 

“Hazardous Discharge”
shall have the meaning set forth in Section 4.19(d).

 

“Hazardous Substance”
shall mean, without limitation, any flammable explosives, radon, radioactive
materials, asbestos, urea formaldehyde foam insulation, polychlorinated
biphenyls, petroleum and petroleum products, methane, hazardous materials,
Hazardous Wastes, hazardous or Toxic Substances or related materials as defined
in CERCLA, the Hazardous Materials Transportation Act, as amended (49 U.S.C.
Sections 1801, et seq.), RCRA, Articles 15 and 27 of the New York State
Environmental Conservation Law or any other applicable Environmental Law and in
the rules, regulations, policies and guidelines adopted pursuant thereto.

 

“Hazardous Wastes”
shall mean all waste materials subject to regulation as hazardous waste under
CERCLA, RCRA or applicable state law, and any other applicable Federal and
state laws now in force or hereafter enacted during the term hereof relating to
hazardous waste disposal.

 

“Holdings” shall
have the meaning set forth in the preamble to this Agreement.

 

“Indebtedness” of
a Loan Party on a particular date shall mean, without duplication:

 

(a)                                  Capitalized
Lease Obligations;

 

(b)                                 all
Indebtedness of any other Person which such Loan Party has guaranteed to the
extent such Indebtedness is of the type referred to in clauses (a), (c) through
(h) and (j);

 

(c)                                  all
reimbursement obligations in connection with letters of credit or letter of
credit guaranties issued for the account of such Loan Party;

 

(d)                                 all
liabilities under interest rate swap and interest rate protection agreements of
any kind and all obligations under Currency Agreements and Commodity Agreements
of such Person;

 

(e)                                  all
indebtedness for borrowed money to the extent such Indebtedness would appear as
a liability upon the consolidated balance sheet of such Person in accordance
with GAAP;

 

(f)                                    the
Obligations;

 

(g)                                 notes
payable and drafts accepted representing extensions of credit whether or not
representing obligations for borrowed money to the extent the foregoing would
appear as a liability upon the consolidated balance sheet of such Person in
accordance with GAAP;

 

(h)                                 any
obligation owed for all or any part of the deferred purchase price of property
or services if the purchase price is due more than six (6) months from the date
the

 

18

 

obligation is incurred or
is evidenced by a note or similar written instrument (but excluding trade
accounts payable, not past due in accordance with the customary terms granted by
the applicable vendor to the Loan Party, or other accrued liabilities arising
in the ordinary course of business or any deferred purchase price represented
by “earnouts” consistent with such Person’s past practice) to the extent such
obligations would appear as a liability upon the consolidated balance sheet of
such Person in accordance with GAAP;

 

(i)                                     all
Indebtedness of any other Person of the type referred to in clauses (a) through
(h) and clause (j) secured by any Lien on any property or asset owned or held
by that Person regardless of whether the indebtedness secured thereby shall
have been assumed by that Person or is non-recourse to the credit of that
Person, the amount of any such Indebtedness being deemed to be the lesser of
the fair market value of the property or assets securing such Indebtedness or
the face amount of such Indebtedness;

 

(j)                                     all
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments to the extent such obligations would appear as a liability upon
the consolidated balance sheet of such Person in accordance with GAAP; and

 

(k)                                  all
Disqualified Capital Stock issued by such Person with the amount of
Indebtedness represented by such Disqualified Capital Stock being equal to the
greater of its voluntary or involuntary liquidation preference and its maximum
fixed repurchase price, but excluding accrued dividends, if any.

 

Notwithstanding
the foregoing, Indebtedness shall not include any Capital Stock (other than
Disqualified Capital Stock).  For purposes
hereof, the “maximum fixed repurchase price” of any
Disqualified Capital Stock which does not have a fixed repurchase price shall
be calculated in accordance with the terms of such Disqualified Capital Stock
as if such Disqualified Capital Stock were purchased on any date on which
Indebtedness shall be required to be determined pursuant to this Agreement, and
if such price is based upon, or measured by, the fair market value of such
Disqualified Capital Stock, such fair market value shall be determined reasonably
and in good faith by the board of directors of the issuer of such Disqualified
Capital Stock.

 

“Individual Formula
Amount” shall mean, at the date of determination thereof, with respect to
each Borrower an amount equal to: (a) up to the Receivables Advance Rate of
Eligible Receivables of such Borrower, plus (b) up to the Inventory
Advance Rate of the value of Eligible Inventory of such Borrower; minus
(c) Reserves.

 

“Intercreditor
Agreement” shall mean the Intercreditor Agreement dated as of the Closing
Date by and between the Agent and the Senior Note Agent, as acknowledged and
agreed to by the Loan Parties, as the foregoing may be amended, restated
modified or supplemented in accordance with its terms.

 

“Interest Period”
shall mean the period provided for any Eurodollar Rate Loan pursuant to Section 2.2(b).

 

“Interest Swap
Obligations” means the obligations of any Person pursuant to any
arrangement with any other Person, whereby, directly or indirectly, such Person
is entitled to receive from time to time periodic payments calculated by
applying either a floating or a fixed rate of interest

 

19

 

on a stated notional
amount in exchange for periodic payments made by such other Person calculated
by applying a fixed or a floating rate of interest on the same notional amount
and shall include, without limitation, interest rate swaps, caps, floors,
collars and similar agreements.

 

“Inventory” shall
mean and include as to each Loan Party all of such Loan Party’s now owned or
hereafter acquired goods, merchandise and other personal property, wherever
located, to be furnished under any contract of service or held for sale or
lease, all raw materials, work in process, finished goods and materials and
supplies of any kind, nature or description which are or might be used or
consumed in such Loan Party’s business or used in selling or furnishing such
goods, merchandise and other personal property, all other inventory of such
Loan Party, and all documents of title or other documents representing them.

 

“Inventory Advance
Rate” shall have the meaning set forth in Section 2.1(a)(y)(ii).

 

“Investments”  shall have the meaning set forth in Section 7.4.

 

“Issuer” shall
mean any Person who issues a Letter of Credit and/or accepts a draft pursuant
to the terms thereof (it being agreed that so long as GMAC CF shall be Agent or
a Lender, then the Issuer shall be General Motors Acceptance Corporation; provided,
however, that in the event that GMAC CF is neither the Agent nor a Lender,
the “Issuer” with respect to all subsequently issued Letters of Credit shall be
a Lender selected by the Borrowers to the extent such Lender agrees to be the
Issuer).

 

“Jefferies Entities”
shall mean (i) ING Furman Selz Investors III L.P., ING Barings Global Leveraged
Equity Plan Ltd., ING Barings U.S. Leveraged Equity Plan LLC, FS Private
Investments III LLC and (ii) any investment vehicle that is owned or controlled
(whether through ownership of securities having a majority of the voting power
or through management of investments) by any of the Persons listed in clause
(i), but excluding any portfolio companies of any Person listed in clause (i)
or (ii).

 

“Lender” and “Lenders”
shall have the meaning ascribed to such term in the preamble to this Agreement
and shall include each Person which becomes a transferee, successor or assign
of any Lender.

 

“Lender Default”
shall have the meaning set forth in Section 2.15(a).

 

“Letter of Credit
Application” shall have the meaning set forth in Section 2.9.

 

“Letter of Credit Fees”
shall have the meaning set forth in Section 3.2.

 

“Letter of Credit
Obligations” shall mean the sum of (x) the aggregate undrawn amount of
Letters of Credit plus the aggregate amount of any draws or other
amounts paid or disbursed under Letters of Credit which have not been
reimbursed (whether through the making of a Revolving Advance or otherwise).

 

“Letters of Credit”
shall have the meaning set forth in Section 2.8.

 

“Lien” shall mean
any mortgage, deed of trust, pledge, hypothecation, assignment, security
interest, lien (whether statutory or otherwise), Charge, claim or encumbrance,
or preference,

 

20

 

priority or other
security agreement or preferential arrangement held or asserted in respect of
any asset of any kind or nature whatsoever including, without limitation, any
conditional sale or other title retention agreement, any lease having
substantially the same economic effect as any of the foregoing, and the filing
of, or agreement to give, any financing statement under the UCC or comparable
law of any jurisdiction.

 

“Loan Parties on a
Consolidated Basis” shall mean the consolidation in accordance with GAAP of
the accounts or other items of Loan Parties and their respective Subsidiaries.

 

“Loan Party” shall
mean, individually, each Borrower and each Guarantor, and “Loan Parties”
shall mean, collectively, the Borrowers and the Guarantors.

 

“Loan Year” means,
collectively, the period of twelve (12) consecutive months commencing on the Closing
Date and ending on the day prior to the first anniversary of the Closing Date,
together with each subsequent period of twelve consecutive months commencing on
the anniversary of the Closing Date and ending on the day prior to the next
anniversary of the Closing Date.

 

“Management Agreement”
shall mean that certain Management Agreement dated February 1, 2005 by and
among Holdings and FS Private Investments LLC.

 

“Material Adverse
Effect” shall mean a material adverse effect on (a) the condition, operations,
assets or business of the Loan Parties on a consolidated basis, (b) any Loan
Party’s ability to pay the Obligations in accordance with the terms thereof,
(c) the value of the Collateral, or Agent’s Liens on the Collateral or the
priority of any such Lien or (d) the practical realization of the benefits of
Agent’s and each Lender’s rights and remedies under this Agreement and the
Other Documents.

 

“Maximum Revolving
Advance Amount” shall mean $20,000,000.

 

“Monthly Advances”
shall have the meaning set forth in Section 3.1.

 

“Multiemployer Plan”
shall mean a “multiemployer plan” as defined in Sections 3(37) and 4001(a)(3)
of ERISA.

 

“Non-Defaulting
Lenders” shall have the meaning set forth in Section 2.15(b).

 

“Note” or “Notes”
shall mean, individually or collectively, the Revolving Credit Note.

 

“Obligations”
shall mean and include any and all of each Loan Party’s indebtedness and/or
liabilities to Agent, Lenders or any Issuer of every kind, nature and
description, direct or indirect, secured or unsecured, joint, several, joint
and several, absolute or contingent, due or to become due, now existing or
hereafter arising, contractual or tortious, liquidated or unliquidated,
evidenced by this Agreement and/or  the
Other Documents (including all interest accruing after the commencement of any
bankruptcy or similar proceeding whether or not enforceable in such proceeding)
and all obligations of any Loan Party to Agent, Lenders or any Issuer to
perform acts or refrain from taking any action under this Agreement and/or the
Other Documents.

 

“Original Closing Date”
shall mean February 27, 2004.

 

21

 

“Original Fee Letter”
shall mean the fee letter agreement dated February 27, 2004, among Loan
Parties and GMAC CF.

 

“Original Term”
shall have the meaning set forth in Section 13.1.

 

“Other Documents”
shall mean the Notes, the Questionnaire, any Guaranty, any pledge agreement,
the Existing Other Documents and any and all other agreements, instruments and
documents, including, without limitation, guaranties, security agreements,
pledges, powers of attorney, consents, and all other writings heretofore, now
or hereafter executed by any Loan Party and/or delivered to Agent, any Lender
or any Issuer in respect of the transactions contemplated by this Agreement.

 

“Other Taxes”
means any present or future stamp or documentary taxes or any other excise or
property taxes, charges or similar levies which arise from any payment made
hereunder or from the execution, delivery or registration of, or otherwise with
respect to, this Agreement or any Other Documents.

 

“Parent” of any
Person shall mean a corporation or other entity owning, directly or indirectly,
at least 50% of the shares of stock or other ownership interests having
ordinary voting power to elect a majority of the directors of the Person, or
other Persons performing similar functions for any such Person.  The term “Parent” shall include, without
limitation, Holdings.

 

“Participant”
shall mean each Person who shall be granted the right by any Lender to
participate in any of the Advances and who shall have entered into a
participation agreement in form and substance satisfactory to such Lender.

 

“Payment Office”
shall mean initially 3000 Town Center, Suite 280, Southfield, Michigan 48075;
thereafter, such other office of Agent, if any, which it may designate by
notice to Borrowers and to each Lender to be the Payment Office.

 

“PBGC” shall mean
the Pension Benefit Guaranty Corporation.

 

“Permitted Acquisition” shall mean acquisitions by a Loan Party of assets
or Capital Stock of another Person who is not a Loan Party (so long as after
giving effect to such acquisition an Event of Default will not be in
existence), whether directly or indirectly, including by merger, consolidation
or otherwise, whereby (x) the Loan Party is the surviving entity or (y) the
surviving entity assumes all of such Loan Party’s Obligations and becomes a
Loan Party hereunder.  “Permitted
Acquisitions” shall include the acquisition by a Loan Party of the Capital
Stock of a Person who would constitute a Foreign Subsidiary after such
acquisition; provided, however, it shall exclude the merger into,
or acquisition of a Loan Party by, a Person that is organized under the laws of
any jurisdiction other than the United States of America, any State thereof or
the District of Columbia.

 

“Permitted
Encumbrances” shall mean (a) Liens in favor of Agent for the benefit of
Agent, Lenders and/or any Issuer, which, in each case, secure Obligations; (b)
Liens for taxes, assessments or other governmental charges (excluding any Lien
imposed pursuant to any of the provisions of ERISA), which are in each case not
delinquent or are being contested in good faith and by appropriate proceedings
and with respect to which proper reserves have been taken by Loan Parties; provided,
that, a stay of enforcement of any such Lien shall be in effect; (c)
Liens disclosed

 

22

 

in the financial
statements referred to in Section 5.5, the existence of which Agent
has consented to in writing; (d) Liens (other than any Lien imposed pursuant to
any of the provisions of ERISA) incurred or deposits or pledges to secure
obligations under worker’s compensation, social security or similar laws, or
under unemployment insurance; (e) Liens (other than any lien imposed pursuant
to any of the provisions of ERISA) incurred or deposits or pledges to secure
bids, tenders, contracts (other than contracts for the payment of money),
leases, statutory obligations, surety and appeal bonds and other obligations of
like nature arising in the ordinary course of any Loan Party’s business; (f)
judgment Liens that have been stayed or bonded or do not give rise to an Event
of Default and statutory Liens of mechanics’, workers’, materialmen’s or other
similar Liens arising under law arising in the ordinary course of any Loan
Party’s business with respect to which obligations are not due or which are
being contested in good faith by the applicable Loan Party; (g) Liens placed
upon fixed assets or real property hereafter acquired to secure a portion of
the purchase price thereof and Liens created under Capital Leases, provided
that (x) any such Lien shall not encumber any property of the Loan Parties
other than the subject fixed assets or real property and (y) the aggregate
amount of Indebtedness secured by such Liens incurred as a result of such
purchases and/or Capital Leases during any fiscal year shall not exceed the
aggregate amount of $5,000,000; (h) Liens with respect to indebtedness of one
Loan Party to another Loan Party; (i) Liens in favor of the Senior Note Agent
for the benefit of the Senior Noteholders under the Senior Note Agreement,
which, in each case, secure the Senior Note Obligations and are permitted under
and are subject to the Intercreditor Agreement; (j) Liens in favor of the
Subordinated Lenders under the Subordinated Debt Documentation, which, in each
case, secure the Subordinated Debt and are permitted under and are subject to
the Subordination Agreement; (k) Liens consented to in writing by Agent and
Required Lenders (which consent may be withheld in the sole discretion of Agent
and Required Lenders); (l) Liens disclosed on Schedule 7.2.;
(m) easements, rights-of-way, zoning restrictions and other similar charges or
encumbrances in respect of real property not interfering in any material
respect with the ordinary conduct of the business of the Loan Parties and any
exception to title to the owned real property appearing on policies of title
insurance relating thereto; (n) Liens on assets (other than assets described in
the definition of Collateral but including Collateral described in clause
(c)(vi) of the definition thereof) securing Acquired Indebtedness permitted
under this Agreement and any refinancing thereof (provided that such
Liens secured such Acquired Indebtedness at the time of and prior to the
incurrence of such Acquired Indebtedness by a Loan Party and were not granted
in connection with, or in anticipation of, the incurrence of such Acquired
Indebtedness by such Loan Party and such Liens do not extend to or cover any
property or assets of any Loan Party other than the assets that secured the
Acquired Indebtedness prior to the time such Indebtedness became Acquired
Indebtedness of the Loan Party (in any event specifically excluding any assets
described in the definition of Collateral but including Collateral described in
clause (c)(vi) of the definition thereof) and are no more favorable to the
lienholders than those securing the Acquired Indebtedness prior to the
incurrence of such Acquired Indebtedness by the Loan Party and provided,
further that the holder of any such Lien on real property shall execute
and deliver a mortgagee waiver, in form and substance satisfactory to Agent, in
order for such Liens to be permitted hereunder); (o) leases or subleases of
real property and equipment granted to Persons other than the Loan Parties in
the ordinary course of business, and not materially interfering with the
ordinary course of business of the Loan Parties; (p) Liens under licensing
agreements entered into by Loan Parties as licensee in the ordinary course of
business by the Loan Parties for the use by the Loan Parties of intellectual
property; (q) Liens arising from (i) operating leases and precautionary UCC
financing statement filings in respect thereof and (ii) precautionary UCC
financing statement filings in respect of equipment or other materials which
are not owned by a Loan Party located on the premises of a Loan Party (but not
in connection with, or as part of, the financing thereof) from time to time in
the ordinary course of business; (r) Liens securing Indebtedness permitted to
be refinanced under Section

 

23

 

7.7, but only covering
assets which secured the Indebtedness being refinanced and (s) Liens on assets
(other than Collateral but including Collateral described in clause (c)(vi) of
the definition thereof) incurred in the ordinary course of business of the Loan
Parties securing obligations that do not exceed $2,000,000 at any time
outstanding.

 

“Permitted Investments”
shall mean (a) Investments by the Loan Parties in any Person that is or will
become immediately after such Investment a Guarantor or that will merge or
consolidate with or into a Borrower or a Guarantor, or that transfers or
conveys all or substantially all of its assets to a Borrower or a Guarantor,
provided that after giving effect to such Investment, no Default or Event of
Default shall be in existence and provided, further, that this
clause (a) shall exclude Investments in Persons who will be Foreign
Subsidiaries after giving effect to such Investment; (b) Investments in the
Senior Notes, so long as Undrawn Availability shall equal or exceed $10,000,000
after giving effect thereto; (c) Investments in securities of trade creditors
or customers received pursuant to any plan of reorganization or similar
arrangement upon the bankruptcy or insolvency of such trade creditors or
customers in exchange for claims against such trade creditors or customers; (d)
receivables owing to the Loan Parties which are overdue in payment; (e)
Investments in Foreign Subsidiaries of Holdings organized under the laws of
Canada or any Province thereof by Holdings or any domestic Loan Party; provided that the aggregate amount of such
Investments outstanding at any time in reliance of this clause (e) (after
giving effect to any such Investments or any portions thereof that are returned
to Holdings or any domestic Loan Party in cash on or prior to the date of such
calculation), plus any loans made under Section 7.5(d),  shall not exceed $2,500,000; (f) Investments
in Foreign Subsidiaries of Holdings organized under the laws of Canada or any
Province thereof by Holdings or any domestic Loan Party; provided that (i) the aggregate amount of
such Investments outstanding at any time in reliance of this clause (f) (i)
after giving effect to any such Investments or any portions thereof that are
returned to Holdings or any domestic Loan Party in cash on or prior to the date
of such calculation), plus any loans made under Section 7.5(e), shall not
exceed 5% of the Consolidated Net Tangible Assets of Holdings or its
Subsidiaries, (ii) each such Investment is used by each such Foreign Subsidiary
(A) for working capital purposes or (B) substantially contemporaneous with its
receipt thereof to purchase all or substantially all of the assets of, or all
of the Capital Stock of, any Person (other than a Subsidiary of Holdings)
engaged in a business substantially similar or complementary to the business of
the Loan Parties primarily in Canada (including by means of a merger,
consolidation or other business combination permitted under this Agreement),
which Person shall become a Foreign Subsidiary of Holdings in the case of where
such purchase is of all of the Capital Stock of such Person and (iii) any such
Investment made in reliance upon this clause (f) may continue to be maintained
notwithstanding that such Investment if made thereafter would not comply with
the requirements of this clause (f); (g) Investments in existence on the date
hereof; (h) Investments in Foreign Subsidiaries of Holdings by Holdings or any
domestic Loan Party; provided
that the aggregate amount of such Investments outstanding at any time in
reliance of this clause (h) (after giving effect to any such Investments or any
portions thereof that are returned to Holdings or any domestic Loan Party in
cash on or prior to the date of such calculation), plus any loans made under Section 7.5(i),  shall not exceed $2,500,000; (i) Investments
consisting of prepaid expenses, negotiable instruments held for collection and
lease, utility and workers’ compensation, performance and other similar
deposits made in the ordinary course of business and consistent with past
practice; (j) Investments in non-cash consideration received in connection with
a disposition permitted under Section 7.1(b); (k) Investments in Loan
Parties that constitute Indebtedness permitted hereunder; (l) Investments made
by Holdings to the extent the consideration for such Investment consists solely
of its Capital Stock and (m) additional Investments (including Investments in
any Foreign Subsidiary or Subsidiaries) in an aggregate amount not to exceed,
together with any loans made under Section 7.5(n), $5,000,000 at any time
outstanding.

 

24

 

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

 

“Phase I Reports”
shall mean the Phase I Environmental Site Assessment and Limited Compliance
Review, Edgen Corporation, 2421 North Line Road, Port Allen, Louisiana,
prepared by Environmental Resources Management (dated January 5, 2005) and
the Phase I Environmental Site Assessment and Limited Compliance Review, Edgen
Corporation, 3595 State Road 60 East, Bartow, Florida, prepared by
Environmental Resources Management (misdated December 5, 2004).

 

“Plan” shall mean
any employee benefit plan within the meaning of Section 3(3) of ERISA,
maintained for employees of Loan Parties or any member of the Controlled Group
or any such Plan to which any Loan Party or any member of the Controlled Group
is required to contribute on behalf of any of its employees.

 

“Preferred Stock”
of any Person means any Capital Stock of such Person that has preferential
rights to any other Capital Stock of such Person with respect to dividends or
redemptions or upon liquidation.

 

“Purchase Money
Indebtedness” shall mean Indebtedness incurred by a Borrower constituting
(x) the purchase price for fixed assets or real property and/or (y) Capitalized
Lease Obligations, to the extent (i) secured by a Permitted Encumbrance
described in clause (g) of the definition thereof and (ii) that the
aggregate annual amount of such Indebtedness and/or Capitalized Lease
Obligations outstanding during any fiscal year shall not exceed $5,000,000 for
Borrowers in the aggregate.

 

“Purchasing Lender”
shall have the meaning set forth in Section 17.3(c).

 

“Qualified Capital
Stock” means any Capital Stock that is not Disqualified Capital Stock.

 

“Questionnaire”
shall mean the Documentation Information Questionnaire and the responses
thereto provided by Loan Parties and delivered to Agent.

 

“RCRA” shall mean
the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq.,
as same may be amended from time to time.

 

“Real Property”
shall mean all of each Loan Party’s right, title and interest in and to the
owned and leased premises identified on Schedule 4.19.

 

“Receivables” shall
mean and include, as to each Loan Party, all of such Loan Party’s accounts
(including, without limitation, all health-care insurance receivables),
contract rights, instruments (including promissory notes and other instruments
evidencing Indebtedness owed to Loan Parties by their Affiliates), documents,
chattel paper (whether tangible or electronic), general intangibles relating to
accounts, drafts and acceptances, and all other forms of obligations owing to
such Loan Party, each of which is arising out of or in connection with the
sale, lease or other disposition of Inventory or the rendition of services, all
guarantees and other security therefor,

 

25

 

whether secured or
unsecured, now existing or hereafter created, and whether or not specifically
sold or assigned to Agent hereunder.

 

“Receivables Advance
Rate” shall have the meaning set forth in Section 2.1(a)(y)(i).

 

“Release” shall
have the meaning set forth in Section 5.7(c).

 

“Reportable Event”
shall mean a reportable event described in Section 4043(b) of ERISA or the
regulations promulgated thereunder as to which the requirement to file a notice
with the PBGC has not been waived under PBGC or other applicable regulations.

 

“Required Lenders”
shall mean Lenders holding at least sixty-six and two-thirds percent (66 2/3%)
of the Advances and, if no Advances are outstanding, shall mean Lenders holding
at least sixty-six and two-thirds percent (66 2/3%)of the Commitment
Percentages; provided, however, that at all times when there
shall be two or fewer Lenders hereunder, “Required Lenders” shall mean Lenders
holding one hundred percent (100%) of the Advances and, if no Advances are
outstanding, shall mean Lenders holding one hundred percent (100%) of the Commitment
Percentages.

 

“Reserves” shall
mean such reserves as Agent may reasonably deem proper and necessary from time
to time.

 

“Restricted Subsidiary”
of any Person means any Subsidiary of such Person which at the time of
determination is not an Unrestricted Subsidiary.

 

“Revolving Advances”
shall mean Advances made other than Letters of Credit.

 

“Revolving Credit Note”
shall have the meaning set forth in Section 2.1(a).

 

“Revolving Interest
Rate” shall mean an interest rate per annum equal to (a) the sum of the
Base Rate plus the Applicable Margin per annum with respect to Domestic
Rate Loans that are Revolving Advances and (b) the sum of the Eurodollar Rate plus
the Applicable Margin per annum with respect to Eurodollar Rate Loans that are
Revolving Advances.

 

“Senior Note Agent”
shall mean The Bank of New York, in its capacity as collateral agent under the
Senior Note Agreement.

 

“Senior Note Agreement”
shall mean the Indenture dated February 1, 2005 among Holdings, certain
Loan Parties, The Bank of New York, as Trustee, and Senior Note Agent, as the
foregoing may be amended, restated, modified and supplemented from time to time
in accordance with Section 7.17 hereof.

 

“Senior Note Documents”
shall mean the Senior Note Agreement and all agreements, instruments and
documents, including, without limitation, guaranties, security agreements,
pledges, powers of attorney, consents and all other writings heretofore, now or
hereafter executed by any Loan Party and/or delivered to Senior Note Agent or
any Senior Noteholder in respect of the transactions contemplated by the Senior
Note Agreement.

 

26

 

“Senior Noteholder”
shall mean each Person in whose name the notes under the Senior Note Agreement
are registered on the registrar’s books, and all permitted successors and
assigns thereof.

 

“Senior Note
Obligations” shall mean all obligations for principal, premium, interest,
penalties, fees, indemnification, reimbursement, damages and other liabilities
and amounts payable under the Senior Note Documents.

 

“Settlement Date”
shall mean the Closing Date and thereafter every Business Day designated by
Agent as a “Settlement Date” by notice from Agent to each Lender, but not less
frequently than weekly.

 

“Significant
Subsidiary” shall mean, with respect to any Person, any Subsidiary of a
Loan Party that satisfies the criteria for a “significant subsidiary” set forth
in Rule 1-02(w) of Regulation S-X under the Exchange Act.

 

“Standby Letters of
Credit” shall mean all Letters of Credit issued in connection with this
Agreement as a credit enhancement for certain Indebtedness (other than
Indebtedness for borrowed money) of Borrowers.

 

“Subordinated Debt”
shall mean all Indebtedness of any Loan Party under or in connection with the
Subordinated Debt Documentation.

 

“Subordinated Debt
Documentation” shall mean the Subordinated Notes and all related
agreements, instruments and other documents executed and delivered in
connection therewith (including, without limitation, the Subordination
Agreement).

 

“Subordinated Lenders”
shall mean, collectively, the holders of Subordinated Debt and their respective
successors and assigns.

 

“Subordinated Notes”
those certain notes that are anticipated to be executed by the Loan Parties in
favor of the Subordinated Lenders subsequent to the Closing Date hereof.

 

“Subordination
Agreement” shall mean any Subordination Agreement to be entered into among
Agent on behalf of the Lenders, Senior Note Agent on behalf of the Senior
Noteholders, Loan Parties and Subordinated Lenders or their duly authorized
representative, in substantially the form of Exhibit B hereto.

 

“Subsidiary” of a
Person shall mean a corporation or other entity whose shares of stock or other
ownership interests having ordinary voting power (other than stock or other
ownership interests having such power only by reason of the happening of a
contingency) to elect a majority of the directors of such corporation, or other
Persons performing similar functions for such entity, are owned, directly or
indirectly, by such Person.

 

“Taxes” means  any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding, in the case of each Lender and the Agent, (i) such taxes
(including income taxes or franchise taxes) as are imposed on or measured by
the Agent’s or each Lender’s net income in any the jurisdiction (whether
federal, state or local and including any political subdivision thereof) under
the laws of which such Lender or the

 

27

 

Agent, as the case may
be, is organized or maintains a lending office, and (ii) any U.S. federal
withholding tax that is imposed on amounts payable to any Lender at the time
such Lender becomes a party hereto (or designates a new lending office) or is
attributable to such Lender’s failure to comply with Section 3.9(e).

 

“Term” shall mean
the period commencing on the Closing Date and ending on the Termination Date.

 

“Termination Date”
shall have the meaning set forth in Section 13.1.

 

“Termination Event”
shall mean (i) a Reportable Event with respect to any Plan or Multiemployer
Plan; (ii) the withdrawal of any Loan Party or any member of the Controlled
Group from a Plan or Multiemployer Plan during a plan year in which such entity
was a “substantial employer” as defined in Section 4001(a)(2) of ERISA;
(iii) the providing of notice of intent to terminate a Plan in a distress
termination described in Section 4041(c) of ERISA; (iv) the institution by
the PBGC of proceedings to terminate a Plan or Multiemployer Plan; (v) any
event or condition (a) which might constitute grounds under Section 4042
of ERISA for the termination of, or the appointment of a trustee to administer,
any Plan or Multiemployer Plan, or (b) that may result in termination of a
Multiemployer Plan pursuant to Section 4041A of ERISA; or (vi) the partial
or complete withdrawal within the meaning of Sections 4203 and 4205 of ERISA,
of any Loan Party or any member of the Controlled Group from a Multiemployer
Plan.

 

“Toxic Substance”
shall mean and include any material present on the Real Property which is
subject to regulation under the Toxic Substances Control Act (TSCA), 15 U.S.C. §§ 2601
et seq., applicable state law, or any other applicable Federal or state
laws now in force or hereafter enacted relating to toxic substances.  “Toxic Substance” includes but is not limited
to asbestos, polychlorinated biphenyls (PCBs) and lead-based paints.

 

“Transactions”
shall have the meaning set forth in Section 5.5.

 

“Transaction Date” shall have the meaning set
forth in the definition of Consolidated Fixed Charge Coverage Ratio.

 

“Transaction Documents”
shall have the meaning set forth in Section 8.1(c).

 

“Transferee” shall
have the meaning set forth in Section 17.3(b).

 

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

 

“Undrawn Availability”
at a particular date shall mean an amount equal to (a) the lesser of (i) the
Formula Amount or (ii) the Maximum Revolving Advance Amount, minus (b)
the sum of (i) the outstanding amount of Advances plus (ii) all amounts
due and owing to any Borrower’s trade creditors which are outstanding beyond
normal trade terms (except to the extent consistent with the past business practices
of such Borrower) plus (iii) accrued interest under this Agreement and
fees and expenses for which any Borrower is liable under this Agreement but
which have not been paid or charged to any Borrower’s Account.

 

“Unrestricted
Subsidiary” of any Person means:

 

28

 

(1)                  any Subsidiary of such Person that at the time of
determination shall be or continue to be designated an Unrestricted Subsidiary
by the Board of Directors of such Person in the manner provided below; and

 

(2)                  any Subsidiary of an Unrestricted Subsidiary.

 

The Board of Directors of
Holdings may designate any Subsidiary (including any newly acquired or newly
formed Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary owns
any Capital Stock of, or owns or holds any Lien on any property of, Holdings or
any other Subsidiary of Holdings that is not a Subsidiary of the Subsidiary to
be so designated, provided that:

 

(1)                  Holdings certifies to the Agent that such
designation complies with Section 4.09 of the Senior Note Agreement; and

 

(2)                  each Subsidiary to be so designated and each of
its Subsidiaries has not at the time of designation, and does not thereafter,
create, incur, issue, assume, guarantee or otherwise become directly or indirectly
liable with respect to any Indebtedness pursuant to which the lender has
recourse to any of the assets of Holdings or any of its Restricted
Subsidiaries.

 

The Board of Directors of
Holdings may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary only if:

 

(1)                  immediately after giving effect to such
designation, Holdings is able to incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness as defined in the Senior Note
Agreement) in compliance with the Section 4.08 of the Senior Note
Agreement; and

 

(2)                  immediately before and immediately after giving
effect to such designation, no Default or Event of Default shall have occurred
and be continuing.

 

Any such designation by the
Board of Directors shall be evidenced to the Agent by promptly filing with the
Agent a copy of the Board Resolution giving effect to such designation and an
Officers’ Certificate certifying that such designation complied with the
foregoing provisions.

 

“Week” shall mean
the time period commencing with the opening of business on a Monday and ending
on the end of business the following Sunday.

 

“Wholly-Owned
Restricted Subsidiary” of any Person means any Restricted Subsidiary of
such Person of which all the outstanding Capital Stock (other than in the case
of a Foreign Restricted Subsidiary, directors’ qualifying shares or an
immaterial amount of shares required to be owned by other Persons pursuant to
applicable law) are owned by such Person or any Wholly Owned Restricted
Subsidiary of such Person.

 

Notwithstanding any other
provision hereof, the defined terms Asset Acquisition, Asset Sale, Capitalized
Lease Obligation, Consolidated EBITDA, Consolidated Fixed Charge Coverage
Ratio, Consolidated Fixed Charges, Consolidated Interest Expense, Consolidated
Net Tangible Assets, Domestic Restricted Subsidiary, Four Quarter Period,
Preferred Stock, Equity Offering, Consolidated Net Income, Consolidated
Non-cash Charges, Domestic Subsidiary, Equity Offering, Fair Market Value,
Foreign Restricted Subsidiary, Interest Swap Obligations, Qualified

 

29

 

Capital Stock, Restricted
Subsidiary, Transaction Date, and Wholly-Owned Restricted Subsidiary are
included herein solely for use in connection with the Consolidated Fixed Charge
Coverage Test.

 

1.3.                                                      UCC
Terms.

 

All terms used herein and defined in the UCC shall
have the meaning given therein unless otherwise defined herein.

 

1.4.                                                      Certain
Matters of Construction.

 

The terms “herein”, “hereof” and “hereunder” and other
words of similar import refer to this Agreement as a whole and not to any
particular section, paragraph or subdivision. Each reference to a Section, an
Exhibit or a Schedule shall be deemed to refer to a Section, an Exhibit or
a Schedule, as applicable, of this Agreement unless otherwise specified.  Any pronoun used shall be deemed to cover all
genders.  Wherever appropriate in the
context, terms used herein in the singular also include the plural and vice
versa.  All references to statutes
(including the UCC) and related regulations shall include any amendments of
same and any successor statutes and regulations.  Unless otherwise provided, all references to
any instruments or agreements to which Agent is a party, including, without
limitation, references to any of the Other Documents, shall include any and all
modifications or amendments thereto and any and all extensions or renewals
thereof.

 

II.                                     ADVANCES,
PAYMENTS.

 

2.1.                                                      Revolving
Advances.

 

(a)                                  Revolving
Advances.  Subject to the terms and
conditions set forth in this Agreement (including, without limitation, Section 2.1(c)),
each Lender, severally and not jointly, will make Revolving Advances to the
Borrowers in aggregate amounts outstanding at any time equal to such Lender’s
Commitment Percentage of the lesser of (x) an amount equal to (i) the Maximum
Revolving Advance Amount minus (ii) the aggregate amount of outstanding
Letter of Credit Obligations and (y) an amount equal to the sum of:

 

(i)                                     up
to 85%, subject to the provisions of Section 2.1(c) (the “Receivables
Advance Rate”), of Eligible Receivables, plus

 

(ii)                                  up
to the least of (A) 60%, subject to the provisions of Section 2.1(c),
of the lesser of (I) the aggregate cost, calculated on a first-in-first-out
basis, of Eligible Inventory at such time and (II) the aggregate fair market
value of Eligible Inventory at such time, (B) 85%, subject to the provisions of
Section 2.1(c), of the appraised net orderly liquidation value of
Eligible Inventory (as determined by an appraiser acceptable to Agent and, for
the purposes of this clause (B) only, without giving effect to any
reduction of Eligible Inventory for slow-moving Inventory) at such time (the
percentages set forth in clauses (A) and (B), each an “Inventory
Advance Rate” and, together with the Receivables Advance Rate, the “Advance
Rates”) and (C) $10,000,000; minus

 

(iii)                               the
aggregate amount of outstanding Letter of Credit Obligations, minus

 

30

 

(iv)                              Reserves.

 

The amount derived from
the sum of (x) Sections 2.1(a)(y)(i) and (ii)  minus (y) Section 2.1
(a)(y)(iv) at any time and from time to time shall be referred to as the “Formula
Amount”.  The Revolving Advances
shall be evidenced by one or more secured promissory notes (each, a “Revolving
Credit Note”) substantially in the form attached hereto as Exhibit 2.1(a).

 

(b)                                 Individual
Limits on Revolving Advances. 
Without limiting the provisions of Section 2.1(a), in no
event shall any Lender be obligated to make Revolving Advances to any Borrower
in aggregate amounts outstanding at any time in excess of such Lender’s
Commitment Percentage of the lesser of (x) the Maximum Revolving Advance Amount
minus the sum of (i) outstanding Revolving Advances made to the other
Borrower and (ii) the aggregate amount of outstanding Letter of Credit
Obligations or (y) such Borrower’s Individual Formula Amount minus the
aggregate Letter of Credit Obligations outstanding with respect to such
Borrower.

 

(c)                                  Discretionary
Rights.  The Inventory Advance Rate
may be decreased by Agent at any time and from time to time in the exercise of
its reasonable discretion in the event that the Agent determines that the
percentage of slow-moving Inventory has increased after the Closing Date.  Each Borrower consents to any such decreases and
acknowledges that decreasing the Inventory Advance Rate or increasing the
Reserves may limit or restrict Revolving Advances requested by Borrowers.

 

(d)                                 Existing
Revolving Advances.  Upon the
effectiveness of this Agreement, all Revolving Advances outstanding under the
Existing Loan Agreement shall be deemed to be Revolving Advances outstanding
under this Agreement.

 

2.2.                                                      Procedure
for Borrowing.

 

(a)                                  Any
Borrower may notify Agent prior to 11:00 a.m. (New York time) on a Business Day
of such Borrower’s request to incur, on that day, a Revolving Advance
hereunder.  Agent may, in its sole
discretion, accept telephonic notices of borrowing; provided,  however,
that any such acceptance in one or more instances shall not create a course of
dealing or require Agent to accept any telephonic notices in the future.  In addition, neither Agent nor any Lender
shall incur any liability to any Loan Party in (x) acting upon any telephonic
or other notice of borrowing that Agent believes in good faith to have been
given by an officer or other person authorized to act on behalf of the
applicable Borrower and/or (y) in refusing to act upon any telephonic or other
notice of borrowing that Agent believes in good faith may not have been given
by an officer or other person authorized to act on behalf of the applicable
Borrower.  Any amount required to be paid
as interest hereunder, or as fees or other charges under this Agreement or any
other agreement with Agent, Lenders and/or any Issuer, or with respect to any
other Obligation, which shall become due, shall be deemed a request for a
Revolving Advance by the Borrower obligated to pay such amount as of the date
such payment is due, in the amount required to pay in full such interest, fee,
charge or Obligation under this Agreement or any other agreement with Agent,
Lenders and/or any Issuer and such request shall be irrevocable.

 

(b)                                 Notwithstanding
the provisions of (a) above, in the event any Borrower desires to obtain a
Eurodollar Rate Loan, such Borrower shall give Agent at least three (3)
Business Days’ prior written notice, specifying (i) the date of the proposed
borrowing (which shall be a

 

31

 

Business Day), (ii) the type of Revolving Advance and the amount on the
date of such Revolving Advance to be borrowed, which amount shall be in a
minimum amount of $1,000,000 and in integral multiples of $250,000 in excess
thereof, and (iii) the duration of the first Interest Period therefor.  Interest Periods for Eurodollar Rate Loans shall
be for one, two, three or six months.  No
Eurodollar Rate Loan shall be made available to any Borrower during the
continuance of a Default or an Event of Default.

 

(c)                                  Each
Interest Period of a Eurodollar Rate Loan shall commence on the date such Eurodollar
Rate Loan is made and shall end on such date as the requesting Borrower may
elect as set forth in (b)(iii) above provided that the exact length of each
Interest Period shall be determined in accordance with the practice of the
interbank market for offshore Dollar deposits and no Interest Period shall end
after the Termination Date.

 

(d)                                 The
requesting Borrower shall elect the initial Interest Period applicable to a
Eurodollar Rate Loan by its notice of borrowing given to Agent pursuant to Section 2.2(b)
or by its notice of conversion given to Agent pursuant to Section 2.2(e),
as the case may be.  The requesting
Borrower shall elect the duration of each succeeding Interest Period by giving
irrevocable written notice to Agent of such duration not less than three (3)
Business Days prior to the last day of the then current Interest Period
applicable to such Eurodollar Rate Loan. 
If Agent does not receive timely notice of the Interest Period elected
by the applicable Borrower, such Borrower shall be deemed to have elected to
convert to a Domestic Rate Loan subject to Section 2.2(e).

 

(e)                                  Provided
that no Event of Default shall have occurred and be continuing, the applicable
Borrower may, (i) on the last Business Day of the then current Interest Period
applicable to any outstanding Eurodollar Rate Loan, continue such loan as a
Eurodollar Rate Loan or convert any such loan into a loan of another type in
the same aggregate principal amount provided that any continuation or
conversion of a Eurodollar Rate Loan shall be made only on the last Business
Day of the then current Interest Period applicable to such Eurodollar Rate
Loan; or (ii) on any Business Day with respect to Domestic Rate Loans, convert
any such loan into a loan of another type in the same aggregate principal
amount.  If the applicable Borrower
desires to continue or convert a loan, such Borrower shall give Agent not less
than three (3) Business Days’ prior written notice to continue a Eurodollar
Rate Loan or convert from a Domestic Rate Loan to a Eurodollar Rate Loan or one
(1) Business Day’s prior written notice to convert from a Eurodollar Rate Loan
to a Domestic Rate Loan, specifying the date of such continuation or
conversion, the loans to be continued or converted and (other than with respect
to conversions from a Eurodollar Rate Loan to a Domestic Rate Loan) the
duration of the first (or next, as appropriate) Interest Period therefor.  After giving effect to each request for
Eurodollar Rate Loan, and/or such continuation and/or conversion, there shall
not be outstanding more than four (4) Eurodollar Rate Loans, in the aggregate.

 

(f)                                    At
its option and upon three (3) Business Days’ prior written notice, any Borrower
may prepay the Eurodollar Rate Loans in whole at any time or in part from time
to time, without premium or penalty, but with accrued interest on the principal
being prepaid to the date of such repayment. 
Such Borrower shall specify the date of prepayment of Revolving Advances
which are Eurodollar Rate Loans and the amount of such prepayment.  In the event that any prepayment of a
Eurodollar Rate Loan is required or permitted on a date other than the last
Business Day of the then current Interest Period with respect thereto, each
Borrower and each other Loan Party shall indemnify Agent and Lenders therefor
in accordance with Section 2.2(g).

 

32

 

(g)                                 Each
Loan Party shall indemnify Agent and Lenders and hold Agent and Lenders
harmless from and against any and all losses or expenses that Agent and Lenders
may sustain or incur as a consequence of any prepayment, continuation of,
conversion of or any default by any Borrower in the payment of the principal of
or interest on any Eurodollar Rate Loan or failure by any Borrower to complete
a borrowing of, a prepayment of, a continuation of or conversion of or to a
Eurodollar Rate Loan after notice thereof has been given, including, but not
limited to, any interest payable by Agent or Lenders to lenders of funds
obtained by it in order to make or maintain its Eurodollar Rate Loans
hereunder.  A certificate as to any
additional amounts payable pursuant to the foregoing sentence submitted by
Agent or any Lender to Borrowers shall be conclusive absent manifest error.

 

(h)                                 Notwithstanding
any other provision hereof, if any applicable law, treaty, regulation or
directive, or any change therein or in the interpretation or application
thereof, shall make it unlawful for any Lender (for purposes of this Section 2.2(h),
the term “Lender” shall include any Lender and the office or branch where any
Lender or any corporation or bank controlling such Lender makes or maintains
any Eurodollar Rate Loans) to make or maintain its Eurodollar Rate Loans, the
obligation of Lenders to make Eurodollar Rate Loans hereunder, as the case may
be, shall forthwith be cancelled and the applicable Borrower shall, if any
affected Eurodollar Rate Loans are then outstanding, promptly upon request from
Agent, either pay all such affected Eurodollar Rate Loans or convert such
affected Eurodollar Rate Loans into loans of another type.  If any such payment or conversion of any
Eurodollar Rate Loan is made on a day that is not the last day of the Interest
Period applicable to such Eurodollar Rate Loan, the applicable Borrower shall
pay Agent, upon Agent’s request, such amount or amounts as may be necessary to
compensate Lenders for any loss or expense sustained or incurred by Lenders in
respect of such Eurodollar Rate Loan as a result of such payment or conversion,
including (but not limited to) any interest or other amounts payable by Lenders
to lenders of funds obtained by Lenders in order to make or maintain such
Eurodollar Rate Loan.  A certificate as
to any additional amounts payable pursuant to the foregoing sentence submitted
by Lenders to the applicable Borrower shall be conclusive absent manifest
error.

 

2.3.                                                      Disbursement
of Revolving Advance Proceeds.

 

All Revolving Advances shall be disbursed from
whichever office or other place Agent may designate from time to time (subject
to Section 3.10) and, together with any and all other Obligations of
Borrowers to Agent or Lenders, shall be charged to the applicable Borrower’s
Account on Agent’s books.  During the
Term, Borrowers may use the Revolving Advances by borrowing, prepaying and
reborrowing, all in accordance with the terms and conditions hereof.  The proceeds of each Revolving Advance
requested by a Borrower or deemed to have been requested by a Borrower under Section 2.2(a)
shall, with respect to requested Revolving Advances to the extent Lenders make
such Revolving Advances, be made available to the applicable Borrower on the
day so requested by way of credit to such Borrower’s operating account at Bank
One N.A. or such other bank as such Borrower may designate following
notification to Agent, in immediately available federal funds or other
immediately available funds or, with respect to Revolving Advances deemed to
have been requested by any Borrower, be disbursed to Agent to be applied to the
outstanding Obligations giving rise to such deemed request.

 

33

 

2.4.                                                      Maximum
Revolving Advances.

 

The aggregate balance of Revolving Advances
outstanding plus the aggregate amount of Letter of Credit Obligations at
any time shall not exceed the lesser of (a) Maximum Revolving Advance Amount
and (b) the Formula Amount.

 

2.5.                                                      Repayment
of Revolving Advances.

 

(a)                                  The
Revolving Advances shall be due and payable in full on the Termination Date
subject to earlier prepayment as herein provided.

 

(b)                                 Each
Borrower recognizes that the amounts evidenced by checks, notes, drafts or any
other items of payment relating to and/or proceeds of Collateral may not be
collectible by Agent on the date received. 
In consideration of Agent’s agreement to conditionally credit the
applicable Borrower’s Account as of the Business Day on which Agent receives
those items of payment, each Borrower agrees that, in computing the charges
under this Agreement, all items of payment shall be deemed applied by Agent on
account of the Obligations the same Business Day as confirmation to Agent by
the Blocked Account bank, as provided for in Section 4.15(h), that
such items of payment have been collected in good funds and credited to Agent’s
account.  Agent is not, however, required
to credit any Borrower’s Account for the amount of any item of payment which is
unsatisfactory to Agent and Agent may charge the applicable Borrower’s Account
for the amount of any item of payment which is returned to Agent unpaid.

 

(c)                                  All
payments of principal, interest and other amounts payable hereunder, or under
any of the related agreements shall be made to Agent at the Payment Office not
later than 1:00 p.m. (New York time) on the due date therefor in lawful money
of the United States of America in federal funds or other funds immediately
available to Agent.  Agent shall have the
right to effectuate payment on any and all Obligations due and owing hereunder
by charging the applicable Borrower’s Account or by making Revolving Advances
as provided in Section 2.2.

 

(d)                                 Borrowers
shall pay principal, interest, and all other amounts payable hereunder, or
under any related agreement, without any deduction whatsoever, including, but
not limited to, any deduction for any setoff or counterclaim.

 

2.6.                                                      Repayment
of Excess Advances.

 

The aggregate balance of Revolving Advances
outstanding at any time in excess of the maximum amount of Revolving Advances
permitted hereunder (including, without limitation, any Revolving Advances
outstanding in excess of the individual Borrower limits set forth in Section 2.1(b))
shall be immediately due and payable without the necessity of any demand, at
the Payment Office, whether or not a Default or Event of Default has occurred.

 

2.7.                                                      Statement
of Account.

 

Agent shall maintain, in accordance with its customary
procedures, a loan account for each Borrower (each, a Borrower’s Account”)
in the name of the applicable Borrower in which shall be recorded the date and
amount of each Advance made by Lenders with respect to such Borrower and the date
and amount of each payment in respect thereof; provided, however,
the failure by Agent to record the date and amount of any Advance shall not
adversely affect Agent or any Lender. 
Each month, Agent shall send to the Borrowers a statement for each Borrower
showing the accounting for the Advances made, payments made or credited in
respect thereof, and other transactions between

 

34

 

Lenders and each Borrower, during such month.  The monthly statements shall be deemed
correct and binding upon Borrowers in the absence of manifest error and shall
constitute an account stated between Lenders and Borrower unless Agent receives
a written statement of Borrowers’ specific exceptions thereto within thirty
(30) days after such statement is received by the Borrowers.  The records of Agent with respect to the loan
account shall be conclusive evidence absent manifest error of the amounts of
Advances and other charges thereto and of payments applicable thereto.

 

2.8.                                                      Letters
of Credit.

 

Subject to the terms and conditions hereof, Agent
shall issue or cause the issuance of Documentary Letters of Credit and Standby
Letters of Credit (collectively, together with any Letters of Credit issued in
connection with the Existing Loan Agreement, “Letters of Credit”) by the
Issuer on behalf of any Borrower; provided, however, that Agent
will not be required to issue or cause to be issued any Letters of Credit to
the extent that the face amount of such Letters of Credit would then cause the
sum of (i) the outstanding Revolving Advances plus (ii) outstanding
Letter of Credit Obligations to exceed the lesser of (x) the Maximum Revolving
Advance Amount or (y) the Formula Amount; provided, further, however,
that Agent will not be required to issue or cause to be issued any Letters of
Credit for the account of any Borrower to the extent that the face amount of
such Letters of Credit issued for such Borrower would then cause the sum of (i)
the outstanding Revolving Advances to such Borrower plus (ii) the
outstanding Letters of Credit issued or caused to be issued on behalf of such
Borrower to exceed the lesser of (x) the Maximum Revolving Advance Amount or
(y) such Borrower’s Individual Formula Amount. 
The maximum amount of outstanding Letters of Credit for the account of
Borrowers shall not exceed $5,000,000 in the aggregate at any time.  All disbursements or payments related to
Letters of Credit shall be deemed to be Domestic Rate Loans consisting of Revolving
Advances and shall bear interest at the Revolving Interest Rate for Domestic
Rate Loans; Letters of Credit that have not been drawn upon shall not bear
interest.

 

2.9.                                                      Issuance
of Letters of Credit.

 

(a)                                  Any
Borrower may request Agent to issue or cause the issuance of a Letter of Credit
by delivering to Agent at the Payment Office, Issuer’s standard form of letter
of credit and security agreement and standard form of letter of credit
application (collectively, the “Letter of Credit Application”) and any
draft if applicable, completed to the satisfaction of Agent; and, such other
certificates, documents and other papers and information as Agent or Issuer may
reasonably request.  The applicable
Borrower also has the right to give instructions and make agreements with
respect to any application, any applicable letter of credit and security
agreement, any applicable letter of credit reimbursement agreement and/or any
other applicable agreement, any letter of credit and the disposition of
documents, disposition of any unutilized funds, and to arrange the issuance of
any amendment, extension or renewal of any Letter of Credit.

 

(b)                                 Each
Letter of Credit shall, among other things, (i) provide for the payment of
sight drafts or acceptances of issuance drafts when presented for honor
thereunder in accordance with the terms thereof and when accompanied by the
documents described therein and (ii) (a) with respect to Documentary Letters of
Credit, have an expiry date not later than ninety (90) days after such
Documentary Letter of Credit’s date of issuance or (b) with respect to Standby
Letters of Credit, have an expiry date not later than six (6) months after such
Standby Letter of Credit’s date of issuance, and (with respect to clauses
(ii)(a) and (ii)(b) above) in no event having an expiry date later than the
Termination Date unless Loan Parties provide cash collateral equal to not less
than one hundred five percent (105%) of the face amount thereof to be held by
Agent pursuant to a cash collateral

 

35

 

agreement in form and substance satisfactory to Agent.  Each Documentary Letter of Credit shall be
subject to the Uniform Customs and Practice for Documentary Credits (1993
Revision), International Chamber of Commerce Publication No. 500, and any
amendments or revision thereof adhered to by the Issuer and, to the extent not
inconsistent therewith, the laws of the State of New York.  All Standby Letters of Credit shall be
subject to the laws or rules designated in such Standby Letter of Credit, or if
no laws or rules are designated, the International Standby Practices (ISP98 —
International Chamber of Commerce Publication Number 590) (the “ISP98 Rules”)
and, as to matters not governed by the ISP98 Rules, the laws of the State of
New York.

 

(c)                                  Agent
shall use its reasonable efforts to notify Lenders of the request by any
Borrower for a Letter of Credit hereunder.

 

2.10.                                                Requirements
For Issuance of Letters of Credit.

 

(a)                                  In
connection with the issuance of any Letter of Credit, Borrowers shall
indemnify, save and hold Agent, each Lender and each Issuer harmless from any
loss, cost, expense or liability, including, without limitation, payments made
by Agent, any Lender or any Issuer and expenses and reasonable attorneys’ fees
incurred by Agent, any Lender or any Issuer arising out of, or in connection
with, any Letter of Credit to be issued or created for any Borrower except to
the extent arising out of Agent’s, such Lender’s or such Issuer’s gross
negligence or willful misconduct. 
Borrowers shall be bound by Agent’s or Issuer’s regulations and good
faith interpretations of any Letter of Credit issued or created for any
Borrower’s Account, although this interpretation may be different from its own;
and, neither Agent, nor any Lender, nor any Issuer nor any of their correspondents
shall be liable for any error, negligence, or mistakes, whether of omission or
commission, in following any Borrower’s instructions or those contained in any
Letter of Credit or of any modifications, amendments or supplements thereto or
in issuing or paying any Letter of Credit except for Agent’s, any Lender’s, any
Issuer’s or such correspondents’ gross negligence or willful misconduct.

 

(b)                                 Borrowers
authorize and direct any Issuer of a Letter of Credit to name the applicable
Borrower as the “Applicant” or “Account Party” therein, to deliver to Agent all
related payment/acceptance advices, to deliver to Agent all instruments,
documents, and other writings and property received by the Issuer pursuant to
the Letter of Credit and to accept and rely upon Agent’s instructions and
agreements with respect to all matters arising in connection with the Letter of
Credit or the application therefor.

 

(c)                                  In
connection with all Letters of Credit issued or caused to be issued by Agent
under this Agreement, each Borrower hereby appoints Agent, or its designee, as
its attorney, with full power and authority if an Event of Default shall have
occurred and be continuing, (i) to sign and/or endorse such Borrower’s name
upon any warehouse or other receipts, letter of credit applications and
acceptances; (ii) to sign such Borrower’s name on bills of lading; (iii) to
clear Inventory through Customs in the name of such Borrower or Agent or
Agent’s designee, and to sign and deliver to Customs officials powers of attorney
in the name of such Borrower for such purpose; and (iv) to complete in such
Borrower’s name or Agent’s, or in the name of Agent’s designee, any order, sale
or transaction, obtain the necessary documents in connection therewith, and
collect the proceeds thereof.  Neither
Agent nor its attorneys will be liable for any acts or omissions nor for any
error of judgment or mistakes of fact or law, except for Agent’s or its
attorney’s gross negligence or willful misconduct.  This power, being coupled with an interest,
is irrevocable as long as any Letters of Credit remain outstanding.

 

36

 

(d)                                 Each
Lender shall to the extent of the percentage amount equal to the product of
such Lender’s Commitment Percentage times the aggregate amount of all
unreimbursed reimbursement obligations arising from disbursements made or
obligations incurred with respect to the Letters of Credit be deemed to have
irrevocably purchased an undivided participation in (i) each such unreimbursed reimbursement
obligation, (ii) Agent’s credit support enhancement provided to the Issuer of
any Letter of Credit and (iii) each Revolving Advance made as a consequence of
the issuance of a Letter of Credit and all disbursements thereunder, in each
case in an amount equal to such Lender’s applicable Commitment Percentage times
the outstanding amount of the Letters of Credit and disbursements
thereunder.  In the event that at the
time a disbursement is made the unpaid balance of Revolving Advances exceeds or
would exceed, with the making of such disbursement, the amount permitted under Section 2.1(a)
or under Section 2.1(b), and such disbursement is not reimbursed by
Borrowers within two (2) Business Days, Agent shall promptly notify each Lender
and upon Agent’s demand each Lender shall pay to Agent such Lender’s
proportionate share of such unreimbursed disbursement together with such
Lender’s proportionate share of Agent’s unreimbursed costs and expenses
relating to such unreimbursed disbursement. 
Upon receipt by Agent of a repayment from any Borrower of any amount
disbursed by Agent for which Agent had already been reimbursed by Lenders,
Agent shall deliver to each Lender that Lender’s pro rata share of such
repayment.  Each Lender’s participation
commitment shall continue until the last to occur of any of the following
events: (A) Agent ceases to be obligated to issue or cause to be issued Letters
of Credit hereunder; (B) no Letters of Credit issued hereunder remain
outstanding and uncancelled or (C) all Persons (other than the applicable
Borrower) have been fully reimbursed for all payments made under or relating to
Letters of Credit.

 

2.11.                                                Additional
Payments.

 

Any sums expended by Agent or any Lender due to any
Loan Party’s failure to perform or comply with its obligations under this
Agreement or any Other Document including, without limitation, any Loan Party’s
obligations under Sections 4.2, 4.4, 4.12, 4.13, 4.14 and 6.1, may be
charged to the applicable Borrower’s Account as a Revolving Advance and added
to the Obligations.

 

2.12.                                                Manner
of Borrowing and Payment.

 

(a)                                  Each
borrowing of Revolving Advances shall be advanced according to the applicable
Commitment Percentages of Lenders.

 

(b)                                 Each
payment (including each prepayment) by a Borrower on account of the principal
of the Revolving Advances shall be applied to the Revolving Advances pro rata
according to the applicable Commitment Percentages of Lenders.  Except as expressly provided herein, all
payments (including prepayments) to be made by Borrowers on account of
principal, interest and fees shall be made without set off or counterclaim and
shall be made to Agent on behalf of the Lenders to the Payment Office, in each
case on or prior to 1:00 p.m. (New York time), in Dollars and in immediately
available funds.

 

(c)                                  (i)                                     Notwithstanding
anything to the contrary contained in Sections 2.12(a) and 2.12(b),
commencing with the first Business Day following the Closing Date, each
borrowing of Revolving Advances shall be advanced by Agent and each payment by
any Borrower on account of Revolving Advances shall be applied first to those
Revolving Advances advanced by Agent.  On
or before 1:00 p.m. (New York time) on each Settlement Date commencing with the
first

 

37

 

Settlement Date following
the Closing Date, Agent and Lenders shall make certain payments as follows: (I)
if the aggregate amount of new Revolving Advances made by Agent during the
preceding Week (if any) exceeds the aggregate amount of repayments applied to
outstanding Revolving Advances during such preceding Week, then each Lender
shall provide Agent with funds in an amount equal to its applicable Commitment
Percentage of the difference between (w) such Revolving Advances and (x) such
repayments and (II) if the aggregate amount of repayments applied to
outstanding Revolving Advances during such Week exceeds the aggregate amount of
new Revolving Advances made during such Week, then Agent shall provide each
Lender with funds in an amount equal to its applicable Commitment Percentage of
the difference between (y) such repayments and (z) such Revolving Advances.

 

(ii)                                  Each
Lender shall be entitled to earn interest at the applicable Revolving Interest
Rate on outstanding Revolving Advances which it has funded.

 

(iii)                               Promptly
following each Settlement Date, Agent shall submit to each Lender a certificate
with respect to payments received and Revolving Advances made during the Week
immediately preceding such Settlement Date. 
Such certificate of Agent shall be conclusive in the absence of manifest
error.

 

(d)                                 If
any Lender or Participant (a “Benefited Lender”) shall at any time
receive any payment of all or part of its Advances, or interest thereon, or
receive any Collateral in respect thereof (whether voluntarily or involuntarily
or by set-off) in a greater proportion than any such payment to and Collateral
received by any other Lender, if any, in respect of such other Lender’s
Advances, or interest thereon, and such greater proportionate payment or
receipt of Collateral is not expressly permitted hereunder, such Benefited
Lender shall purchase for cash from the other Lenders a participation in such
portion of each such other Lender’s Advances, or shall provide such other
Lender with the benefits of any such Collateral, or the proceeds thereof, as
shall be necessary to cause such Benefited Lender to share the excess payment
or benefits of such Collateral or proceeds ratably with each of Lenders; provided,
however, that if all or any portion of such excess payment or benefits
is thereafter recovered from such Benefited Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest.  Each
Lender so purchasing a portion of another Lender’s Advances may exercise all
rights of payment (including, without limitation, rights of set-off) with
respect to such portion as fully as if such Lender were the direct holder of
such portion.

 

(e)                                  Unless
Agent shall have been notified by telephone, confirmed in writing, by any
Lender that such Lender will not make the amount which would constitute its
applicable Commitment Percentage of the Revolving Advances available to Agent,
Agent may (but shall not be obligated to) assume that such Lender shall make
such amount available to Agent on the next Settlement Date and, in reliance
upon such assumption, make available to the applicable Borrower a corresponding
amount.  Agent will promptly notify
Borrowers of its receipt of any such notice from a Lender.  If such amount is made available to Agent on
a date after such next Settlement Date, such Lender shall pay to Agent on
demand an amount equal to the product of (i) the daily average Federal Funds
Rate (computed on the basis of a year of 360 days) during such period as quoted
by Agent, times (ii) such amount, times (iii) the number of days from and
including such Settlement Date to the date on which such amount becomes
immediately available to Agent.  A
certificate of Agent submitted to any Lender with respect to any amounts owing
under this paragraph (e) shall be conclusive, in the absence of manifest
error.  If such amount is not in fact
made available to Agent by such Lender within three (3) Business Days after
such Settlement Date, Agent shall be entitled to

 

38

 

recover such an amount,
with interest thereon at the rate per annum then applicable to such Revolving
Advances hereunder, on demand from the applicable Borrower; provided, however,
that Agent’s right to such recovery shall not prejudice or otherwise adversely
affect Borrowers’ rights (if any) against such Lender.

 

2.13.                                                Mandatory
Prepayments.

 

When any Loan Party sells
or otherwise disposes of any Collateral, other than Inventory in the ordinary
course of business (which shall be governed by the provisions of Section 4.15(h)),
or receives insurance proceeds with respect to Collateral or with respect to
business interruption in connection with any insurance maintained pursuant to Section 4.11,
Loan Parties shall repay the Advances in an amount equal to the net proceeds of
such sale (i.e., gross proceeds less the reasonable costs of such sales or
other dispositions) or the gross proceeds of such insurance payment, such
repayments to be made promptly but in no event more than one (1) Business Day
following receipt of such proceeds, and until the date of payment, such
proceeds shall be held in trust for Agent. 
The foregoing shall not be deemed to be implied consent to any sale or
disposition of Collateral otherwise prohibited by the terms and conditions
hereof.  Such repayments shall be
applied, (x) first, to the Revolving Advances in such order as Agent may
determine, subject to Borrowers’ ability to reborrow Revolving Advances in
accordance with the terms hereof and (y) second, to the extent required
under Section 3.2(b), as cash collateral in an amount of one
hundred and five percent (105%) of outstanding Letter of Credit Obligations
pursuant to arrangements satisfactory to Agent.

 

2.14.                                                Use
of Proceeds.

 

Each Borrower shall apply the proceeds of the
Revolving Advances made on and after the Closing Date solely for such
Borrower’s general corporate purposes to the extent not prohibited by this
Agreement.

 

2.15.                                                Defaulting
Lender.

 

(a)                                  Notwithstanding
anything to the contrary contained herein, in the event any Lender (x) has
refused (which refusal constitutes a breach by such Lender of its obligations
under this Agreement) to make available its portion of any Revolving Advance or
(y) notifies either Agent or any Borrower that it does not intend to make
available its portion of any Revolving Advance (if the actual refusal would
constitute a breach by such Lender of its obligations under this Agreement)
(each, a “Lender Default”), all rights and obligations hereunder of such
Lender (a “Defaulting Lender”) as to which a Lender Default is in effect
and of the other parties hereto shall be modified to the extent of the express
provisions of this Section 2.15 while such Lender Default remains
in effect.

 

(b)                                 Revolving
Advances shall be incurred pro rata from Lenders (the “Non-Defaulting
Lenders”) which are not Defaulting Lenders based on their respective
Commitment Percentages, and no Commitment Percentage of any Lender or any pro
rata share of any Revolving Advances required to be advanced by any Lender
shall be increased as a result of such Lender Default.  Amounts received in respect of principal of
any type of Revolving Advances shall be applied to reduce the applicable
Revolving Advances of each Lender pro rata based on the aggregate of the
outstanding Revolving Advances of that type of all Lenders at the time of such
application; provided, that, such amount shall not be applied to any Revolving
Advances of a Defaulting Lender at any time when, and to the extent that, the aggregate
amount of Revolving Advances of any Non-

 

39

 

Defaulting Lender exceeds such Non-Defaulting Lender’s Commitment
Percentage of all Revolving Advances then outstanding.

 

(c)                                  A
Defaulting Lender shall not be entitled to give instructions to Agent or to
approve, disapprove, consent to or vote on any matters relating to this
Agreement and the Other Documents.  All
amendments, waivers and other modifications of this Agreement and the Other
Documents may be made without regard to a Defaulting Lender and, for purposes
of the definition of “Required Lenders”, a Defaulting Lender shall be deemed
not to be a Lender and not to have either Advances outstanding or a Commitment
Percentage.

 

(d)                                 Other
than as expressly set forth in this Section 2.15, the rights and
obligations of a Defaulting Lender (including the obligation to indemnify
Agent) and the other parties hereto shall remain unchanged.  Nothing in this Section 2.15
shall be deemed to release any Defaulting Lender from its obligations under
this Agreement and the Other Documents, shall alter such obligations, shall
operate as a waiver of any default by such Defaulting Lender hereunder, or
shall prejudice any rights which any Borrower, Agent or any Lender may have
against any Defaulting Lender as a result of any default by such Defaulting
Lender hereunder.

 

(e)                                  In
the event a Defaulting Lender retroactively cures to the satisfaction of Agent
the breach which caused a Lender to become a Defaulting Lender, such Defaulting
Lender shall no longer be a Defaulting Lender and shall be treated as a Lender
under this Agreement.

 

III.                                 INTEREST
AND FEES.

 

3.1.                                                      Interest.

 

Interest on Revolving Advances shall be payable to
Agent for the benefit of Lenders in arrears on the first day of each month with
respect to Domestic Rate Loans and, with respect to Eurodollar Rate Loans, at
the end of each Interest Period or, for Eurodollar Rate Loans with an Interest
Period in excess of three months, at the earlier of (a) each three months after
the anniversary date of the commencement of such Eurodollar Rate Loan or (b)
the end of the Interest Period.  Interest
charges shall be computed on the actual principal amount of Revolving Advances
outstanding during the month (the “Monthly Advances”) at a rate per
annum equal to the applicable Revolving Interest Rate.  Whenever, subsequent to the date of this
Agreement, the Base Rate is increased or decreased, the applicable Revolving
Interest Rate for Domestic Rate Loans shall be similarly changed without notice
or demand of any kind by an amount equal to the amount of such change in the
Base Rate during the time such change or changes remain in effect.  Upon and after the occurrence of an Event of
Default, and during the continuation thereof, at the option of Agent, (i) the
Obligations other than Eurodollar Rate Loans shall bear interest at the
applicable Revolving Interest Rate plus two percent (2.0%) per annum and
(ii) Eurodollar Rate Loans shall bear interest at the applicable Revolving
Interest Rate for Eurodollar Rate Loans plus two percent (2.0%) per
annum (as applicable, the “Default Rate”).

 

3.2.                                                      Letter
of Credit Fees; Cash Collateral.

 

(a)                                  Borrowers
shall pay (x) to Agent, for the benefit of Lenders, fees for each Letter of
Credit for the period from and excluding the date of issuance of same to and
including the date of expiration or termination, equal to the average daily
face amount of each outstanding Letter

 

40

 

of Credit multiplied by (i) a per annum rate equal to the Eurodollar
Rate Loan Applicable Margin at the time of issuance with respect to Standby
Letters of Credit and (ii) a per annum rate equal to the Eurodollar Rate Loan
Applicable Margin at the time of issuance with respect to Documentary Letters
of Credit, such fees to be calculated on the basis of a 360-day year for the
actual number of days elapsed and to be payable monthly in arrears on the first
day of each month and on the last day of the Term and (y) to Agent for the
benefit of the Issuer, any and all fees and expenses as agreed upon by the
Issuer and any Borrower in connection with any Letter of Credit, including,
without limitation, in connection with the opening, amendment or renewal of any
such Letter of Credit and shall reimburse Agent for any and all fees and
expenses, if any, paid by Agent to the Issuer (all of the foregoing fees, the “Letter
of Credit Fees”).  All Letter of
Credit Fees payable hereunder shall be deemed earned in full on the date when
the same are due and payable hereunder and shall not be subject to rebate or
proration upon the termination of this Agreement for any reason.  Any such charge in effect at the time of a
particular transaction shall be the charge for that transaction,
notwithstanding any subsequent change in the Issuer’s prevailing charges for
that type of transaction.  Upon and after
the occurrence of an Event of Default, and during the continuation thereof, the
Agent may, at its option, increase the Letter of Credit Fees under the
foregoing clause (x) by two percent (2.0%) per annum.

 

(b)                                 Upon
the occurrence of an Event of Default which is continuing, Borrowers will cause
cash to be deposited and maintained in an account with Agent, as cash
collateral, in an amount equal to one hundred and five percent (105%) of the
outstanding Letters of Credit, and each Borrower hereby irrevocably authorizes
Agent, in its discretion, on such Borrower’s behalf and in such Borrower’s
name, to open such an account and to make and maintain deposits therein, or in
an account opened by such Borrower, in the amounts required to be made by
Borrowers, out of the proceeds of Receivables or other Collateral or out of any
other funds of such Borrower coming into any Lender’s possession at any time.  Agent will invest such cash collateral (less
applicable reserves) in such short-term money-market items as to which Agent
and such Borrower mutually agree and the net return on such investments shall
be credited to such account and constitute additional cash collateral.  Upon the occurrence of an Event of Default
which is continuing, no Borrower may withdraw amounts credited to any such
account.

 

3.3.                                                      Loan
Fees.

 

(a)                                  Facility
Fee.  If, for any month during the
Term, the average daily unpaid balance of the Advances for each day of such
month does not equal the Maximum Revolving Advance Amount, then Borrowers shall
pay to Agent for the ratable benefit of Lenders a fee at a rate equal to
one-half of one percent (1/2 %) per annum on the amount by which the Maximum
Revolving Advance Amount exceeds such average daily unpaid balance.  Such fee shall be payable to Agent in arrears
on the first day of each month.

 

(b)                                 Borrowers
shall pay the fees as set forth in the Fee Letter in accordance with the terms
thereof.

 

3.4.                                                      Computation
of Interest and Fees.

 

Interest and fees hereunder shall be computed on the
basis of a year of 360 days and for the actual number of days elapsed.  If any payment to be made hereunder becomes
due and payable on a day other than a Business Day, the due date thereof shall
be extended to the next succeeding Business Day and interest thereon shall be
payable at the applicable Revolving Interest Rate during such extension.

 

41

 

3.5.                                                      Maximum
Charges.

 

In no event whatsoever shall interest and other
charges charged hereunder exceed the highest rate permissible under law.  In the event interest and other charges as
computed hereunder would otherwise exceed the highest rate permitted under law,
such excess amount shall be first applied to any unpaid principal balance owed
by Borrowers, and if the then remaining excess amount is greater than the
previously unpaid principal balance, Lenders shall promptly refund such excess
amount to Borrowers and the provisions hereof shall be deemed amended to
provide for such permissible rate.

 

3.6.                                                      Increased
Costs.

 

In the event that any introduction of or change in any
applicable law, treaty or governmental regulation, or any change therein or in
the interpretation or application thereof, or compliance by any Lender (for
purposes of this Section 3.6, the term “Lender” shall include Agent
or any Lender and any corporation or bank controlling Agent or any Lender) and
the office or branch where Agent or any Lender (as so defined) makes or maintains
any Eurodollar Rate Loans with any request or directive (whether or not having
the force of law) from any central bank or other financial, monetary or other
authority, shall:

 

(a)                                  subject
Agent or any Lender to any tax of any kind whatsoever with respect to this
Agreement or any Other Document or change the basis of taxation of payments to
Agent or any Lender of principal, fees, interest or any other amount payable
hereunder or under any Other Documents (except for changes in the rate of tax
on the overall net income of Agent or any Lender by the jurisdiction in which
it maintains its principal office);

 

(b)                                 impose,
modify or hold applicable any reserve, special deposit, assessment or similar
requirement against assets held by, or deposits in or for the account of,
advances or loans by, or other credit extended by, any office of Agent or any
Lender, including (without limitation) pursuant to Regulation D of the Board of
Governors of the Federal Reserve System; or

 

(c)                                  impose
on Agent or any Lender or the London interbank Eurodollar market any other
condition with respect to this Agreement or any Other Document;

 

and the result of any of
the foregoing is to increase the cost to Agent or any Lender of making,
renewing or maintaining its Advances hereunder by an amount that Agent or such
Lender deems to be material or to reduce the amount of any payment (whether of
principal, interest or otherwise) in respect of any of the Advances by an
amount that Agent or such Lender deems to be material, then, in any case Borrowers
shall promptly pay Agent or such Lender, upon its demand, such additional
amount as will compensate Agent or such Lender for such additional cost or such
reduction, as the case may be, provided that the foregoing shall not apply to
increased costs which are reflected in the Adjusted LIBOR Rate.  Agent or such Lender shall certify the amount
of such additional cost or reduced amount to Borrowers, and such certification
shall be conclusive absent manifest error (such amount being hereinafter
referred to as the “Increased Costs”).

 

3.7.                                                      Basis
For Determining Interest Rate Inadequate or Unfair.

 

In the event that Agent
or any Lender shall have determined that:

 

42

 

(a)                                  reasonable
means do not exist for ascertaining the Adjusted LIBOR Rate applicable pursuant
to Section 2.2 for any Interest Period; or

 

(b)                                 Dollar
deposits in the relevant amount and for the relevant maturity are not available
in the London interbank Eurodollar market, with respect to an outstanding
Eurodollar Rate Loan, a proposed Eurodollar Rate Loan, or a proposed conversion
of a Domestic Rate Loan into a Eurodollar Rate Loan,

 

then Agent shall give the
Borrowers prompt written, telephonic or telegraphic notice of such
determination.  If such notice is given,
(i) any such requested Eurodollar Rate Loan shall be made as a Domestic Rate
Loan, unless the applicable Borrower shall notify Agent no later than 10:00
a.m. (New York time) two (2) Business Days prior to the date of such proposed
borrowing, that its request for such borrowing shall be cancelled or made as an
unaffected type of Eurodollar Rate Loan, (ii) any Domestic Rate Loan or
Eurodollar Rate Loan which was to have been converted to or continued as an
affected type of Eurodollar Rate Loan shall be continued as or converted into a
Domestic Rate Loan, or, if applicable Borrower shall notify Agent, no later
than 10:00 a.m. (New York time) two (2) Business Days prior to the proposed
conversion or continuation, shall be maintained as an unaffected type of
Eurodollar Rate Loan, and (iii) any outstanding affected Eurodollar Rate Loans
shall be converted into a Domestic Rate Loan, or, if applicable Borrower shall
notify Agent, no later than 10:00 a.m. (New York time) two (2) Business Days
prior to the last Business Day of the then current Interest Period applicable
to such affected Eurodollar Rate Loan, shall be converted into an unaffected
type of Eurodollar Rate Loan, on the last Business Day of the then current
Interest Period for such affected Eurodollar Rate Loans.  Until such notice has been withdrawn, Lenders
shall have no obligation to make an affected type of Eurodollar Rate Loan or
maintain outstanding affected Eurodollar Rate Loans and no Borrower shall have
the right to convert a Domestic Rate Loan or an unaffected type of Eurodollar
Rate Loan into an affected type of Eurodollar Rate Loan.

 

3.8.                                                      Capital
Adequacy.

 

(a)                                  In
the event that Agent or any Lender shall have determined that any introduction
of or change in any applicable law, rule, regulation or guideline regarding
capital adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by Agent or any Lender (for purposes of this Section 3.8,
the term “Lender” shall include Agent or any Lender and any corporation or bank
controlling Agent or any Lender) and the office or branch where Agent or any
Lender (as so defined) makes or maintains any Eurodollar Rate Loans with any
request or directive regarding capital adequacy (whether or not having the
force of law) of any such authority, central bank or comparable agency, has or
would have the effect of reducing the rate of return on Agent’s or any Lender’s
capital as a consequence of its obligations hereunder to a level below that
which Agent or such Lender could have achieved but for such adoption, change or
compliance (taking into consideration Agent’s and each Lender’s policies with
respect to capital adequacy) by an amount deemed by Agent or any Lender to be
material, then, from time to time, Borrowers shall pay upon demand to Agent or
such Lender such additional amount or amounts as will compensate Agent or such
Lender for such reduction.  In
determining such amount or amounts, Agent or such Lender may use any reasonable
averaging or attribution methods.  The
protection of this Section 3.8 shall be available to Agent and each
Lender regardless of any possible contention of invalidity or inapplicability
with respect to the applicable law, regulation or condition.

 

43

 

(b)                                 A
certificate of Agent or such Lender setting forth such amount or amounts as
shall be necessary to compensate Agent or such Lender with respect to Section 3.8(a)
when delivered to Borrowers shall be conclusive absent manifest error (such
amount being hereinafter referred to as the “Capital Adequacy Costs”).

 

3.9.                                                      Taxes.

 

(a)                                  Any
and all payments by the Loan Parties to each Lender or the Agent under this
Agreement and any Other Document shall be made free and clear of, and without
deduction or withholding for any Taxes. 
In addition, each Borrower shall pay all Other Taxes.

 

(b)                                 Each
Loan Party agrees to indemnify and hold harmless each Lender and the Agent for
the full amount of Taxes or Other Taxes (including any Taxes or Other Taxes
imposed by any jurisdiction on amounts payable under this Section 3.9)
paid by any Lender or the Agent and any liability (including penalties,
interest, additions to tax and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted.  Payment under this
indemnification shall be made within 30 days after the date such Lender or the
Agent makes written demand therefor.

 

(c)                                  If
any Loan Party shall be required by law to deduct or withhold any Taxes or
Other Taxes from or in respect of any sum payable hereunder to any Lender or
the Agent, then:

 

(i)                                     the
sum payable shall be increased as necessary so that after making all required
deductions and withholdings (including deductions and withholdings applicable
to additional sums payable under this Section 3.9) such Lender or
the Agent, as the case may be, receives an amount equal to the sum it would
have received had no such deductions or withholdings been made;

 

(ii)                                  such
Loan Party shall make such deductions and withholdings;

 

(iii)                               such
Loan Party shall pay the full amount deducted or withheld to the relevant
taxing authority or other authority in accordance with applicable law; and

 

(iv)                              such
Loan Party shall also pay to each Lender or the Agent for the account of such
Lender, at the time interest is paid, all additional amounts which the
respective Lender specifies as necessary to preserve the after-tax yield such
Lender would have received if such Taxes or Other Taxes had not been imposed.

 

(d)                                 At
the Agent’s request, within 30 days after the date of any payment by any Loan
Party of Taxes or Other Taxes, such Loan Party shall furnish the Agent the
original or a certified copy of a receipt evidencing payment thereof, or other
evidence of payment satisfactory to the Agent.

 

(e)                                  Any
Lender that is entitled to an exemption from or reduction of withholding tax
under the law of the jurisdiction in which any Loan Party is resident for tax
purposes, or under any treaty to which such jurisdiction is a party, with
respect to payments hereunder or under any Other Document shall, to the extent
it may lawfully do so, deliver to such Loan Party (with a copy to the Agent),
at the time or times prescribed by applicable requirements of law or reasonably
requested by such Loan Party or the Agent, such properly completed and executed
documentation prescribed

 

44

 

by applicable requirements of law as will permit such payments to be
made without withholding or at a reduced rate of withholding.  In addition, any Lender, if requested by any
Loan Party or the Agent, shall deliver such other documentation prescribed by
applicable requirements of law or reasonably requested by such Loan Party or
the Agent as will enable such Loan Party or the Agent to determine whether or
not such Lender is subject to backup withholding or information reporting requirements.

 

(f)                                    If
any Loan Party pays any additional amounts under this Section 3.9 to a
Lender and such Lender determines in its reasonable discretion that it has
actually received or realized in connection therewith any refund or any
reduction of, or credit against, its Tax liabilities in or with respect to the
taxable year in which the additional amount is paid (a “Tax Benefit”),
such Lender shall pay to such Loan Party an amount that such Lender shall, in
its reasonable discretion, determine is equal to the net benefit, after tax,
which was obtained by such Lender in such year as a consequence of such Tax
Benefit; provided, however, if an Event of Default has occurred
and is continuing, any such amount shall be applied to repay the Advances and
if a Default has occurred, such amount shall not be paid to the Loan Party
until such Default is cured within any applicable grace period or is waived in
writing by Agent.

 

3.10.                                                Additional
Costs.

 

If any Loan Party is
required to pay additional amounts to any Lender or the Agent pursuant to subsection (c)
of Section 3.9 (such amounts, together with the Increased Costs and
Capital Adequacy Costs, collectively, the “Additional Costs”) then such Lender
shall use reasonable efforts (consistent with legal and regulatory
restrictions) to change the jurisdiction of its lending office so as to
eliminate any such additional payments by such Loan Party of Additional Costs
which may thereafter accrue, if such change in the judgment of such Lender is
not otherwise disadvantageous to such Lender. 
If any Lender (as defined in Section 3.6 or 3.8) fails to give
notice within 60 days after it obtains knowledge of an event giving rise to the
payment of Increased Costs or Capital Adequacy Costs, the Lender shall, with
respect to compensation payable from such event, only be entitled to payment
for such costs incurred from and after the date which is 60 days prior to the
date that the Lender gives such notice.

 

3.11.                                                Substitution
of Lenders.

 

(a)                                  If
any Lender (an “Affected Lender”) makes demand upon any Loan Party for
(or if any Loan Party is otherwise required to pay) any Additional Costs
pursuant to Sections 3.6, 3.8 and/or 3.9, the Loan Parties may, within
thirty (30) days of receipt of such demand, give written notice (a “Substitution
Notice”) to the Agent and to each Lender of its intention to replace such
Affected Lender with another financial institution (a “Substitute Lender”)
designated in such Substitution Notice. 
If, within thirty (30) days of Agent’s receipt of such Substitution
Notice, (x) Agent shall notify Loan Parties and each Lender in writing that
such Substitute Lender is reasonably satisfactory to the Agent and the Lenders,
other than such Affected Lender, and (y) such Affected Lender shall not agree
to waive the payment of such Additional Costs, then such Affected Lender shall,
so long as no Default or Event of Default exists, assign all of its rights and
obligations under this Agreement and the Other Documents to such Substitute
Lender, and such Substitute Lender shall assume all of such Affected Lender’s
rights and obligations, pursuant to an agreement, substantially in the form of
the Commitment Transfer Supplement attached hereto as Exhibit
17.3, executed by such Affected Lender and such Substitute
Lender.  Upon the effective date of such
Commitment Transfer Supplement, such Substitute Lender shall become a party to
this Agreement and shall have all the rights and obligations of a Lender as set
forth in such Commitment Transfer Supplement, and

 

45

 

such Affected Lender shall be released from its obligations hereunder,
and no further consent or action by any party shall be required.  If such Substitute Lender is not incorporated
under the laws of the United States of America or a State thereof, it shall,
prior to the first date on which interest or fees are payable hereunder for its
account, deliver to the Loan Parties and Agent certification as to its
exemption from the deduction or withholding of any United States federal income
taxes.

 

(b)                                 Loan
Parties, Agent and Lenders shall execute such modifications to this Agreement
and the Other Documents as shall, in the reasonable judgment of Agent, be
necessary or desirable in connection with the substitution of Lenders in accordance
with subsection (a) of this Section 3.11.

 

IV.                                 COLLATERAL:
GENERAL TERMS.

 

4.1.                                                      Security
Interest in the Collateral.

 

Each Loan Party hereby acknowledges, confirms and
agrees that Agent, for its benefit and for the ratable benefit of each Lender
and each Issuer, has a continuing security interest in, and Lien upon, the
Collateral as heretofore granted to Agent pursuant to the Existing Loan
Agreement, and that such security interest and Lien continues notwithstanding
the amendment and restatement of the Existing Loan Agreement.  In addition to and without limiting the
foregoing, to secure the prompt payment and performance to Agent, each Issuer
and each Lender of the Obligations, each Loan Party hereby assigns, pledges and
grants, to Agent for the ratable benefit of Agent, each Issuer and each Lender,
a continuing security interest in and to all of its Collateral, whether now
owned or existing or hereafter acquired or arising and wheresoever
located.  Each Loan Party shall mark its
books and records as may be necessary or appropriate to evidence, protect and
perfect Agent’s security interest and shall cause its financial statements to
reflect such security interest. 
Notwithstanding any other provision herein, the priority of the Lien of
the Agent in the Collateral described in clause (c)(vi) in the definition of
Collateral shall at all times be subject to the terms of the Intercreditor
Agreement.

 

4.2.                                                      Perfection
of Security Interest.

 

(a)                                  Each
Loan Party shall take all action that may be necessary or desirable, or that
Agent may request, so as at all times to maintain the validity, perfection,
enforceability and priority of Agent’s security interest in the Collateral or
to enable Agent to protect, exercise or enforce its rights hereunder and in the
Collateral, in each case to the extent then applicable in the reasonable
judgment of Agent to the Collateral, including, but not limited to, (i)
immediately discharging all Liens other than Permitted Encumbrances, (ii)
obtaining landlords’ or mortgagees’ lien waivers, (iii) delivering to Agent,
endorsed or accompanied by such instruments of assignment as Agent may specify,
and stamping or marking, in such manner as Agent may specify, any and all
chattel paper, instruments, letters of credits and advices thereof and
documents evidencing or forming a part of the Collateral, (iv) entering into
warehousing, lockbox, bailee and other custodial arrangements satisfactory to
Agent, and (v) executing and delivering financing statements, instruments of
pledge, mortgages, notices and assignments, in each case in form and substance
satisfactory to Agent, relating to the creation, validity, perfection,
maintenance or continuation of Agent’s security interest in the Collateral
under the UCC or other applicable law.

 

(b)                                 The
Agent may at any time and from time to time file, without the signature of any
Loan Party in accordance with Section 9-509 of the UCC, financing
statements, continuation statements and amendments thereto that describe the
Collateral and which contain any other

 

46

 

information required by the UCC for the sufficiency or filing office
acceptance of any financing statements, continuation statements or
amendments.  Each Loan Party agrees to
furnish any such information to Agent promptly upon request.

 

(c)                                  Each
Loan Party shall, at any time and from time to time, take such steps as Agent
may reasonably request (provided that, solely in the case of clauses (i) and
(ii) hereof, any such steps shall be commercially reasonable) (i) to obtain
an acknowledgment, in form and substance reasonably satisfactory to Agent, of
any bailee having possession of any of the Collateral, stating that the bailee
holds such Collateral for Agent, (ii) to obtain “control” of any letter-of-credit
rights, deposit accounts or electronic chattel paper (as such terms are defined
in the UCC with corresponding provisions thereof defining what constitutes
“control” for such items of Collateral), with any agreements establishing
control to be in form and substance reasonably satisfactory to Agent, and (iii)
otherwise to insure the continued perfection and priority of Agent’s security
interest in any of the Collateral for the benefit of the Lenders and of its
rights therein.  If any Loan Party shall
at any time, acquire a “commercial tort claim” (as such term is defined in the
UCC) described in clause (c)(vii) of the definition of the Collateral excess of
$100,000, such Loan Party shall promptly notify Agent thereof in writing,
therein providing a reasonable description and summary thereof, and upon
delivery thereof to Agent, such Loan Party shall be deemed to thereby grant to
Agent for the benefit of the Lenders (and each Loan Party hereby grants to
Agent, for the benefit of each Lender) a security interest and lien in and to
such commercial tort claim and all proceeds thereof, all upon the terms of and
governed by this Agreement.

 

(d)                                 Each
Loan Party hereby confirms and ratifies all UCC financing statements filed by
Agent with respect to such Loan Party on or prior to the date of this Agreement
to the extent the foregoing describes the Collateral in which Agent has been
granted a Lien.

 

(e)                                  All
charges, expenses and fees Agent may incur in doing any of the foregoing, and
any local taxes relating thereto, shall be charged to the applicable Borrowers’
Account as a Revolving Advance and added to the Obligations, or, at Agent’s
option, shall be paid to Agent for the ratable benefit of Lenders immediately
upon demand.

 

4.3.                                                      Disposition
of Collateral.

 

Each Loan Party will safeguard and protect all
Collateral for Agent’s general account and make no disposition thereof whether
by sale, lease or otherwise except the sale of Inventory in the ordinary course
of business (which shall be governed by the provisions of Section 4.15(h))
and as otherwise permitted under Section 7.1(b)).

 

4.4.                                                      Preservation
of Collateral.

 

In addition to the rights and remedies set forth in Section 11.1,
Agent: (a) may at any time take such steps as Agent deems necessary to protect
Agent’s interest in and to preserve the Collateral, including the hiring of
such security guards or the placing of other security protection measures as
Agent may deem appropriate; (b) may employ and maintain at any Loan Party’s
premises a custodian who shall have full authority to do all acts necessary to
protect Agent’s interests in the Collateral; (c) may lease warehouse facilities
to which Agent may move all or part of the Collateral; (d) may use any Loan
Party’s owned or leased lifts, hoists, trucks and other facilities or equipment
for handling or removing the Collateral; and (e) shall have, and is hereby
granted, a right of ingress and egress to the places where the Collateral is
located, and may proceed over and through

 

47

 

any Loan Party’s owned or leased property.  Each Loan Party shall cooperate fully with
all of Agent’s efforts to preserve the Collateral and will take such actions to
preserve the Collateral as Agent may direct. 
All of Agent’s out-of-pocket expenses of preserving the Collateral,
including any expenses relating to the bonding of a custodian, shall be charged
to the applicable Borrowers’ Account as a Revolving Advance and added to the
Obligations.

 

4.5.                                                      Ownership
of Collateral.

 

With respect to the Collateral, at the time the
Collateral becomes subject to Agent’s security interest: (a) each Loan
Party shall be the sole owner of and fully authorized and able to sell,
transfer, pledge and/or grant a first priority security interest in each and
every item of its respective Collateral to Agent; and, except for Permitted
Encumbrances the Collateral shall be free and clear of all Liens and
encumbrances whatsoever; (b) each document and agreement executed by each Loan
Party or delivered to Agent or any Lender in connection with this Agreement
shall be true and correct in all material respects; (c) all signatures and
endorsements of each Loan Party that appear on such documents and agreements
shall be genuine and each Loan Party shall have full capacity to execute same;
and (d) each Loan Party’s Inventory (except Inventory in transit to a
location set forth on Schedule 4.5
in the ordinary course of such Loan Party’s business) shall be located as set
forth on Schedule 4.5 and shall
not be removed from such location(s) without the prior written consent of Agent
except with respect to the sale of Inventory in the ordinary course of business
and with respect to any new location in the United States of America of which
the Loan Parties have given the Agent thirty (30) days prior written notice.

 

4.6.                                                      Defense
of Agent’s and Lenders’ Interests.

 

Until (a) payment and performance in full of all of
the Obligations and (b) the irrevocable termination of this Agreement, Agent’s
interests in the Collateral shall continue in full force and effect.  During such period no Loan Party shall,
without Agent’s prior written consent, pledge, sell (except Inventory in the
ordinary course of business or as permitted under Section 7.1(b)), assign,
transfer, create or suffer to exist a Lien upon or encumber or allow or suffer
to be encumbered in any way except for Permitted Encumbrances, any part of the
Collateral.  Each Loan Party shall defend
Agent’s interests in the Collateral against any and all Persons whatsoever,
other than with respect to Permitted Encumbrances.  At any time following and during the
continuance of an Event of Default, Agent shall have the right to take
possession of the indicia of the Collateral and the Collateral in whatever
physical form contained, including without limitation: labels, stationery,
documents, instruments and advertising materials.  If Agent exercises this right to take
possession of the Collateral, Loan Parties shall, upon demand, assemble it in a
commercially reasonable manner and make it available to Agent at a place
reasonably convenient to Agent.  In
addition, with respect to all Collateral, Agent and Lenders shall be entitled
to all of the rights and remedies set forth herein and further provided by the
UCC or other applicable law.  At any time
following the occurrence and during the continuance  of an Event of Default, each Loan Party
shall, and Agent may, at its option, instruct all suppliers, carriers,
forwarders, warehouses or others receiving or holding cash, checks, Inventory,
documents or instruments in which Agent holds a security interest to deliver
same to Agent and/or subject to Agent’s order and if they shall come into any
Loan Party’s possession, they, and each of them, shall be held by such Loan
Party in trust as Agent’s trustee, and such Loan Party will immediately deliver
them to Agent in their original form together with any necessary endorsement.

 

48

 

4.7.                                                      Books
and Records.

 

Each Loan Party shall (a) on a commercially reasonable
basis, keep proper books of record and account in which full, true and correct
entries will be made of all dealings or transactions of or in relation to its
business and affairs; (b) on a commercially reasonable basis, set up on its
books accruals with respect to all taxes, assessments, charges, levies and
claims; and (c) on a reasonably current basis, set up on its books, from its
earnings, allowances against doubtful Receivables, advances and Investments and
all other proper accruals (including without limitation by reason of
enumeration, accruals for premiums, if any, due on required payments and
accruals for depreciation, obsolescence, or amortization of properties), which
should be set aside from such earnings in connection with its business.  All determinations pursuant to this Section 4.7
shall be made in accordance with, or as required by, GAAP consistently applied
in the opinion of the Accountants.

 

4.8.                                                      Financial
Disclosure.

 

Each Loan Party hereby irrevocably authorizes and
directs all accountants and auditors employed by such Loan Party at any time
during the Term to exhibit and deliver to Agent and each Lender copies of any
of the Loan Party’s financial statements, trial balances or other accounting
records of any sort in the accountant’s or auditor’s possession, and to
disclose to Agent and each Lender any information such accountants may have
concerning such Loan Party’s financial status and business operations.  Each Loan Party hereby authorizes all
federal, state and municipal authorities to furnish to Agent and each Lender
copies of reports or examinations relating to such Loan Party, whether made by
such Loan Party or otherwise; however, Agent and each Lender will attempt to
obtain such information or materials directly from such Loan Party prior to
obtaining such information or materials from such accountants or such
authorities.

 

4.9.                                                      Compliance
with Laws.

 

Each Loan Party shall comply in all material respects
with all acts, rules, regulations and orders of any legislative, administrative
or judicial body or official applicable to its respective Collateral or any
part thereof or to the operation of such Loan Party’s business the
non-compliance with which could reasonably be expected to have a Material
Adverse Effect.  Each Loan Party may,
however, contest or dispute any acts, rules, regulations, orders and directions
of those bodies or officials in any reasonable manner, provided any Lien
arising therefrom is a Permitted Encumbrance and sufficient reserves are
established to the reasonable satisfaction of Agent to protect Agent’s Lien on
the Collateral. The Collateral at all times shall be maintained in accordance
with the requirements of all insurance carriers which provide insurance with
respect to the Collateral so that such insurance shall remain in full force and
effect.

 

4.10.                                                Inspection
of Premises.

 

Upon two (2) days prior written notice, at all
reasonable times during normal business hours, Agent and each Lender shall have
full access to and the right to audit, check, inspect and make abstracts and
copies from each Loan Party’s books, records, audits, correspondence and all
other papers relating to the Collateral and the operation of each Loan Party’s
business; provided, however, in the event that an Event of
Default has occurred and is continuing, the Loan Parties shall hereby be deemed
to have waived such two (2) days prior written notice requirement and such
requirement regarding normal business hours. 
Agent, any Lender and their agents may enter upon any of Loan Party’s
premises upon two (2) days prior written notice at any time during business
hours, and from time to time, for the purpose of inspecting the Collateral and
any and all records

 

49

 

pertaining thereto and the operation of such Loan
Party’s business; provided, however, in the event that an Event
of Default has occurred and is continuing, the Loan Parties shall hereby be
deemed to have waived such two (2) days prior written notice requirement and
such requirement regarding normal business hours.

 

4.11.                                                Insurance.

 

Each Loan Party maintains and shall continue to
maintain adequate insurance policies and shall provide Agent with evidence of
such insurance coverage for public liability, property damage, product
liability, and business interruption with respect to its business and
properties and the business and properties of its Subsidiaries against loss or
damage of the kinds customarily carried or maintained by corporations of
established reputation engaged in similar businesses and in amounts acceptable
to Agent.  Each Loan Party shall cause
Agent at all times be named as loss payee on all insurance policies relating to
any Collateral and shall cause Agent at all times be named as additional insured
under all liability policies, in each case pursuant to appropriate endorsements
in form and substance satisfactory to Agent and shall collaterally assign to
Agent, for itself and on behalf of Lenders, as security for the payment of the
Obligations all business interruption insurance of Loan Parties.  No notice of cancellation has been received
with respect to such policies and each Loan Party and each of their respective
Subsidiaries is in compliance with all conditions contained in such policies.  Any proceeds received from any policies of
insurance relating to any Collateral shall be applied to the Obligations to the
extent set forth in Section 2.13. 
Each Loan Party shall provide Agent evidence of the insurance coverage
and of the assignments and endorsements required by this Agreement immediately
upon request by Agent and upon renewal of any existing policy.  If any Loan Party elects to change insurance
carriers, policies or coverage amounts, such Loan Party shall notify Agent and
provide Agent with evidence of the updated insurance coverage and of the
assignments and endorsements required by this Agreement.  In the event any Loan Party fails to provide
Agent with evidence of the insurance coverage required by this Agreement, Agent
may, but is not required to, purchase insurance at such Loan Party’s expense to
protect Agent’s and the Lenders’ interests in the Collateral.  This insurance may, but need not, protect
such Loan Party’s interests.  The
coverage purchased by Agent may, but need not, pay any claim made by any Loan
Party or any claim that is made against any Loan Party in connection with the
Collateral.  The applicable Loan Party
may later cancel any insurance purchased by Agent, but only after providing
Agent with evidence that such Loan Party has obtained insurance as required by
this Agreement.  If Agent purchases
insurance for the Collateral, the Loan Parties will be responsible for the
costs of that insurance, including interest thereon and other charges imposed
on Agent in connection with the placement of the insurance, until the effective
date of the cancellation or expiration of the insurance, and such costs may be
added to the Obligations.  The costs of
the insurance may be more than the cost of insurance any Loan Party is able to
obtain on its own.

 

4.12.                                                Failure
to Pay Insurance.

 

If any Loan Party fails to obtain insurance as
hereinabove provided, or to keep the same in force, Agent, if Agent so elects,
may obtain such insurance and pay the premium therefor for Borrowers’ Account,
and charge Borrowers’ Account therefor and such expenses so paid shall be part
of the Obligations.

 

50

 

4.13.                                                Payment
of Taxes.

 

Each Loan Party will pay, when due, all material
taxes, assessments and other Charges lawfully levied or assessed upon such Loan
Party or any of the Collateral including, without limitation, real and personal
property taxes, assessments and charges and all franchise, income, employment,
social security benefits, withholding, and sales taxes.  If any tax by any governmental authority is
or may be imposed on or as a result of any transaction between any Loan Party
and Agent or any Lender which Agent or any Lender may be required to withhold
or pay or if any taxes, assessments, or other Charges remain unpaid after the
date fixed for their payment, or if any claim shall be made which, in Agent’s
or any Lender’s opinion, may possibly create a valid Lien on the Collateral,
Agent may without notice to Loan Parties pay the taxes, assessments or other
Charges and each Loan Party hereby indemnifies and holds Agent and each Lender
harmless in respect thereof.  Agent will
not pay any taxes, assessments or Charges to the extent that any Loan Party has
contested or disputed those taxes, assessments or Charges in good faith, by
expeditious protest, administrative or judicial appeal or similar proceeding
provided that any Lien arising therefrom is a Permitted Encumbrance and
sufficient reserves are established to the reasonable satisfaction of Agent to
protect Agent’s security interest in or Lien on the Collateral.  The amount of any payment by Agent under this
Section 4.13 shall be charged to Borrowers’ Account as a Revolving
Advance and added to the Obligations and, until Loan Parties shall furnish
Agent with an indemnity therefor (or supply Agent with evidence satisfactory to
Agent that due provision for the payment thereof has been made), Agent may hold
without interest any balance standing to Loan Parties’ credit and Agent shall
retain its security interest in any and all Collateral held by Agent.

 

4.14.                                                Payment
of Leasehold Obligations.

 

Each Loan Party shall at all times pay, when and as
due, its rental obligations under all leases under which it is a tenant, and
shall otherwise comply, in all material respects, with all other terms of such
leases and keep them in full force and effect and, at Agent’s request will
provide evidence of having done so.

 

4.15.                                                Receivables.

 

(a)                                  Nature
of Receivables.  Each of the
Receivables shall be a bona fide and valid account representing a bona fide
liability incurred by the Customer therein named, for a fixed sum as set forth
in the invoice relating thereto (provided immaterial or unintentional invoice
errors shall not be deemed to be a breach hereof) with respect to an absolute
sale or lease and delivery of goods upon stated terms of a Loan Party, or work,
labor or services theretofore rendered by a Loan Party as of the date each
Receivable is created.  Same shall be due
and owing in accordance with the applicable Loan Party’s standard terms of sale
(including standard discounts and similar items in each case as indicated on
the applicable invoice) without dispute, setoff or counterclaim except as may
be stated on the accounts receivable schedules delivered by Loan Parties to
Agent.

 

(b)                                 Solvency
of Customers.  Each Customer, to each
Loan Party’s knowledge, as of the date each Receivable is created, is solvent
and will be able to pay all Receivables on which the Customer is obligated in
full when due or with respect to such Customers of any Loan Party who are not
solvent such Loan Party has set up on its books and in its financial records
bad debt reserves adequate to cover such Receivables.

 

(c)                                  Locations
of Loan Party.  Each Loan Party’s
chief executive office is located at the addresses set forth on Schedule 4.15(c).  Each Loan Party’s books and records are
located at the addresses set forth on Schedule 4.15(c)
and until written notice is given to Agent by any

 

51

 

Borrower of any other office at which any Loan Party keeps its records
pertaining to Receivables, all such records shall be kept at such addresses
listed on Schedule 4.15(c).

 

(d)                                 Collection
of Receivables.  Until any Loan
Party’s authority to do so is terminated by Agent (which notice Agent may give
at any time following the occurrence and during the continuance of an Event of
Default, each Loan Party will, at such Loan Party’s sole cost and expense, but
subject to the Lien of Agent, collect all amounts received on Receivables.  Each Loan Party shall deposit in the Blocked
Account or, upon request by Agent after the occurrence and during the
continuance of an Event of Default, deliver to Agent, in original form and on
the date of receipt thereof, all checks, drafts, notes, money orders,
acceptances, cash and other evidence of Indebtedness.

 

(e)                                  Notification
of Assignment of Receivables.  At any
time following the occurrence and during the continuance of an Event of
Default, Agent shall have the right to send notice of the assignment of, and
Agent’s security interest in, the Receivables to any and all Customers or any
third party holding or otherwise concerned with any of the Collateral.  Thereafter, Agent shall have the sole right
to collect the Receivables, take possession of the Collateral, or both.  Agent’s actual collection expenses,
including, but not limited to, stationery and postage, telephone and telecopy,
secretarial and clerical expenses and the salaries of any collection personnel
used for collection, may be charged to Borrowers’ Account and added to the
Obligations.

 

(f)                                    Power
of Agent to Act on Loan Parties’ Behalf. 
Agent shall have the right to receive, endorse, assign and/or deliver in
the name of Agent or any Loan Party any and all checks, drafts and other
instruments for the payment of money relating to the Receivables, and each Loan
Party hereby waives notice of presentment, protest and non-payment of any
instrument so endorsed.  Each Loan Party
hereby constitutes Agent or Agent’s designee as such Loan Party’s attorney with
power (i) to endorse such Loan Party’s name upon any notes, acceptances,
checks, drafts, money orders or other evidences of payment or Collateral; (ii)
to sign such Loan Party’s name on any invoice or bill of lading relating to any
of the Receivables, drafts against Customers, assignments and verifications of
Receivables; (iii) to send verifications of Receivables to any Customer; (iv)
to sign such Loan Party’s name on all financing statements or any other
documents or instruments deemed necessary or appropriate by Agent to preserve,
protect, or perfect Agent’s interest in the Collateral and to file same; (v) to
demand, upon the occurrence and during the continuance of an Event of Default,
payment of the Receivables; (vi) to enforce, upon the occurrence and during the
continuance of an Event of Default, payment of the Receivables by legal
proceedings or otherwise; (vii) to exercise, upon the occurrence and during the
continuance of an Event of Default, all of Loan Parties’ rights and remedies
with respect to the collection of the Receivables and any other Collateral;
(viii) to settle, adjust, compromise, extend or renew, upon the occurrence and
during the continuance of an Event of Default, the Receivables; (ix) to settle,
adjust or compromise, upon the occurrence and during the continuance of an
Event of Default, any legal proceedings brought to collect Receivables; (x) to
prepare, file and sign, upon the occurrence and during the continuance of an
Event of Default, such Loan Party’s name on a proof of claim in bankruptcy or
similar document against any Customer; (xi) to prepare, file and sign, upon the
occurrence and during the continuance of an Event of Default, such Loan Party’s
name on any notice of Lien, assignment or satisfaction of Lien or similar
document in connection with the Receivables; and (xii) to do all other acts and
things necessary to carry out this Agreement. 
All acts of said attorney or designee are hereby ratified and approved,
and said attorney or designee shall not be liable for any acts of omission or commission
nor for any error of judgment or mistake of fact or of law, unless done
maliciously or with gross (not mere) negligence; this power being coupled with
an interest is irrevocable while any of the

 

52

 

Obligations remain unpaid.  Agent
shall have the right at any time following the occurrence and during the
continuance of an Event of Default, to change the address for delivery of mail
addressed to any Loan Party to such address as Agent may designate and to
receive, open and dispose of all mail addressed to any Loan Party.

 

(g)                                 No
Liability.  Neither Agent nor any
Lender shall, under any circumstances or in any event whatsoever, have any
liability for any error or omission or delay of any kind occurring in the
settlement, collection or payment of any of the Receivables or any instrument
received in payment thereof, or for any damage resulting therefrom unless
resulting from the gross (not mere) negligence or willful misconduct of Agent
or such Lender.  Following the occurrence
and during the continuance of an Event of Default, Agent may, without notice to
or consent from any Loan Party, sue upon or otherwise collect, extend the time
of payment of, compromise or settle for cash, credit or upon any terms any of
the Receivables or any other securities, instruments or insurance applicable
thereto and/or release any obligor thereof. 
Agent is authorized and empowered to accept, following the occurrence
and during the continuance of an Event of Default, the return of the goods
represented by any of the Receivables, without notice to or consent by any Loan
Party, all without discharging or in any way affecting any Loan Party’s
liability hereunder.

 

(h)                                 Establishment
of a Lockbox Account, Dominion Account. 
All proceeds of Collateral shall, at the direction of Agent, be
deposited by Loan Parties into one or more lockbox accounts, dominion accounts
or such other blocked accounts (collectively, the “Blocked Accounts”) as
Agent may require pursuant to an arrangement with such bank as may be selected
by Loan Parties and be acceptable to Agent. 
Loan Parties shall issue to any such bank, an irrevocable letter of
instruction directing said bank (upon Agent’s written instruction (“Agent’s
Instructions”)) to transfer such funds so deposited to Agent, either to any
account maintained by Agent at said bank or by wire transfer to appropriate
account(s) of Agent.  All funds deposited
in a Blocked Account shall be subject to the Lien of Agent and Loan Parties
shall obtain the agreement by such bank to waive any offset rights against the
funds so deposited.  Neither Agent nor
any Lender assumes any responsibility for any Blocked Account arrangement,
including without limitation, any claim of accord and satisfaction or release
with respect to deposits accepted by any bank thereunder.  The Loan Parties shall indemnify and save the
Agent and Lenders harmless against any and all losses together with any
interest, fees and expenses in connection with the  deposit of any funds into the Blocked
Accounts.  Agent agrees that it shall not
deliver the Agent’s Instructions 
referred to in this clause (h) unless and until an Event of Default has
occurred and is continuing.

 

(i)                                     Adjustments.  No Loan Party will, without Agent’s consent,
compromise or adjust any Receivables (or extend the time for payment thereof)
or accept any returns of merchandise or grant any additional discounts,
allowances or credits thereon except for those compromises, adjustments,
returns, discounts, credits and allowances as have been heretofore customary in
the business of such Loan Party.

 

4.16.                                                Inventory.

 

To the extent Inventory held for sale or lease has
been produced by any Loan Party, it has been and will be produced by such Loan
Party in accordance in all material respects with the Federal Fair Labor
Standards Act of 1938, as amended, and all rules, regulations and orders
thereunder.

 

53

 

4.17.                                                Maintenance
of Equipment.

 

The Equipment shall be maintained in good operating
condition and repair (reasonable wear and tear excepted) and all necessary
replacements of and repairs thereto shall be made so that the value and
operating efficiency of the Equipment shall be maintained and preserved.  No Loan Party shall use or operate the
Equipment in violation in any material respect of any law, statute, ordinance,
code, rule or regulation.

 

4.18.                                                Exculpation
of Liability.

 

Nothing herein contained shall be construed to
constitute Agent or any Lender as any Loan Party’s agent for any purpose
whatsoever, nor shall Agent or any Lender be responsible or liable for any
shortage, discrepancy, damage, loss or destruction of any part of the
Collateral wherever the same may be located and regardless of the cause
thereof.  Neither Agent nor any Lender,
whether by anything herein or in any assignment or otherwise, assume any of
Loan Party’s obligations under any contract or agreement assigned to Agent or
such Lender, and neither Agent nor any Lender shall be responsible in any way
for the performance by Loan Party of any of the terms and conditions thereof.

 

4.19.                                                Environmental
Matters.

 

(a)                                  Except
as would not result in a Material Adverse Effect, Loan Parties shall ensure
that the Real Property remains in compliance with all Environmental Laws and
they shall not place or permit to be placed any Hazardous Substances on any
Real Property except as not prohibited by applicable law or appropriate
governmental authorities.

 

(b)                                 Loan
Parties shall establish and maintain a system reasonably required to assure and
monitor continued compliance with all applicable Environmental Laws which
system shall include periodic reviews of such compliance.

 

(c)                                  Loan
Parties shall (i) employ in connection with the use of the Real Property
appropriate technology necessary to maintain compliance with any applicable
Environmental Laws as required and (ii) dispose of any and all Hazardous Waste
generated at the Real Property only at facilities and with carriers that
maintain valid permits if required under RCRA or any other applicable
Environmental Laws.

 

(d)                                 In
the event any Loan Party obtains, gives or receives notice of any Release or
threat of Release of a reportable quantity of any Hazardous Substances at the
Real Property (any such event being hereinafter referred to as a “Hazardous
Discharge”) or receives any notice of violation, request for information or
notification that it is potentially responsible for investigation or cleanup of
environmental conditions at the Real Property, demand letter or complaint,
order, citation, or other written notice with regard to any Hazardous Discharge
or violation of Environmental Laws affecting the Real Property or any Loan
Party’s interest therein (any of the foregoing is referred to herein as an “Environmental
Complaint”) from any Person, including any state agency responsible in
whole or in part for environmental matters in the state in which the Real
Property is located or the United States Environmental Protection Agency (any
such person or entity hereinafter the “Authority”), then Borrowers
shall, within five (5) Business Days, give written notice of same to Agent
detailing facts and circumstances of which any Loan Party is aware giving rise
to the Hazardous Discharge or Environmental Complaint.  Such information is to be provided to allow
Agent to protect its security interest in the Collateral and is not intended to
create nor shall it create any obligation upon Agent or any Lender with respect
thereto.

 

54

 

(e)                                  Loan
Parties shall promptly forward to Agent copies of any request for information,
notification of potential liability, demand letter relating to potential
responsibility with respect to the investigation or cleanup of Hazardous
Substances at any other site owned, operated or used by any Loan Party to
dispose of Hazardous Substances and shall continue to forward copies of
material correspondence between any Loan Party and the Authority regarding such
claims to Agent until the claim is settled. 
Loan Parties shall promptly forward to Agent copies of all documents and
reports concerning a Hazardous Discharge at the Real Property that any Loan
Party is required to file under any Environmental Laws.  Such information is to be provided solely to
allow Agent to protect Agent’s security interest in the Collateral.

 

(f)                                    Loan
Parties shall respond promptly to any Hazardous Discharge or Environmental
Complaint and take all action reasonably necessary in order to safeguard the
health of any Person and to avoid subjecting the Collateral to any Lien.  If any Loan Party shall fail to respond
promptly to any Hazardous Discharge or Environmental Complaint or any Loan
Party shall fail to comply within a reasonable time with any of the
requirements of any Environmental Laws, Agent on behalf of Lenders may, but
without the obligation to do so, for the sole purpose of protecting Agent’s
interest in the Collateral: (A) give such notices or (B) enter onto the Real
Property (or authorize third parties to enter onto the Real Property) and take
such actions as Agent (or such third parties as directed by Agent) deem
reasonably necessary or advisable, to clean up, remove, mitigate or otherwise
deal with any such Hazardous Discharge or Environmental Complaint.  All reasonable costs and expenses incurred by
Agent and Lenders (or such third parties) in the exercise of any such rights,
including any sums paid in connection with any judicial or administrative
investigation or proceedings, fines and penalties, together with interest
thereon from the date expended at the Default Rate for Revolving Advances
constituting Domestic Rate Loans shall be paid upon demand by Loan Parties, and
until paid shall be added to and become a part of the Obligations secured by
the Liens created by the terms of this Agreement or any other agreement between
Agent, any Lender and any Loan Party.

 

(g)                                 Promptly
upon the written request of Agent from time to time and upon reasonable cause
to believe that a Hazardous Discharge has occurred, Loan Parties shall provide
Agent, at Loan Parties’ expense, with an environmental site assessment or
environmental audit report prepared by an environmental engineering firm
acceptable in the reasonable opinion of Agent, to assess with a reasonable
degree of certainty the existence of a Hazardous Discharge and the potential
costs in connection with abatement, cleanup and removal of any Hazardous
Substances found on, under, at or within the Real Property as a result of such
Hazardous Discharge.  Any report or investigation
of such Hazardous Discharge proposed and acceptable to an appropriate Authority
that is charged to oversee the clean-up of such Hazardous Discharge shall be
acceptable to Agent.  If such estimates,
individually or in the aggregate, exceed $100,000, Agent shall have the right
to require Loan Parties to post a bond, letter of credit or other security
reasonably satisfactory to Agent to secure payment of these costs and expenses.

 

(h)                                 Loan
Parties shall defend and indemnify Agent and Lenders and hold Agent, Lenders
and their respective employees, agents, directors and officers harmless from
and against all loss, liability, damage and expense, claims, costs, fines and
penalties, including reasonable attorney’s fees, suffered or incurred by Agent
or Lenders with respect to Real Property under or on account of any
Environmental Laws, including, without limitation, the assertion of any Lien
thereunder, with respect to any Hazardous Discharge, the presence of any
Hazardous Substances affecting the Real Property, whether or not the same
originates or emerges from the Real Property or any contiguous real estate,
including any loss of value of the Real Property as a result of the foregoing
except to the

 

55

 

extent such loss, liability, damage and expense is attributable to any
Hazardous Discharge resulting from actions on the part of Agent or any
Lender.  Loan Parties’ obligations under
this Section 4.19 shall arise upon the discovery of the presence of
any Hazardous Substances at the Real Property, whether or not any federal,
state, or local environmental agency has taken or threatened any action in
connection with the presence of any Hazardous Substances.  Loan Parties’ obligation and the
indemnifications hereunder shall survive the termination of this Agreement.

 

(i)                                     For
purposes of Sections 4.19 and 5.7, all references to Real Property shall
be deemed to include all of Loan Parties’ right, title and interest in and to
its owned and leased premises.

 

4.20.                                                Financing
Statements.

 

Except as respects the financing statements filed by
Agent and the financing statements described on Schedule 7.2,
no financing statement covering any of the Collateral or any proceeds thereof
is on file in any public office; provided, however, that
subsequent to the Closing Date financing statements may also be filed with
respect to Liens described in clauses 
(i), (j), (k), (q), (r) and (s) of the definition of Permitted
Encumbrances.

 

V.                                     REPRESENTATIONS
AND WARRANTIES.

 

Each Loan Party
represents and warrants as follows:

 

5.1.                                                      Authority.

 

Each Loan Party has full power, authority and legal
right to enter into this Agreement and the Other Documents and to perform all
its respective Obligations hereunder and thereunder.  The execution, delivery and performance of
this Agreement and of the Other Documents (a) are within such Loan Party’s
limited liability company, partnership or corporate powers, have been duly
authorized and are not in contravention of terms of such Loan Party’s
certificate of formation, partnership agreement, limited liability company
agreement, by-laws, certificate of incorporation or other applicable documents
relating to such Loan Party’s formation, and (b) will not (i) conflict
with  applicable law, (ii) conflict with,
result in any breach in any of the provisions of or constitute a default under
any material agreement or undertaking to which such Loan Party is a party or by
which such Loan Party is bound or (iii) result in the creation of any Lien
except Permitted Encumbrances upon any asset of such Loan Party except for any
conflict, breach or default under clause (i) and (ii) of this clause (b) which
could not reasonably be expected to have a Material Adverse Effect.

 

5.2.                                                      Formation
and Qualification.

 

(a)                                  Each
Loan Party is duly formed or incorporated and in good standing under the laws
of the jurisdiction of its formation or incorporation and is qualified to do
business and is in good standing in the jurisdictions which constitute all
jurisdictions in which qualification and good standing are necessary for such
Loan Party to conduct its business and own its property and where the failure
to so qualify could reasonably be expected to have a Material Adverse
Effect.  The exact State organizational
number of each Loan Party is set forth on Schedule 5.2(a) or
as the applicable Loan Party shall notify Agent in writing no less than thirty
(30) days prior to any such change.  As
of the date hereof, each Loan Party has delivered to Agent true and complete
copies of its certificate of

 

56

 

formation, certificate of limited partnership, partnership agreement,
limited liability company agreement, certificate of incorporation and by-laws,
as the case may be, and will notify Agent of any amendment or changes thereto
as required under Section 7.14 hereof.

 

(b)                                 As
of the date hereof, the only Subsidiaries of each Loan Party are listed on Schedule 5.2(b), as such Schedule may
be updated by Loan Parties on or prior to any change in such Schedule 5.2(b).

 

5.3.                                                      Survival
of Representations and Warranties.

 

All representations and warranties of each Loan Party
contained in this Agreement and the Other Documents shall be true at the time
of such Loan Party’s execution of this Agreement and the Other Documents (or if
made solely as of a specific date, as of such date), and shall survive the
execution, delivery and acceptance thereof by the parties thereto and the
closing of the transactions described therein or related thereto.

 

5.4.                                                      Tax
Returns.

 

Each Loan Party’s federal tax identification number is
set forth on Schedule 5.4.  Each Loan Party has filed all federal, state
and local tax returns and other reports each is required by law to file and has
paid all material taxes, assessments, fees and other governmental charges that
are due and payable, except for those being diligently contested in good faith
and adequately provided for on the financial statements of the Loan Parties in
accordance with GAAP.  Federal, state and
local income tax returns of each Loan Party have been examined and reported
upon by the appropriate taxing authority or closed by applicable statute and
satisfied for all fiscal years prior to and including the fiscal year ended December 31,
2000.  The provision for taxes on the
books of each Loan Party are adequate for the payment of all material taxes for
all years not closed by applicable statutes, and for its current fiscal year,
and (x) as of the date hereof, no Loan Party has any knowledge of any
deficiency or additional assessment in connection therewith not provided for on
its books and (y) Loan Parties shall promptly notify Agent if they acquire any
knowledge of any deficiency or additional assessment in connection therewith
not provided for on its books.

 

5.5.                                                      Financial
Statements.

 

The consolidated balance sheets of the Loan Parties,
their Subsidiaries and such other Persons described therein (including the
accounts of all Subsidiaries for the respective periods during which a
subsidiary relationship existed) as of November 30, 2004, and the related
statements of income, changes in stockholder’s equity, and changes in cash flow
for the period ended on such date, have been prepared in accordance with GAAP,
consistently applied, subject to the absence of footnotes and normal recurring
year-end adjustments, and present fairly the financial position of the Loan
Parties and their Subsidiaries at such date and the results of their operations
for such period.  Since November 30,
2004, there has been no change in the condition, financial or otherwise, of
Loan Parties or their Subsidiaries as shown on the consolidated balance sheet
as of such date except for the Acquisition and other  changes, none of which individually or in the
aggregate could reasonably be expected to have a Material Adverse Effect.

 

57

 

5.6.                                                      Loan
Party Name.

 

The exact name of each Loan Party is set forth in the
first paragraph to this Agreement (or, if such Loan Party is not listed in such
first paragraph, such exact name is set forth on Schedule 5.6),
subject to name changes of the Loan Parties in connection with any merger,
dissolution or other changes of a Loan Party’s name; provided Agent is given
fifteen (15) days prior written notice of such name change.  No Loan Party has been known by any other corporate,
limited liability company or partnership name in the past five years and no
Loan Party sells Inventory under any other name except as set forth on Schedule 5.6, nor has any Loan
Party been the surviving entity of a merger or consolidation or acquired all or
substantially all of the assets of any Person during the preceding five (5)
years, except for the Acquisition and
subject to mergers, dissolutions or other transactions expressly permitted
hereunder and of which Loan Parties have given the Agent fifteen (15) days
prior written notice.

 

5.7.                                                      O.S.H.A.
and Environmental Compliance.

 

Except as could not
reasonably be expected to have a Material Adverse Effect,

 

(a)                                  (i)                                     each
Loan Party has in all material respects duly complied with, and its facilities,
business, assets, property, leaseholds and Equipment are in compliance in all
material respects with, the provisions of the Federal Occupational Safety and
Health Act, RCRA and all other Environmental Laws;

 

(ii)                                  to
the knowledge of each Loan Party, there have been no outstanding citations,
notices or orders of non-compliance issued to any Loan Party or relating to its
business, assets, property, leaseholds or Equipment under any such laws, rules
or regulations, in each case except as set forth on Schedule 5.7;
and

 

(iii)                               each
Loan Party has provided to Agent prior to the Closing Date copies of all
environmental audit reports in its or any of its consultant’s possession or
control with respect to the Real Property.

 

(b)                                 Each
Loan Party has been issued all required federal, state and local licenses,
certificates or permits relating to all applicable Environmental Laws, except
as set forth on Schedule 5.7.

 

(c)                                  (i)  Except as set forth in the Phase I Reports,
there are no visible signs of releases, spills, discharges, leaks or disposal
(each, a “Release”) of Hazardous Substances at, upon, under or within
any Real Property; (ii) there are no underground storage tanks or
polychlorinated biphenyls on the Real Property; (iii) to the knowledge of each
Loan Party, the Real Property has never been used as a treatment, storage or
disposal facility of Hazardous Waste; and (iv) to the knowledge of each Loan
Party, no Hazardous Substances are present on the Real Property, excepting such
quantities as are handled in accordance with all applicable manufacturer’s
instructions and governmental regulations and in proper storage containers and
as are necessary for the operation of the commercial business of any Loan Party
or of its tenants, in each case except as set forth on Schedule 5.7.

 

58

 

5.8.                                                      Solvency;
No Litigation, Indebtedness, Violation or Default.

 

(a)                                  Both
immediately prior to and after giving effect to the Transactions, each Loan
Party is solvent, able to pay its debts as they mature, has capital sufficient
to carry on its business and all businesses in which it is about to engage, and
(i) as of the Closing Date, the fair present saleable value of each Loan
Party’s assets is in excess of the amount of its liabilities and (ii)
subsequent to the Closing Date, the fair saleable value of each Loan Party’s
assets will be in excess of the amount of its liabilities.

 

(b)                                 Except
as disclosed in Schedule 5.8(b), no Loan
Party has (i) any pending or threatened litigation, arbitration, actions or
proceedings which involve the possibility of having a Material Adverse Effect,
and (ii) any indebtedness for borrowed money other than the Obligations,
the Senior Note Obligations, or indebtedness and liabilities under the
Subordinated Debt Documentation to the extent permitted under Section 7.7(g)(i)
hereof or as otherwise expressly permitted to be incurred under Section 7.7
hereof.

 

(c)                                  No
Loan Party is in violation of any applicable statute, regulation or ordinance
in any respect which could reasonably be expected to have a Material Adverse
Effect, nor is any Loan Party in violation of any order of any court,
governmental authority or arbitration board or tribunal which could reasonably
be expected to have a Material Adverse Effect.

 

(d)                                 Except
as set forth in Schedule 5.8(d), (i) no
Plan that is covered by Title IV of ERISA has incurred any “accumulated funding
deficiency,” as defined in Section 302(a)(2) of ERISA and Section 412(a)
of the Code, whether or not waived, which is reasonably likely to result in a
Material Adverse Effect and each Loan Party and, to the knowledge of each Loan
Party, each member of the Controlled Group has met all applicable minimum
funding requirements under Section 302 of ERISA in respect of each such
Plan unless any such failure is not reasonably likely to result in a Material
Adverse Effect, (ii) each Plan maintained by any Loan Party which is intended
to be a qualified plan under Section 401(a) of the Code as currently in
effect has been determined by the Internal Revenue Service to be qualified
under Section 401(a) of the Code and the trust related thereto is exempt
from federal income tax under Section 501(a) of the Code, (iii) no Loan
Party nor any member of the Controlled Group has incurred any liability to the
PBGC other than for the payment of premiums, and there are no premium payments
which have become due which are unpaid and which are reasonably likely to
result in a Material Adverse Effect, (iv) no Plan that is covered by Title IV
of ERISA has been terminated by the plan administrator thereof nor by the PBGC,
and there is no occurrence which would cause the PBGC to institute proceedings
under Title IV of ERISA to terminate any Plan, (v) at this time, the current
value of the assets of each Plan that is covered by Title IV of ERISA exceeds
the present value of the accrued benefits and other liabilities of such Plan
and no Loan Party knows of any facts or circumstances which would materially
change the value of such assets and accrued benefits and other liabilities
which are reasonably likely to result in a Material Adverse Effect, (vi) no
Loan Party or member of the Controlled Group has breached any of the
responsibilities, obligations or duties imposed on it by ERISA with respect to
any Plan so as to result in a Material Adverse Effect, (vii) no Loan Party has,
nor to the knowledge of each Loan Party, no member of the Controlled Group has
incurred any liability for any excise tax arising under Section 4972 or
4980B of the Code which is reasonably likely to result in a Material Adverse
Effect and, to the knowledge of each Loan Party, no fact exists which could
give rise to any such liability, (viii) no Loan Party nor, to the knowledge of
any Loan Party, any fiduciary of, nor any trustee to, any Plan, has engaged in
a “prohibited transaction” described in Section 406 of ERISA or Section 4975
of the Code nor taken any action which would constitute or result in a
Termination Event with respect to any such Plan which would result in a
Material Adverse Effect, (ix) each Loan Party has made all contributions due
and payable with respect to each Plan unless such failure would not result

 

59

 

in a Material Adverse Effect, (x) there exists no event described in Section 4043(b)
of ERISA, for which the thirty (30) day notice period contained in 29 CFR
§2615.3 has not been waived, (xi) no Loan Party has any fiduciary
responsibility for investments with respect to any Plan existing for the
benefit of persons other than employees or former employees of any Loan Party
and any member of the Controlled Group, and (xii) no Loan Party nor any member
of the Controlled Group has withdrawn, completely or partially, from any
Multiemployer Plan so as to incur liability under the Multiemployer Pension
Plan Amendments Act of 1980 which is reasonably likely to result in a Material
Adverse Effect.

 

5.9.                                                      Patents,
Trademarks, Copyrights and Licenses.

 

All patents, patent applications, trademarks,
trademark applications, service marks, service mark applications, copyrights,
copyright applications, design rights, tradenames and assumed names owned by
any Loan Party and all material licenses to the foregoing that are held by any
Loan Party are set forth on Schedule 5.9.  To the knowledge of the Loan Parties, the
items designated as owned by a Loan Party on Schedule 5.9
are valid.  The owned and licensed
intellectual property identified on Schedule 5.9
constitutes the material intellectual property rights used in the operation of
the business of the Loan Parties.  Except
as set forth on Schedule 5.9, there is
no objection to or pending challenge to the validity of any material patent,
trademark, copyright, design right, tradename or trade secret owned by any Loan
Party or any material license held by any Loan Party and no Loan Party is aware
of any grounds for any such challenge. 
With respect to all software used by any Loan Party (other than
commercially available software), such Loan Party is in possession of all
source and object codes related to each piece of software or is the beneficiary
of a source code escrow agreement, each such source code escrow agreement being
listed on Schedule 5.9.

 

5.10.                                                Licenses
and Permits.

 

Except as set forth in Schedule 5.10,
each Loan Party (a) is in compliance with and (b) has procured and is now in
possession of, all material licenses or permits required by any applicable
federal, state or local law or regulation for the operation of its business in
each jurisdiction wherein it is now conducting or proposes to conduct business
and where the failure to be in compliance or procure such licenses or permits
could reasonably be expected to have a Material Adverse Effect.

 

5.11.                                                No
Defaults.

 

(a)                                  Except
as set forth on Schedule 5.11, no Loan
Party is in default in the payment of (i) the principal of or interest (beyond
any applicable grace period) on any Indebtedness with an outstanding principal
amount, individually or in the aggregate, in excess of $1,000,000, or (ii)
under any instrument or agreement under or subject to which any such
Indebtedness has been issued which default would permit the holder of such
Indebtedness to accelerate its stated maturity, and no other event of default
has occurred under the provisions of any such instrument or agreement which
event of default would permit the holder of such Indebtedness to accelerate its
stated maturity.  No Default or Event of
Default has occurred or is continuing.

 

(b)                                 No
Loan Party is in default in the payment or performance of any other contractual
obligations where such default could reasonably be expected to have a Material
Adverse Effect.

 

60

 

5.12.                                                No
Burdensome Restrictions.

 

No Loan Party is party to any contract or agreement
the performance of which could have a Material Adverse Effect.  No Loan Party has agreed or consented to
cause or permit in the future (upon the happening of a contingency or
otherwise) any of its property, whether now owned or hereafter acquired, to be
subject to a Lien which is not a Permitted Encumbrance.

 

5.13.                                                No
Labor Disputes, Etc..

 

No Loan Party is involved in any labor dispute; there
are no strikes or walkouts or union organization of any Loan Party’s employees,
or to the knowledge of any Loan Party, threatened or in existence and no labor
contract is scheduled to expire during the Term other than as set forth on Schedule 5.13, except for any
of the foregoing which would not have a Material Adverse Effect.  As of the date hereof, Schedule 5.13
sets forth a description of all collective bargaining agreements
with respect to the employees of any Loan Party.

 

5.14.                                                Margin
Regulations.

 

No Loan Party is engaged, nor will it engage,
principally or as one of its important activities, in the business of extending
credit for the purpose of “purchasing” or “carrying” any “margin stock” within
the meaning of the quoted term under Regulation U of the Board of Governors of
the Federal Reserve System as now and from time to time hereafter in
effect.  No part of the proceeds of any
Advance will be used for “purchasing” or “carrying” “margin stock” as defined
in Regulation U of such Board of Governors.

 

5.15.                                                Investment
Company Act.

 

No Loan Party is an “investment company” registered or
required to be registered under the Investment Company Act of 1940, as amended,
nor is it controlled by such a company.

 

5.16.                                                Disclosure.

 

No representation or warranty made by any Loan Party
in this Agreement or in any financial statement, report, certificate or any
other document furnished in connection herewith contains any untrue statement
of a material fact or omits to state any material fact necessary to make the
statements herein or therein (taken as a whole) not misleading in any material
respect on the date made or furnished (or deemed furnished).  There is no fact known to Loan Parties or
which reasonably should be known to Loan Parties which Loan Parties have not
disclosed to Agent in writing with respect to the transactions contemplated by
this Agreement which could reasonably be expected to have a Material Adverse
Effect.  The projections and pro forma
financial information contained in the material furnished herewith are based
upon good faith estimates and assumptions believed by the chief financial
officer and other management of the Loan Parties to be reasonable at the time
made, it being recognized by the Lenders that such financial information as it
relates to future events is not to be viewed as fact and that actual results
during the period or periods covered by such financial information may differ
from the projected results set forth therein by a material amount.

 

61

 

5.17.                                                Delivery
of Senior Note Documents, Equity Documents and Subordinated Debt Documentation.

 

As of the date hereof, Agent has received complete
copies of the Senior Note Documents and Equity Documents (including all
exhibits, schedules and disclosure letters referred to therein or delivered
pursuant thereto, if any).  The Loan
Parties will notify Agent in writing at least five (5) Business Days prior to
the execution and delivery of the Subordinated Debt Documentation and will make
reasonable efforts to provide Agent with an opportunity to review drafts
thereof prior to execution.  The Loan
Parties will deliver the Subordinated Debt Documentation and all amendments
thereto and waivers relating to the Senior Note Documents and Subordinated Debt
Documentation promptly after execution thereof.

 

5.18.                                                Swaps.

 

Except as set forth on Schedule 5.18,
no Loan Party is a party to, nor will it be a party to, any swap agreement
whereby such Loan Party has agreed or will agree to swap interest rates or
currencies.

 

5.19.                                                Conflicting
Agreements.

 

No provision of any mortgage, indenture, contract,
agreement, judgment, decree or order binding on any Loan Party or affecting the
Collateral conflicts with (except to the extent such conflict could not
reasonably be expected to have a Material Adverse Effect), or requires any
Consent which has not already been obtained to, or would in any way prevent the
execution, delivery or performance of, the terms of this Agreement or the Other
Documents.

 

5.20.                                                Application
of Certain Laws and Regulations.

 

No Loan Party is subject to any statute, rule or
regulation which regulates the incurrence of any Indebtedness, including without
limitation, statutes or regulations relative to common or interstate carriers
or to the sale of electricity, gas, steam, water, telephone, telegraph or other
public utility services.

 

5.21.                                                Business
and Property of Loan Parties.

 

Upon and after the Closing Date, Loan Parties and the
Foreign Subsidiaries do not propose to engage in any business other than the
distribution of carbon and alloy steel pipe (and related materials and
services) and activities necessary to conduct the foregoing or substantially
related thereto.  On the Closing Date,
each Loan Party and Foreign Subsidiary of a Loan Party will own all the
property and possess all of the rights and Consents necessary for the conduct
of the business of such Loan Party.

 

5.22.                                                Material
Contracts.

 

As of the date hereof, Schedule 5.22
contains a true, correct and complete list of all contracts which are material
to the operation of any Loan Party’s business. 
Except as set forth on Schedule 5.22,
and except as could not reasonably be expected to have a Material Adverse
Effect, each such contract is in full force and effect in all respects and no
defaults exist thereunder.  As of the
date hereof, no Loan Party has received notice from any party to such contract stating
that it intends to terminate or amend such contract.

 

62

 

5.23.                                                Acquisition
Agreement.

 

The Acquisition has been
consummated, or simultaneously with the closing hereof is being consummated,
(i) in accordance with the terms of the Acquisition Documents provided to the
Agent and without any waiver or amendment of any material term thereof without
the prior written consent of Agent, and (ii) in compliance in all material
respects with all applicable laws.

 

VI.                                 AFFIRMATIVE
COVENANTS.

 

Each Loan Party shall,
until payment in full of the Obligations and termination of this Agreement:

 

6.1.                                                      Payment
of Fees.

 

Pay to Agent on demand all usual and customary fees
and expenses which Agent incurs in connection with (a) the forwarding of
Advance proceeds and (b) the establishment and maintenance of any Blocked
Accounts as provided for in Section 4.15(h).  Agent may, without making demand, charge any
Borrowers’ Account for all such fees and expenses.

 

6.2.                                                      Conduct
of Business and Maintenance of Existence and Assets.

 

(i) Conduct continuously and operate actively its
business according to good business practices and maintain all of its
properties useful or necessary in its business in good working order and
condition (reasonable wear and tear excepted and except as the Collateral and
other property may be disposed of in accordance with the terms of this
Agreement), including, without limitation, all licenses, patents, copyrights,
design rights, domain names and addresses, tradenames, trade secrets and
trademarks and take all actions necessary to enforce and protect the validity
of any intellectual property right or other right that may be included in the
Collateral; (ii) keep in full force and effect its existence and comply in all
material respects with the laws and regulations governing the conduct of its
business where the failure to do so could reasonably be expected to have a
Material Adverse Effect; and (iii) make all such reports and pay all such
franchise and other taxes and license fees and do all such other acts and
things as may be lawfully required to maintain its rights, licenses, leases,
powers and franchises under the laws of the United States or any political
subdivision thereof where the failure to do so could reasonably be expected to
have a Material Adverse Effect.

 

6.3.                                                      Violations.

 

Promptly notify Agent in writing of any violation of
any law, statute, regulation or ordinance of any Governmental Body, or of any
agency thereof, applicable to any Loan Party which could reasonably be expected
to have a Material Adverse Effect.

 

6.4.                                                      Government
Receivables.

 

Take all steps necessary to protect Agent’s interest
in the Collateral under the Federal Assignment of Claims Act or other
applicable state or local statutes or ordinances and deliver to Agent appropriately
endorsed, any instrument or chattel paper connected with any Receivable arising
out of contracts between any Loan Party and the United States, any state or any
department, agency or instrumentality of any of them.

 

63

 

6.5.                                                      Execution
of Supplemental Instruments.

 

Execute and deliver to Agent from time to time, upon
demand, such supplemental agreements, statements, assignments and transfers, or
instructions or documents relating to the Collateral, and such other
instruments as Agent may reasonably request, in order that the full intent of
this Agreement may be carried into effect.

 

6.6.                                                      Payment
of Indebtedness.

 

Subject at all times to any applicable subordination
arrangement in favor of Agent and/or Lenders, pay, discharge or otherwise
satisfy at or before maturity (subject, where applicable, to specified grace
periods and, in the case of the trade payables, to normal payment practices)
all its obligations and liabilities of whatever nature, except when the failure
to do so could not reasonably be expected to have a Material Adverse Effect or
when the amount or validity thereof is currently being contested in good faith
by appropriate proceedings and each Loan Party shall have provided for such
reserves as Agent may reasonably deem proper and necessary.

 

6.7.                                                      Standards
of Financial Statements.

 

Cause all financial statements referred to in Sections
9.6, 9.7, 9.8, 9.9 and 9.11 as to which GAAP is applicable to be complete and
correct in all material respects (subject, in the case of interim financial
statements, to the absence of footnotes and normal year-end audit adjustments)
and to be prepared in reasonable detail and in accordance with GAAP applied
consistently throughout the periods reflected therein (except as concurred in
by such reporting accountants or officer, as the case may be, and disclosed
therein).

 

6.8.                                                      Taxes
and Other Governmental Charges.

 

File, and cause each of its Subsidiaries to file, when
due, all tax returns and other reports which it is required to file and (b)
pay, and cause each of its Subsidiaries to pay, or provide for the payment,
when due, of all material taxes, fees, assessments and other governmental
charges against it or upon its property, income and franchises, make all required
withholding and other tax deposits, and establish adequate reserves for the
payment of all such items, and provide to the Agent and the Lenders, upon
request, satisfactory evidence of its timely compliance with the foregoing; provided,
however, so long as the Loan Parties have has notified the Agent in
writing, none of the Loan Parties or any of their respective Subsidiaries need
pay any tax, fee, assessment, or governmental charge (i) it is contesting
in good faith by appropriate proceedings diligently pursued, (ii) as to which
the appropriate Loan Party or Subsidiary, as the case may be, has established
proper reserves as required under GAAP, and (iii) the nonpayment of which
does not result in the imposition of a Lien (other than a Permitted Encumbrance
described in clause (b) of the definition thereof).

 

6.9.                                                      Revisions
or Updates to Schedules.

 

Should any of the information or disclosures provided
on any of the schedules originally attached hereto become outdated or incorrect
in any material respect, the Loan Parties shall deliver to the Agent and the
Lenders as part of the officer’s certificate required pursuant to Section 9.9
such revisions or updates to such schedule(s) as may be necessary or
appropriate to update or correct such schedule(s), provided that no such
revisions or updates to any schedule(s) shall be deemed to have amended,
modified or superseded such schedule(s) as originally attached hereto, or to
have cured any breach of warranty or representation resulting from the
inaccuracy or incompleteness of any such schedule(s), unless and until (x) the
Required Lenders shall have

 

64

 

accepted in writing such revisions or updates to such
schedule(s) or (y) the revisions or updates to the applicable schedule reflects
a state of facts that is expressly permitted under the existing provisions of
this Agreement.

 

6.10.                                                Financial
Statements.

 

(a)                                  The
pro forma balance sheet of as of the Closing Date the Loan Parties on a
Consolidated Basis (the “Pro Forma Balance Sheet”) shall be furnished to
Agent within 120 days of the Closing Date and shall reflect the consummation of
the transactions contemplated by the Acquisition Documents, the Senior Note
Documents, Subordinated Debt Documentation (if any), the Equity Documents and
under this Agreement (the “Transactions”) and shall be accurate,
complete and correct and fairly reflect in all material respects the financial
condition of the Loan Parties on a Consolidated Basis as of the Closing Date
after giving effect to the Transactions, and will be prepared in accordance
with Loan Parties’ past practices, consistently applied.  The Pro Forma Balance Sheet shall be
certified as accurate, complete and correct in all material respects by the
President and Chief Financial Officer of the Loan Parties.  All financial statements referred to in this Section 6.10(a),
including the related schedules and notes thereto, shall be prepared, in
accordance with Loan Parties’ past practices, consistently applied.

 

(b)                                 The
twelve month cash flow projections for the twelve month period ending December 31,
2005 of the Loan Parties on a Consolidated Basis and their projected balance
sheets, which shall be furnished to Agent within 120 days of the Closing Date
(the “Projections”), shall be prepared by the Chief Financial Officer of the
Loan Parties, based on underlying assumptions which the Loan Parties believe
provide a reasonable basis for the projections contained therein and reflect
Loan Parties’ judgment based on current facts known to Loan Parties based on
reasonable assumptions concerning conditions and course of action for the
projected period.  The Projections
together with the Pro Forma Balance Sheet are referred to as the “Pro Forma
Financial Statements”.

 

6.11.                                                Perfection of Lien on Canadian Intercompany
Obligations.

 

Within (i) 30 days of the
Closing Date with respect to Edgen Canada and (ii) five (5) days of the
creation or acquisition of any other Foreign Subsidiary organized under the
laws of Canada or any Province thereof (any such Foreign Subsidiary, including
Edgen Canada, a “Canadian Subsidiary”), 
Loan Parties shall deliver to Agent, in form and substance reasonably
satisfactory to Agent, (i) a term promissory note (each a “Term Intercompany
Note”), which shall evidence all advances and loans by any Loan Party to such
Canadian Subsidiary (but which shall not be cross-defaulted to the Obligations
under this Agreement), duly pledged and endorsed to Agent as Collateral (and
Agent shall have a first priority perfected security interest therein); (ii) a
Security Agreement executed by such Canadian Subsidiary to the Loan Parties
securing the obligations of the Canadian Subsidiary under such Term
Intercompany Note with a first priority Lien on all assets of such Canadian Subsidiary
of the type described in the definition of Collateral under this Agreement
(excluding Collateral describe in clause (c)(vi) of the definition thereof),
(iii) a PPSA Registration Statements filed by the Loan Parties against the
Canadian Subsidiary in  all appropriate
filing offices, naming Agent as secured party, (iv) a Canadian opinion of
counsel with respect to the foregoing and (v) any other lien search, document,
charter document, certificate or agreement that Agent reasonably believes is
necessary for the perfection of its interest in the pledge of the Term
Intercompany Note and the perfection and priority of the collateral granted by
the Canadian Subsidiary to the Loan Parties therefor.

 

65

 

VII.                             NEGATIVE
COVENANTS.

 

No Loan Party shall,
until satisfaction in full of the Obligations and termination of this
Agreement:

 

7.1.                                                      Merger,
Consolidation, Acquisition and Sale of Assets.

 

(a)                                  Enter
into any merger, consolidation or other reorganization with or into any other
Person or acquire all or a substantial portion of the assets or stock of any
Person or permit any other Person to consolidate with or merge with it other
than (i) the Acquisition; (ii) a merger or consolidation of a Loan Party into a
Borrower; (iii) a Subsidiary of a Borrower into such Borrower; (iv) of Loan
Parties that are not Borrowers into each other; and/or (v)  Permitted Acquisitions.

 

(b)                                 Sell,
lease, transfer or otherwise dispose of any of its properties or assets
(including the sale of any Capital Stock of any Loan Party other than Capital
Stock issued by Holdings), except (i) in the ordinary course of its business,
(ii) as provided in Section 4.3, (iii) any or all assets of a Loan
Party’s Subsidiary (upon voluntary liquidation or otherwise) to the Borrowers
or any or all assets of a Loan Party’s Subsidiary (upon voluntary liquidation
or otherwise, but excluding the assets of a Borrower) to any other Loan Party;
(iv) for the sale or issuance of any Subsidiary’s Capital Stock to the Borrowers
or any other Loan Party; (v) for obsolete or worn out property (other than
Collateral but including Collateral described in clause (c)(vi) of the
definition thereof) in the ordinary course of business; (vi) for non-exclusive
licenses of proprietary rights or the abandonment of intellectual property
rights in the ordinary course of business; (vii) for assets in respect of any
property or casualty insurance claim or any condemnation proceeding relating to
any assets of the Loan Parties or any of their Subsidiaries; (viii) as provided
in (a) above; (ix) dispositions of investments or receivables in connection
with the compromise or collection thereof in a bankruptcy or similar proceeding
of the Customer or obligor with respect thereto and (x) for other assets (other
than Collateral but including Collateral described in clause (c)(vi) of the
definition thereof ) in any fiscal year of the Loan Parties for which the Loan
Parties receive aggregate consideration of $1,000,000 or less.

 

7.2.                                                      Creation
of Liens.

 

Create or suffer to exist any Lien or transfer upon or
against any of its property or assets now owned or hereafter acquired, except
Permitted Encumbrances.

 

7.3.                                                      Guarantees.

 

Become liable upon the obligations of any Person by
assumption, endorsement or guaranty thereof or otherwise (other than to
Lenders) except (a) as disclosed on Schedule 7.3,
(b) unsecured guarantees by Holdings and/or Sub-Holdings of the trade payables
of any Borrower in the ordinary course of business, consistent with past
practices, (c) unsecured guarantees by Holdings with respect to Sub-Holdings,
Sub-Holdings with respect to Edgen Carbon and Edgen Carbon with respect to
Edgen Alloy, of Real Property leases and employment agreements entered into in
the ordinary course of business, consistent with past practices, (d) unsecured
guarantees (other than those described in clauses (b) and (c) above)
made in the ordinary course of business up to an aggregate amount of $100,000
outstanding at any time for all Loan Parties, (e) the endorsement of checks in
the ordinary course of business, (f) guarantees by Loan Parties of the Senior
Note Obligations, (g) guarantees by Loan Parties of the Subordinated Notes, (h)
standard contractual indemnities and

 

66

 

warranties consistent with the Loan Parties’ past
practice and (i) guarantees by the Loan Parties of Indebtedness permitted to be
incurred by other Loan Parties hereunder.

 

7.4.                                                      Investments.

 

Purchase or acquire obligations or stock of, or any
other interest in, any Person (collectively, “Investments”) except for (a)
Permitted Investments, (b) Cash Equivalents and (c)(i) the repurchase of
Capital Stock of Holdings owned by employees, directors, former employees or
former directors of Loan Parties in connection with any compensation or benefit
plan or the termination of their employment, (ii) repurchase of Capital Stock
deemed to occur upon the “cashless” exercise of stock options, warrants or
other similar rights to the extent such Capital Stock represents a portion of
the exercise price of such options, warrants or other similar rights or (iii)
the repurchase of Capital Stock of Holdings in exchange for, or out of the net
cash proceeds, of the concurrent sale of Holdings’ Capital Stock or from the concurrent
contribution of equity capital to Holdings.

 

7.5.                                                      Loans.

 

Make advances, loans or extensions of credit to any
Person, including without limitation, any Parent, Subsidiary or Affiliate
except with respect to (a) the extension of commercial trade credit in
connection with the sale of Inventory in the ordinary course of its business;
(b) loans to employees on an arm’s-length basis in the ordinary course of
business consistent with the Loan Parties’ past practices for travel expenses,
relocation costs and similar purposes up to a maximum of $25,000 to any
employee and up to a maximum of $200,000 in the aggregate at any one time
outstanding; (c) unsecured loans by one Borrower to another Borrower not to
exceed the outstanding balance of $5,000,000 at any time for Borrowers in the
aggregate; provided, however, that both immediately prior to and
immediately after the making of any such loan (x) the representations and
warranties contained in Section 5.8 hereof shall be true and
correct and (y) no Event of Default shall be in existence; (d) loans, advances
or extensions of credit to Foreign Subsidiaries of Holdings organized under the
laws of Canada or any Province thereof by Holdings or any domestic Loan Party; provided that the aggregate amount of such
loans, advances or extensions of credit outstanding at any time in reliance of
this clause (d) (after giving effect to any such loans, advances or extensions
of credit or any portions thereof that are returned to Holdings or any domestic
Loan Party in cash on or prior to the date of such calculation), plus any
Investments made under clause (e) of the definition of Permitted Investments,
shall not exceed $2,500,000; (e) loans, advances or extensions of credit to
Foreign Subsidiaries of Holdings organized under the laws of Canada or any
Province thereof by Holdings or any domestic Loan Party; provided that (i) the aggregate amount of
such loans, advances or extensions of credit outstanding at any time in
reliance of this clause (e)(i) after giving effect to any such loans, advances
or extensions of credit or any portions thereof that are returned to Holdings
or any domestic Loan Party in cash on or prior to the date of such
calculation), plus any Investments made under clause (f) of the definition of
Permitted Indebtedness,  shall not exceed
5% of the Consolidated Net Tangible Assets of Holdings or its Subsidiaries,
(ii) each such loans, advances or extensions of credit is used by each such
Foreign Subsidiary (A) for working capital purposes or (B) substantially contemporaneous
with its receipt thereof to purchase all or substantially all of the assets of,
or all of the Capital Stock of, any Person (other than a Subsidiary of
Holdings) engaged in a business substantially similar or complementary to the
business of the Loan Parties primarily in Canada (including by means of a
merger, consolidation or other business combination permitted under this
Agreement), which Person shall become a Foreign Subsidiary of Holdings in the
case of where such purchase is of all of the Capital Stock of such Person and
(iii) any such loans, advances

 

67

 

or extensions of credit made in reliance upon this
clause (e) may continue to be maintained notwithstanding that such loans,
advances or extensions of credit if made thereafter would not comply with the
requirements of this clause (e); (f) loans and advances, including advances for
travel and moving expenses, to employees, officers, directors of the Loan
Parties in the ordinary course of business for bona fide business purposes not
in excess of $1,000,000 at any one time outstanding; (g) advances to suppliers
and customers in the ordinary course of business; (h) receivables owing to the
Loan Parties if created or acquired in the ordinary course of business and
payable or dischargeable in accordance with customary trade terms as the Loan
Parties deem reasonable under the circumstances; (i) loans, advances or
extensions of credit to Foreign Subsidiaries of Holdings by Holdings or any
domestic Loan Party; provided
that the aggregate amount of such loans, advances or extensions of credit
outstanding at any time in reliance of this clause (i) (after giving effect to
any such loans, advances or extensions of credit or any portions thereof that
are returned to Holdings or any domestic Loan Party in cash on or prior to the
date of such calculation), plus any Investments made under clause (h) of the
definition of Permitted Investments, shall not exceed $2,500,000; (j) payroll,
travel and similar advances to cover matters that are expected at the time of
the advances ultimately to be treated as expenses for accounting purposes and
that are made in the ordinary course of business and consistent with past
practice; (k) loans, advances or extensions of credit consisting of prepaid
expenses, negotiable instruments held for collection and lease, utility and
workers’ compensation, performance and other similar deposits made in the
ordinary course of business and consistent with past practice; (l) loans,
advances or extensions of credit to employees to purchase Holdings’ Capital
Stock, so long as the full amount of such loan, advance or extension of credit
is immediately contributed to the Borrowers as common equity; (m) the
endorsement of instruments for collection or deposit in the ordinary course of
business; and (n) additional loans, advances or extensions of credit (including
loans, advances or extensions of credit in any Foreign Subsidiary or
Subsidiaries) in an aggregate amount not to exceed, together with any Investment
made under clause (m) of the definition of Permitted Investments, $5,000,000 at
any time outstanding; provided, however, that both immediately
prior to and immediately after the making of any loan described in clauses (d),
(e), (i), (l) or (n) of this Section 7.5 (x) the representations
and warranties contained in Section 5.8 hereof shall be true and
correct and (y) no Default or Event of Default shall be in existence; and provided,
further, prior to making any such loan to Edgen Canada or to any other
Foreign Subsidiary organized under the laws of Canada or any Province thereof,
Loan Parties shall comply with Section 6.11 hereof.

 

7.6.                                                      Dividends
and Distributions.

 

Declare, pay or make any
dividend or distribution on any shares of the common stock, preferred stock or
other equity interests of any Loan Party (other than dividends or distributions
payable in its stock or other equity interests or split-ups or
reclassifications of its stock or other equity interests) or apply any of its
funds, property or assets to the purchase, redemption or other retirement of
any such common or preferred stock or any other equity interests, except that
Loan Parties shall be permitted to pay dividends (i) to Holdings, to pay
regularly scheduled interest and regularly scheduled principal on the Senior
Notes and regularly scheduled interest on the Subordinated Debt, each to the
extent permitted by the terms of the Intercreditor Agreement and the
Subordination Agreement, respectively and to repurchase the Capital Stock issued
by Holdings, owned by Loan Parties’ employees, directors, former employees or
former directors whose employment has terminated or otherwise in connection
with any compensation or benefit plan, (ii) to Sub-Holdings, to reimburse
Sub-Holdings for all out-of-pocket expenses, professional fees, franchise taxes
and other ordinary course of business operating expenses incurred by
Sub-Holdings solely in its capacity as a parent corporation of Borrowers
(including, without limitation the reimbursement by

 

68

 

Borrowers of expenses to
Sub-Holdings for administrative services rendered by Sub-Holdings to Borrowers,
consistent with past practices and payments under employment agreements entered
into by Sub-Holdings incurred in the ordinary course of business for the
benefit of Borrowers), (iii) to fund any management fee payments under the
Management Agreement to the extent permitted under Section 7.9, (iv) to a
Borrower, and (v) to its member (if such upper-tier Loan Party is a limited
liability company) or shareholder (if such upper-tier Loan Party is a
corporation) for a taxable year in an aggregate amount not exceeding the amount
sufficient to cover the payment of the portion of the federal, state and local
income and franchise tax liability of, or attributable to, such member or
shareholder, if any, by reason of its inclusion of the taxable income of its
lower-tier Loan Party or Loan Parties for such taxable year (“Increased Tax
Burden”).  Payments to a member or shareholder
shall be made so as to be available when the tax is due, including in respect
of estimated tax payments.  In the event
the actual distributions or dividends to a member or shareholder exceed such
upper-tier Loan Party’s Increased Tax Burden, then such upper-tier member or
shareholder or the common parent (“Common Parent”) of the consolidated
tax group of which such upper-tier member or shareholder is a member (the “Loan
Party Consolidated Group”) shall repay such lower-tier Loan Party the
amount of such excess no later than the later of (A) the date the annual
Federal income tax return must be filed by the Common Parent of such lower-tier
Loan Party (without giving effect to any filing extensions) and (B) in a
situation where such Loan Party Consolidated Group is entitled to a tax refund
solely attributable to a tax loss realized by the lower-tier Loan Party for
such tax year, and only if the tax return on which such refund is claimed is
prepared by the Loan Party Consolidated Group in good faith (and correctly in
the reasonable judgment of the Agent), two (2) Business Days after such Loan
Party Consolidated Group (or any member thereof) receives such refund.  All of the foregoing repayments shall be
applied to the repayment of principal and/or interest on Revolving Advances and
cash collateral as may be required under Section 3.2(b).  In the event such amounts are not repaid in a
timely manner by the applicable member of the Loan Party Consolidated Group,
then Loan Parties shall not pay or make any dividend or distribution with
respect to, or purchase, redeem or retire, any limited liability company
interests or Capital Stock of any Loan Party held or controlled by, directly or
indirectly, such member or shareholder until such payment has been made, provided,
however, that both before and after giving effect to the payment of such
purchases, redemptions and/or dividends in clause (iii) above there shall not
exist any Event of Default or Default.

 

7.7.                                                      Indebtedness.

 

Create, incur, assume or suffer to exist any
Indebtedness except in respect of the following:

 

(a)                                  Obligations
owing to Agent and/or Lenders;

 

(b)                                 Indebtedness
of any Borrower to another Borrower not in excess of $5,000,000 at any time
outstanding;

 

(c)                                  accounts
payable to trade creditors and current operating expenses which are not aged
more than 180 days from billing date or more than 60 days from due date, in
each case incurred in the ordinary course of business and paid within such time
period, unless the same are being actively contested by the applicable Loan
Party in good faith and by appropriate and lawful proceedings and such Loan
Parties shall have set aside such reserves, if any, with respect thereto as are
required by GAAP and deemed adequate by the applicable Loan Party and its independent
accountants;

 

69

 

(d)                                 obligations
to pay rental payments permitted by Section 7.10;

 

(e)                                  Purchase
Money Indebtedness;

 

(f)                                    contingent
liabilities arising out of endorsements of checks and other negotiable
instruments for deposit or collection in the ordinary course of business;

 

(g)                                 Indebtedness
due under (i) the Subordinated Debt Documentation (provided, however,
that such Indebtedness may only be created, incurred or assumed if the
Consolidated Fixed Charge Coverage Test with respect to such creation,
incurrence or assumption has been satisfied) and (ii) the Senior Note Documents
not to exceed an aggregate principal amount of $105,000,000 and Indebtedness
which refinances the foregoing pursuant to terms that are substantially the
same as the Indebtedness being refinanced (including, without limitation,
without any increase in the outstanding principal amount thereof as of the date
of such refinancing or the shortening of the principal amortization or maturity
of any principal amount thereof);

 

(h)                                 guarantees
permitted under Section 7.3;

 

(i)                                     other
Indebtedness of Holdings and any other Loan Party outstanding on the date
hereof to the extent reflected on the financial statements furnished to Agent
on or before the Closing Date and Indebtedness which refinances the foregoing
pursuant to terms that are substantially the same as the Indebtedness being
refinanced;

 

(j)                                     intercompany
Indebtedness of any Loan Party to another Loan Party or to a Foreign Subsidiary;

 

(k)                                  Indebtedness
arising from the honoring by a bank or other financial institution of a check,
draft or similar instrument inadvertently (except in the case of daylight
overdrafts) drawn against insufficient funds in the ordinary course of business;
provided, however, that such
Indebtedness is extinguished within five business days of incurrence;

 

(l)                                     Indebtedness
of any Loan Party represented by letters of credit, surety bonds, insurance
obligations or other similar bonds for the account of the any Loan Party, as
the case may be, to provide security for workers’ compensation claims, payment
obligations in connection with self-insurance or similar requirements in the
ordinary course of business;

 

(m)                               obligations
in respect of performance, bid and surety bonds and completion guarantees
provided by any Loan Party in the ordinary course of business (provided that
the issuer of any such bond or guarantee shall subordinate all rights to the
Collateral that it may have under law or contract in a manner acceptable to
Agent);

 

(n)                                 Indebtedness
arising from agreements of the Loan Parties providing for indemnification,
adjustment of purchase price or similar obligations, in each case, incurred in
connection with the disposition of any business, assets or Subsidiary, other
than guarantees of Indebtedness incurred by any Person acquiring all or any
portion of such business, assets or Subsidiary for the purpose of financing
such acquisition; provided that the maximum
aggregate liability in respect of all such Indebtedness shall at no time exceed
the gross proceeds actually received by the Loan Parties and the Subsidiary in
connection with such disposition;

 

70

 

(o)                                 Indebtedness
incurred to finance Permitted Acquisitions so long as the Consolidated Fixed
Charge Coverage Test has been satisfied after giving effect to the incurrence
of such Indebtedness and any refinancings, refundings, renewals or extensions
thereof pursuant to terms that are substantially the same as the Indebtedness
being refinanced (including, without limitation, without  any increase in the principal amount thereof
as of the date of such refinancing or the shortening of the principal
amortization or maturity of any principal amount thereof);

 

(p)                                 Acquired
Indebtedness in connection with a Permitted Acquisition so long as the
Consolidated Fixed Charge Coverage Test has been satisfied after giving effect
to the incurrence or assumption of such Indebtedness, and any refinancings,
refundings, renewals or extensions thereof pursuant to terms that are
substantially the same as the Indebtedness being refinanced (including, without
limitation, without any increase in the principal amount thereof as of the date
of such refinancing or the shortening of the maturity of any principal amount
thereof); and

 

(q)                                 unsecured
Indebtedness not included in clauses (a) through (p) above which does
not exceed at any time outstanding, in the aggregate, the sum of $5,000,000.

 

The Loan Parties will
not, directly or indirectly, incur any Indebtedness which by its terms (or by
the terms of any agreement governing such Indebtedness) is contractually
subordinated to any other Indebtedness of the Loan Parties unless such
Indebtedness is also by its terms (or by the terms of any agreement governing
such Indebtedness) made contractually subordinate to the Obligations of the
Loan Parties under this Agreement; provided,
however, that no Indebtedness will
be deemed to be contractually subordinated in right of payment to any other
Indebtedness of the Loan Parties’ solely by virtue of being unsecured.

 

The accrual of interest,
accrual of dividends on Disqualified Capital Stock, the accretion or
amortization of original issue discount, the payment of interest on any
Indebtedness in the form of additional Indebtedness in accordance with their
terms, the reclassification of Preferred Stock 
as Indebtedness due to a change in accounting principles, and the
payment of dividends on Disqualified Capital Stock in the form of additional
shares of the same class of Disqualified Capital Stock will not be deemed to be
an incurrence of Indebtedness or an issuance of Disqualified Capital Stock for
purposes of this Section 7.7. Notwithstanding any other provision of this Section 7.7,
the maximum amount of Indebtedness that the Loan Parties may incur pursuant to
this Section 7.7 shall not be deemed to be exceeded solely as a result of
fluctuations in exchange rates or currency values.

 

The amount of any
Indebtedness outstanding as of any date will be:

 

(1)                  the accreted value of the Indebtedness, in the case of
any Indebtedness issued with original issue discount;

 

(2)                  the principal amount of the Indebtedness, in the case
of any other Indebtedness; and

 

(3)                  in respect of Indebtedness of another Person secured
by a Lien on the assets of the specified Person without recourse to such Person
or any of its assets (other than to the assets that are the subject of such
Lien), the lesser of:

 

(a)                                  the Fair Market Value of such assets that
are the subject of such Lien at the date of determination; and

 

71

 

(b)                                 the amount of the Indebtedness of the
other Person.

 

7.8.                                                      Nature
of Business.

 

Substantially change the nature of the business in
which it is presently engaged, nor except as specifically permitted hereby
purchase or invest, directly or indirectly, in any assets or property other
than in the ordinary course of business for assets or property which are useful
in, necessary for and are to be used in its business as presently conducted
and/or are expressly permitted hereunder to be conducted in the future.

 

7.9.                                                      Transactions
with Affiliates.

 

Except (a) as expressly permitted by Section 7.1
and Section 7.4, (b) pursuant to those agreements described on Schedule 7.9 as in effect on
the Closing Date (and any amendment thereto or replacement agreement which is
not more disadvantageous to the Loan Party in any material respect than the
agreement existing as of the Closing Date), (c) issuances and sales of Capital
Stock of Holdings to its Affiliates and (d) so long as no Default or Event of
Default shall have occurred and be continuing, the payment of fees under the
Management Agreement in an amount not to exceed $500,000 in any calendar year,
directly or indirectly, purchase, acquire or lease any property from, or sell,
transfer or lease any property to, or otherwise deal with, any Affiliate,
except transactions in the ordinary course of business, on an arm’s-length
basis on terms no less favorable than terms which would have been obtainable
from a Person other than an Affiliate and in any event disclosed to Agent.

 

7.10.                                                Leases.

 

Enter as lessee into any lease arrangement for real or
personal property (other than Capital Leases) if after giving effect thereto,
aggregate annual rental payments for all leased property would exceed
$5,000,000 in any one fiscal year for all Loan Parties.

 

7.11.                                                Subsidiaries.

 

(a)                                  Form
any Subsidiary, unless (i) such Subsidiary expressly joins in this Agreement as
a Loan Party and becomes jointly and severally liable for the obligations of
Loan Parties hereunder and under any other agreement between any Loan Party and
Lenders (other than any Foreign Subsidiary) and (ii) Agent shall have received
all documents, including legal opinions, it may reasonably require to establish
compliance with each of the foregoing conditions.

 

(b)                                 Enter
into any partnership, joint venture or similar arrangement.

 

(c)                                  Permit
any Foreign Subsidiary to own any Goods (as defined in the UCC), other than
Goods in transit, located in the United States of America, any state thereof or
the District of Columbia.

 

7.12.                                                Fiscal
Year and Accounting Changes.

 

Change its fiscal year from December 31 or make
any significant change (i) in accounting treatment and reporting practices
except as required by GAAP or (ii) in tax reporting treatment except as
required by law.

 

72

 

7.13.                                                Pledge
of Credit.

 

Now or hereafter pledge Agent’s or any Lender’s credit
on any purchases or for any purpose whatsoever or use any portion of any
Advance in or for any business other than the applicable Loan Party’s business
as conducted on the date of this Agreement.

 

7.14.                                                Amendment
of Organizational Documents.

 

Amend, modify or waive any term or provision of its
certificate or articles of formation, limited liability company agreement,
partnership agreement, certificate of incorporation, by-laws, or any other
applicable documents relating to such Loan Party’s formation or organization,
unless required by law or unless such amendment, modification or waiver could
not reasonably be expected to adversely affect the rights of the Agent and/or
the Lenders (and, in any such event, with prompt written notice to Agent).

 

7.15.                                                Compliance
with ERISA.

 

(i) Without prior notice to Agent, (x) maintain, or
permit any member of the Controlled Group to maintain, or (y) become obligated
to contribute to, or permit any member of the Controlled Group to become
obligated to contribute to, any Plan covered by Title IV of ERISA, (ii) engage
in any non-exempt “prohibited transaction”, as that term is defined in Section 406
of ERISA and Section 4975 of the Code, (iii) incur, or permit any member
of the Controlled Group to incur, any “accumulated funding deficiency”, as that
term is defined in Section 302 of ERISA or Section 412 of the Code,
where such deficiency is reasonably likely to result in a Material Adverse
Effect, (iv) terminate, or permit any member of the Controlled Group to
terminate, any Plan where such event could result in any liability of any Loan
Party or the imposition of a lien on the property of any Loan Party pursuant to
Section 4068 of ERISA where such liability or lien is reasonably likely to
result in a Material Adverse Effect, (v) assume, or permit any member of the
Controlled Group to assume, any obligation to contribute to any Multiemployer
Plan not disclosed on Schedule 5.8(d),
(vi) incur, or permit any member of the Controlled Group to incur, any
withdrawal liability to any Multiemployer Plan where such liability is reasonably
likely to result in a Material Adverse Effect, (vii) fail promptly to notify
Agent of the occurrence of any Termination Event, (viii) fail to comply with
the requirements of ERISA or the Code or other applicable laws in respect of
any Plan where such failure is reasonably likely to result in a Material
Adverse Effect, (ix) fail to meet, or permit any member of the Controlled Group
to fail to meet, all minimum funding requirements under ERISA or the Code or
postpone or delay or allow any member of the Controlled Group to postpone or
delay any funding requirement with respect of any Plan covered by Title IV of
ERISA where such failure, postponement or delay is reasonably expected to
result in a Material Adverse Effect.

 

7.16.                                                Prepayment
of Indebtedness.

 

Except as permitted pursuant to Section 7.17,
at any time, directly or indirectly, prepay any Indebtedness (other than to
Lenders), or repurchase, redeem, retire or otherwise acquire any Indebtedness
of any Loan Party.

 

7.17.                                                Senior
Note Obligations; Subordinated Notes.

 

At any time, (a) (x) directly or indirectly, pay,
prepay, repurchase, redeem, retire or otherwise acquire, or make any payment on
account of any principal of, interest on or premium

 

73

 

payable in connection with the repayment or redemption
of any of the Subordinated Notes in violation of the Subordination Agreement or
with respect to any principal amount of the Subordinated Notes or (y) directly
or indirectly, pay, prepay, repurchase, redeem, retire or otherwise acquire, or
make any payment on account of any principal of the Senior Note Obligations, if
Borrowers do not have at least 
$10,000,000 of Undrawn Availability after giving effect thereto; or (b) amend
or waive any provision in any of the (x) Senior Note Documents without the
prior written consent of Agent, if such amendment, modification or other change
would (i) increase the aggregate principal amount of the Senior
Note Obligations, (ii) shorten the final maturity of the Senior
Note Obligations, (iii) require any scheduled principal payment to be made
earlier than the date originally scheduled or otherwise amend Article Three,
Section 4.10 or Section 4.11 of the Senior Note Agreement in a manner
that is adverse to Agent and/or Lenders, (iv) increase the amount of any
mandatory prepayment of principal, or (v) increase the interest rate with
respect to the Senior Note Obligations by more than 250 basis points above the
highest rate of interest specified therein as of the date hereof (it being
understood that the imposition of a default rate of interest in the amount and
under the circumstances in the Senior Note Agreement as in effect on the
date hereof shall not be restricted by this clause) or (y) Subordinated Debt
Documentation if such amendment or waiver increases the principal amount
outstanding or modifies or amends any other material term therein in a manner
that is adverse to Agent and/or Lenders.

 

7.18.                                                State
of Organization.

 

Change the State or applicable jurisdiction in which
it is incorporated or otherwise organized, unless it has given the Agent not
less than thirty (30) days prior written notice thereof.

 

7.19.                                                Foreign
Asset Control Regulations.

 

Become, nor shall any
Affiliate of any Loan Party have become, sanctioned or targeted under any
Federal regulation governing Foreign Asset Control, or any other comparable
statute or regulation.

 

VIII.                         CONDITIONS
PRECEDENT.

 

8.1.                                                      Conditions
to Initial Advances.

 

The agreement of Lenders to make the initial Advances
requested to be made on the Closing Date is subject to the satisfaction, or
waiver by Lenders, immediately prior to or concurrently with the making of such
Advances, of the following conditions precedent:

 

(a)                                  Notes.  Agent shall have received the Notes duly
executed and delivered by an authorized officer of each Borrower;

 

(b)                                 Filings,
Registrations, Recordings and Searches. 
Each document (including, without limitation, any UCC financing
statement) required by this Agreement, any related agreement or under law or
reasonably requested by the Agent to be filed, registered or recorded in order
to create, in favor of Agent, a perfected security interest in or lien upon the
Collateral shall have been properly filed, registered or recorded in each
jurisdiction in which the filing, registration or recordation thereof is so
required or requested, and Agent shall have received an acknowledgment copy, or
other evidence satisfactory to it, of each such filing, registration or
recordation and

 

74

 

satisfactory evidence of the payment of any necessary fee, tax or
expense relating thereto.  The Agent
shall also have received UCC, tax, judgment and other lien searches with
respect to each Loan Party in such jurisdictions as the Agent shall require,
and the results of such searches shall be satisfactory to the Agent;

 

(c)                                  Proceedings
of Loan Parties.  Agent shall have
received a copy of the resolutions in form and substance reasonably
satisfactory to Agent, of the Board of Directors (or equivalent authority) of
each Loan Party authorizing (i) the execution, delivery and performance of this
Agreement, the Other Documents (other than the Existing Other Documents to the
extent terminated pursuant to the terms of Section 17.19 of this
Agreement), the Acquisition Documents, the Equity Documents, the Senior Note
Documents, and any other agreements related to the transactions contemplated
hereby to the extent such Loan Party is a party thereto, (collectively the “Transaction
Documents”), and (ii) the granting by each Loan Party of the security
interests in and liens upon the Collateral as provided hereunder, in each case
certified by the Secretary or an Assistant Secretary of each Loan Party as of
the Closing Date; and, such certificate shall state that the resolutions
thereby certified are in accordance with the provisions of the charter,
operating agreement, LLC agreement or partnership agreement and the law of the
jurisdiction of such Loan Party’s organizations or formation and have not been
amended, modified, revoked or rescinded as of the date of such certificate;

 

(d)                                 Incumbency
Certificates of Loan Parties.  Agent
shall have received a certificate of the Secretary or an Assistant Secretary of
each Loan Party, dated the Closing Date, as to the incumbency and signature of
the officers of each Loan Party executing this Agreement, any certificate or
other documents to be delivered by it pursuant hereto, together with evidence
of the incumbency of such Secretary or Assistant Secretary;

 

(e)                                  Certificates.  Agent shall have received a copy of the
articles or certificate of incorporation or other charter documents and by-laws
or similar documents of each Loan Party, and the Equity Documents, and all
amendments thereto, certified by Secretary of such Loan Party that there have
been no changes to such certificate since February 27, 2004.

 

(f)                                    Good
Standing Certificates.  Agent shall
have received good standing certificates for each Loan Party dated not more
than thirty (30) days prior to the Closing Date, issued by the Secretary of
State or other appropriate official of each Loan Party’s jurisdiction of
organization and each jurisdiction where the conduct of each Loan Party’s
business activities or the ownership of its properties necessitates
qualification;

 

(g)                                 Legal
Opinion.  Agent shall have received
the executed legal opinion, each in form and substance satisfactory to Agent,
of (x) Dechert L.L.P. which shall cover such matters incident to the
transactions contemplated by this Agreement, the Other Documents and the other
Transactions as Agent may reasonably require, (y) Schreck Brignone, Nevada
counsel and (z) Kantrow, Spaht Weaver and Blitzer (APLC), Louisiana counsel,
and each Loan Party hereby authorizes and directs such counsel to deliver such
opinions to Agent and Lenders;

 

(h)                                 No
Litigation.  (i) No litigation,
investigation or proceeding before or by any arbitrator or Governmental Body
shall be continuing or threatened against any Loan Party or against the
officers or directors of, or equivalent Persons with respect to, any Loan Party
(A) in connection with this Agreement and/or the Other Documents or any of the
transactions contemplated thereby and which, in the

 

75

 

reasonable opinion of Agent, is deemed material or (B) which could, in
the reasonable opinion of Agent, have a Material Adverse Effect; and (ii) no
injunction, writ, restraining order or other order of any nature materially
adverse to any Loan Party or the conduct of its business or inconsistent with
the due consummation of the Transactions shall have been issued by any
Governmental Body;

 

(i)                                     Financial
Condition Certificates.  Agent shall
have received an executed Financial Condition Certificate in the form of Exhibit 8.1(i).

 

(j)                                     Fees.  Agent shall have received all fees payable to
Agent and Lenders on or prior to the Closing Date pursuant to Article III
and under the Fee Letter;

 

(k)                                  Other
Documents.  Agent shall have received
executed Other Documents, each in form and substance reasonably satisfactory to
Lenders;

 

(l)                                     Insurance.  Agent shall have received in form and
substance satisfactory to Agent, certified copies of Loan Parties’ casualty
insurance policies, together with loss payable endorsements on Agent’s standard
form of loss payee endorsement naming Agent as loss payee, and certified copies
of Loan Parties’ liability insurance policies, together with endorsements
naming Agent as a co-insured;

 

(m)                               Equity
Documents.  Agent shall have received
final executed copies of the Equity Documents as in effect on the Closing Date
and the transactions contemplated thereby (including, without limitation the
common equity contribution of $24,000,000) shall have been consummated;

 

(n)                                 Senior
Note Documents.  Agent shall have
received final executed copies of the Senior Note Documents.  The Senior Note Obligations shall have terms
and conditions acceptable to Agent, including, without limitation, limitations
on principal payments to be made by the Loan Parties, as are acceptable to
Agent.  The closing of the Senior Note
Documents shall occur substantially simultaneously with the closing hereof.

 

(o)                                 Intercreditor
Agreement.  The Liens securing the
Senior Note Obligations shall be subordinated to the Liens in the Collateral in
favor of the Agent pursuant to the Intercreditor Agreement, which shall be in
form and substance satisfactory to Agent including, without limitation,
containing standstill, liquidation and bankruptcy (waterfall) provisions in
form and substance satisfactory to Agent. Agent shall have received an executed
counterpart of the Intercreditor Agreement from the Senior Note Agent and all
other signatories to the Intercreditor Agreement.

 

(p)                                 Acquisition.  Agent shall have received final executed
copies of all Acquisition Documents.  The
Acquisition Documents and all terms and conditions of the Acquisition shall be
acceptable to Agent, and all due diligence of Agent and its counsel with
respect thereto shall be satisfactory in all respects to Agent and its counsel.
The Acquisition shall (i) be consummated in compliance in all material respects
with all requirements of all United States laws and regulations, and (ii) be
consummated prior to or simultaneously with the closing hereof, in accordance
with the Acquisition Documents.

 

(q)                                 Solvency.  The Loan Parties will be required to satisfy
Agent on the Closing Date that after giving effect to the Transactions, they
are solvent, able to meet their obligations as they mature and have sufficient
capital to enable them to operate their business.

 

76

 

(r)                                    Foreign
Asset Control Regulations.  No Loan
Party, nor any Affiliate of any Loan Party, shall have become sanctioned or
targeted under any Federal regulation governing Foreign Asset Control, or any
other comparable statute or regulation.

 

(s)                                  Environmental
Reports.  Agent shall have received
all environmental studies and reports prepared by independent environmental
engineering firms with respect to all Real Property owned or leased by Loan
Parties;

 

(t)                                    Payment
Instructions.  Agent shall have
received written instructions from Loan Parties directing the application of
proceeds of the initial Advances made pursuant to this Agreement;

 

(u)                                 Blocked
Accounts.  Agent shall have received
duly executed Blocked Account Agreements currently in place with JP Morgan
Chase Bank and Bank One, N.A. which establish the springing nature of each of
the Blocked Accounts and shall in all respects be reasonably acceptable to
Agent.

 

(v)                                 Consents.  Agent shall have received any and all
Consents necessary to permit the effectuation of the transactions contemplated
by this Agreement and the Other Documents; and, Agent shall have received such
Consents and waivers of such third parties as might assert claims with respect
to the Collateral, as Agent and its counsel shall deem necessary;

 

(w)                               No
Material Adverse Change.  As
determined by Agent in its sole discretion, (i) since September 30, 2004,
there shall not have occurred any event, condition or state of facts which
could reasonably be expected to have a Material Adverse Effect and (ii) no
representations made or information supplied to Lenders shall have been proven
to be inaccurate or misleading in any material respect;

 

(x)                                   Leasehold
Agreements.  Agent shall have
received landlord, mortgagee or warehouse agreements satisfactory to Agent with
respect to all premises leased by Loan Parties at which Inventory is located;

 

(y)                                 Contract
Review.  Agent shall have reviewed
all material contracts of Loan Parties including, without limitation, leases,
union contracts, labor contracts, vendor supply contracts, license agreements
and distributorship agreements and such contracts and agreements shall be
satisfactory in all respects to Agent;

 

(z)                                   Officer’s
Certificate.  Agent shall have
received an officer’s certificate signed by the Chief Financial Officer of each
Loan Party dated as of the date hereof, stating that (i) all representations
and warranties set forth in this Agreement and the Other Documents are true and
correct in all material respects on and as of such date (except to the extent
made as of a specific date in which case it shall be true and correct in all
material respects as of such date), (ii) Loan Parties are on such date in
compliance in all material respects with all the terms and provisions set forth
in this Agreement and the Other Documents and (iii) on such date no Default or
Event of Default has occurred or is continuing;

 

(aa)                            Borrowing
Base.  Agent shall have received a
duly executed Borrowing Base Certificate which shall indicate that the
aggregate amount of Eligible Receivables and Eligible

 

77

 

Inventory is sufficient in value and amount to support Revolving
Advances and Letters of Credit in the amount requested by Borrowers on the
Closing Date;

 

(bb)                          Undrawn
Availability.  After giving effect to
the Transactions, the initial Revolving Advances and Letters of Credit
hereunder, Borrowers shall have Undrawn Availability of at least $17,000,000;

 

(cc)                            Control
Agreements.  Agent shall have
received control agreements with respect to all Collateral in which a security
interest may be perfected by means of control under the UCC;

 

(dd)                          Payoff
of Indebtedness.  (x) All principal,
interest and fees with respect to the term loan and revolving advances under
the Existing Loan Agreement shall have been repaid in full, and (y) all
principal, interest, fees and other amounts owing (i) to AmSouth in connection
with the AmSouth Facility Documents shall be placed in escrow to apply to the
repayment in full of all such principal, interest, fees and other amounts and
such deposit in escrow shall be sufficient to repay and defease all obligations
of Loan Parties under the AmSouth Documents and (ii) the Subordinated Lenders
(as defined in the Existing Loan Agreement) shall have been repaid in
full.  Agent shall have received evidence
of the events described in the foregoing clause (y) and the release of all
collateral security in connection therewith, in each instance in form and
substance satisfactory to Agent; and

 

(ee)                            Other.  All corporate and other proceedings, and all
documents, instruments and other legal matters in connection with this
Agreement shall be satisfactory in form and substance to Agent, Lenders and
their counsel.

 

8.2.                                                      Conditions
to Each Advance.

 

The agreement of Lenders to make any Advance requested
to be made on any date (including, without limitation, the initial Advance), is
subject to the satisfaction of the following conditions precedent as of the
date such Advance is made:

 

(a)                                  Representations
and Warranties.  Each of the
representations and warranties made by any Loan Party in or pursuant to this
Agreement and any related agreements to which it is a party, and each of the
representations and warranties contained in any certificate, document or
financial or other statement furnished at any time under or in connection with
this Agreement or any related agreement shall be true and correct in all
material respects on and as of such date as if made on and as of such date
(except to the extent such representation or warranty is made solely as of a
specific date, in which case such representation or warranty shall continue to
be true and correct in all material respects as of such date);

 

(b)                                 No
Default.  No Event of Default or
Default shall have occurred and be continuing on such date, or would exist
after giving effect to the Advances requested to be made, on such date; provided,
however, that Lenders, in their sole discretion, may continue to make
Advances notwithstanding the existence of an Event of Default or Default and
that any Advances so made shall not be deemed a waiver of any such Event of
Default or Default;

 

(c)                                  Maximum
Revolving Advances.  In the case of
any Revolving Advances requested to be made, after giving effect thereto, the
aggregate Revolving Advances shall not exceed the maximum amount of Revolving
Advances permitted under Section 2.1; and

 

78

 

(d)                                 Maximum
Letters of Credit.  In the case of
any Letters of Credit requested to be made, after giving effect thereto, the
aggregate Letter of Credit Obligations shall not exceed the maximum amount
permitted under Section 2.8.

 

Each request for an
Advance by any Borrower hereunder shall constitute a representation and
warranty by each Borrower as of the date of such Advance that the conditions
contained in this Section 8.2 shall have been satisfied.

 

IX.                                INFORMATION
AS TO LOAN PARTIES.

 

Each Loan Party shall,
until satisfaction in full of the Obligations and the termination of this
Agreement:

 

9.1.                                                      Disclosure
of Material Matters.

 

(a)                                  Immediately
upon learning thereof, report to Agent all matters materially affecting the
value, enforceability or collectibility of any portion of the Collateral with a
value, individually or in the aggregate, in excess of $1,000,000, including,
without limitation, any Loan Party’s reclamation or repossession of, or the
return to any Loan Party of, a material amount of goods or claims or disputes
asserted by any Customer or other obligor.

 

(b)                                 Promptly
notify Agent in writing upon the occurrence of (a) any Event of Default or
Default; (b) any event of default under the Subordinated Debt Documentation
and/or the Senior Note Documents; (c) any event which with the giving of notice
or lapse of time, or both, would constitute an event of default under the
Subordinated Debt Documentation and/or the Senior Note Documents; (d) any
event, development or circumstance whereby any financial statements or other
reports furnished to Agent fail in any material respect to present fairly, in
accordance with GAAP consistently applied to the extent applicable, the
financial condition or operating results of any Loan Party as of the date of
such statements; (e) any accumulated retirement plan funding deficiency which,
if such deficiency continued for two plan years and was not corrected as
provided in Section 4971 of the Code, could subject any Loan Party to a
tax imposed by Section 4971 of the Code; (f) each and every default by any
Loan Party which might result in the acceleration of the maturity of
Indebtedness with an outstanding principal amount, individually or in the
aggregate, in excess of $1,000,000, including the names and addresses of the
holders of such Indebtedness with respect to which there is a default existing
or with respect to which the maturity has been or could be accelerated, and the
amount of such Indebtedness; (g) any other development in the business or
affairs of any Loan Party which could reasonably be expected to have a Material
Adverse Effect; in each case describing the nature thereof and the action Loan
Parties propose to take with respect thereto; (h) the receipt by any Loan Party
of notice of any material labor dispute to which any Loan Party may become a
party, any strikes or walkouts relating to any of its plants or other
facilities, and the expiration of any labor contract to which any Loan Party is
a party or by which any Loan Party is bound; (i) any lapse or other termination
of any Consent issued to any Loan Party by any Governmental Body or any other
Person that is material to the operation of the Loan Parties’ business; (j) any
refusal by any Governmental Body or any other Person to renew or extend any
such Consent which is material to the operation of the Loan Parties’ business;
(k) copies of any periodic or special reports filed by any Loan Party with any
Governmental Body or Person, if such reports indicate any material adverse
change in the business, operations, affairs or condition of any Loan Party, or
if copies thereof are requested by Agent or any Lender; (l) copies of any
material notices

 

79

 

and other communications from any Governmental Body or
Person which specifically relate to any Loan Party, (m) its receipt of notice
from any party to any contract listed on Schedule 5.22 or any other
contract that is material to the operation of the Loan Parties’ business
stating that it intends to terminate or amend such contract and which
termination or amendment could reasonably be expected to have a Material
Adverse Effect, (n) the termination of any contract listed on Schedule 5.22
or any other contract that is material to the Loan Parties’ business which
termination could reasonably be expected to have a Material Adverse Effect and
(o) the execution and delivery by any Loan Parties or any Subsidiary thereof
of  any guarantees or collateral security
with respect to the Senior Note Obligations other than the guarantees
in effect on the date hereof and the Collateral.

 

9.2.                                                      Reporting.

 

(a)                                  Deliver
to Agent, within five (5) days of the end of each month (or more frequently if
required by Agent), a Borrowing Base Certificate (which shall be calculated as
of the last day of the immediately preceding month and which shall not be
binding upon Agent or restrictive of Agent’s rights under this Agreement).

 

(b)                                 Deliver
to Agent on or before the fifteenth (15th) day of each month as and for the
prior month, and for each Borrower on an individual basis (x) accounts
receivable agings, (y) accounts payable agings, and (z) Inventory reports
(including information with respect to slow-moving Inventory levels and
Inventory mix).  In addition, each
Borrower shall deliver to Agent at such intervals as Agent may require:  (i) confirmatory assignment schedules, (ii) copies
of Customer’s invoices, (iii) evidence of shipment or delivery, and (iv) such
further schedules, documents and/or information regarding the Collateral as
Agent may require including, without limitation, trial balances and test
verifications.  Agent shall have the
right to confirm and verify all Receivables by any manner and through any
medium it considers commercially reasonable and do whatever it may deem
reasonably necessary to protect its interests hereunder.

 

(c)                                  The
items to be provided under Sections 9.2(a) and 9.2(b) are to be in form
satisfactory to Agent and executed by each Loan Party and delivered to Agent
from time to time solely for Agent’s convenience in maintaining records of the
Collateral, and any Loan Party’s failure to deliver any of such items to Agent
shall not affect, terminate, modify or otherwise limit Agent’s Lien with
respect to the Collateral.

 

9.3.                                                      Environmental
Reports.

 

Furnish Agent, concurrently with the delivery of the
financial statements referred to in Sections 9.6 and 9.7, with a
certificate signed by the President of each Loan Party stating, to the best of
his knowledge, that each Loan Party is in compliance in all material respects
with all federal, state and local laws relating to environmental protection and
control and occupational safety and health. 
To the extent any Loan Party is not in compliance with the foregoing
laws, the certificate shall set forth with specificity all areas of
non-compliance and the proposed action such Loan Party will implement in order
to achieve full compliance.

 

9.4.                                                      Litigation.

 

Promptly notify Agent in writing of any litigation,
suit or administrative proceeding affecting any Loan Party, whether or not the
claim is covered by insurance, and of any suit or

 

80

 

administrative proceeding, which in any such case
could reasonably be expected to have a Material Adverse Effect.

 

9.5.                                                      Government
Receivables.

 

Notify Agent immediately if any of its Receivables
arise out of contracts between any Loan Party and the United States, any state,
or any department, agency or instrumentality of any of them.

 

9.6.                                                      Annual
Financial Statements.

 

Furnish Agent as soon as available (but in any event
within one hundred twenty (120) days after the end of each fiscal year of Loan
Parties), financial statements of Loan Parties on a consolidating and
consolidated basis, including, but not limited to, statements of income and
stockholders’ equity and cash flow from the beginning of the current fiscal
year to the end of such fiscal year and the balance sheet as at the end of such
fiscal year, all prepared in accordance with GAAP applied on a basis consistent
with prior practices, and in reasonable detail and reported upon without
qualification by an independent certified public accounting firm selected by
Loan Parties and satisfactory to Agent (the “Accountants”).  The report of the Accountants shall be
accompanied by a statement of the Accountants certifying that (i) they have
caused the Loan Agreement to be reviewed, (ii) in making the examination upon
which such report was based either no information came to their attention which
to their knowledge constituted an Event of Default or a Default under this
Agreement or any related agreement or, if such information came to their
attention, specifying any such Default or Event of Default, its nature, when it
occurred and whether it is continuing, and such report shall contain or have
appended thereto calculations which set forth Loan Parties’ compliance with the
requirements or restrictions imposed by Sections 7.7 and 7.10.  In addition, the reports shall be accompanied
by a certificate of each Loan Party’s Chief Financial Officer which shall state
that, based on an examination sufficient to permit him to make an informed statement,
no Default or Event of Default exists, or, if such is not the case, specifying
such Default or Event of Default, its nature, when it occurred, whether it is
continuing and the steps being taken by Loan Parties with respect to such
event, and such certificate shall have appended thereto calculations which set
forth Loan Parties’ compliance with the requirements or restrictions imposed by
Sections 7.7 and 7.10.

 

9.7.                                                      Quarterly
Financial Statements.

 

Furnish Agent as soon as available (but in any event
within forty-five (45) days after the end of each fiscal quarter (other than
the last quarter of any fiscal year)), an unaudited balance sheet of Loan
Parties on a consolidated and consolidating basis and unaudited statements of
income and stockholders’ equity and cash flow of Loan Parties reflecting
results of operations from the beginning of the fiscal year to the end of such
quarter and for such quarter, prepared on a basis consistent with prior
practices and complete and correct in all material respects, subject to normal
and recurring year end adjustments that individually and in the aggregate are
not material to the business of Loan Parties. 
Each such balance sheet, statement of income and stockholders’ equity and
statement of cash flow shall set forth a comparison of the figures for (w) the
current fiscal period and (x) the current year-to-date with the figures for (y)
the same fiscal period and year-to-date period of the immediately preceding
fiscal year and (z) the projections for such fiscal period and year-to-date
period delivered pursuant to Section 6.10(b) or Section 9.11,
as applicable.  The financial statements
shall be accompanied by a certificate signed by the Chief Financial Officer of
each Loan Party, which shall state that, based on an examination sufficient to
permit him to make an informed

 

81

 

statement, no Default or Event of Default exists, or,
if such is not the case, specifying such Default or Event of Default, its
nature, when it occurred, whether it is continuing and the steps being taken by
Loan Parties with respect to such default, and such certificate shall have
appended thereto calculations which set forth Loan Parties’ compliance with the
requirements or restrictions imposed by Sections 7.7 and 7.10.

 

9.8.                                                      Monthly
Financial Statements.

 

Furnish Agent 
as soon as available (but in any event within thirty (30) days after the
end of each month other than the twelfth such month), an unaudited balance
sheet of Loan Parties on a consolidated and consolidating basis and unaudited
statements of income and stockholders’ equity and cash flow of Loan Parties on
a consolidated and consolidating basis reflecting results of operations from
the beginning of the fiscal year to the end of such month and for such month,
prepared on a basis consistent with prior practices and complete and correct in
all material respects, subject to normal and recurring year-end adjustments
that individually and in the aggregate are not material to the business of Loan
Parties.  Each such balance sheet,
statement of income and stockholders’ equity and statement of cash flow shall
set forth a comparison of the figures for (w) the current fiscal period and (x)
the current year-to-date with the figures for (y) the same fiscal period and
year-to-date period of the immediately preceding fiscal year and (z) the
projections for such fiscal period and year-to-date period delivered pursuant
to Section 6.10(b) or Section 9.11, as applicable.  The financial statements shall be accompanied
by a certificate of each Loan Party’s Chief Financial Officer, which shall
state that, based on an examination sufficient to permit him to make an
informed statement, no Default or Event of Default exists, or, if such is not
the case, specifying such Default or Event of Default, its nature, when it
occurred, whether it is continuing and the steps being taken by Loan Parties
with respect to such event.

 

9.9.                                                      Other
Reports.

 

Furnish Agent as soon as available, but in any event
within ten (10) days after the issuance thereof, with (i) copies of such
financial statements, reports and returns as each Loan Party shall make
publicly available to its stockholders and (ii) copies of all notices, material
financial statements, reports and returns sent pursuant to the Senior Note
Documents and/or the Subordinated Debt Documentation.

 

9.10.                                                Additional
Information.

 

Furnish Agent with such additional information as
Agent shall reasonably request in order to enable Agent to determine whether
the terms, covenants, provisions and conditions of this Agreement and the Notes
have been complied with by Loan Parties including, without limitation and
without the necessity of any request by Agent, (a) copies of all environmental
audits and reviews, (b) at least thirty (30) days prior thereto, notice of any
Loan Party’s opening of any new office or place of business or any Loan Party’s
closing of any existing office or place of business, and (c) promptly after the
filing thereof, copies of any annual report to be filed with the PBGC and/or
pursuant to ERISA in connection with any Plan.

 

9.11.                                                Projected
Operating Budget.

 

Furnish Agent, no later than the beginning of each
Loan Party’s fiscal years commencing with fiscal year 2006, a month-by-month
projected operating budget and cash flow of

 

82

 

Loan Parties on a consolidated and consolidating basis
for such fiscal year (including an income statement for each month and a
balance sheet as at the end of the last month in each fiscal quarter), such
projections to be accompanied by a certificate signed by the President or Chief
Financial Officer of each Loan Party to the effect that such projections have
been prepared on the basis of sound financial planning practice consistent with
past budgets and financial statements and that such officer has no reason to
question the reasonableness of any material assumptions on which such
projections were prepared.

 

9.12.                                                Variances
From Operating Budget.

 

Furnish Agent, concurrently with the delivery of the
quarterly and annual financial statements referred to in Section 9.6
and  9.7, a written report
summarizing all material variances from budgets submitted by Loan Parties
pursuant to Sections 6.10(b) and 9.11, and a discussion and analysis by
management with respect to such variances.

 

9.13.                                                ERISA
Notices and Requests.

 

Furnish Agent with prompt written notice in the event
that (i) any Loan Party knows or has reason to know that a Termination Event
has occurred, together with a written statement describing such Termination
Event and the action, if any, which such Loan Party or any member of the
Controlled Group has taken, is taking, or proposes to take with respect thereto
and, when known, any action taken or threatened by the Internal Revenue Service,
Department of Labor or PBGC with respect thereto, (ii) any Loan Party knows or
has reason to know that a prohibited transaction (as defined in Sections 406 of
ERISA and 4975 of the Code) has occurred together with a written statement
describing such transaction and the action which such Loan Party has taken, is
taking or proposes to take with respect thereto, (iii) a funding waiver request
has been filed with respect to any Plan covered by Title IV of ERISA together
with all communications received by any Loan Party or any member of the
Controlled Group with respect to such request, (iv) any increase in the
benefits of any existing Plan or the establishment of any new Plan or the
commencement of contributions to any Plan to which any Loan Party or any member
of the Controlled Group was not previously contributing shall occur and is
reasonably likely to result in a Material Adverse Effect, (v) any Loan Party
shall receive or shall have knowledge that any member of the Controlled Group
has received from the PBGC a notice of intention to terminate a Plan covered by
Title IV of ERISA or to have a trustee appointed to administer such a Plan,
together with copies of each such notice, if a Material Adverse Effect is
reasonably likely to result; (vi) any Loan Party shall receive any unfavorable
determination letter from the Internal Revenue Service regarding the
qualification of a Plan under Section 401(a) of the Code, together with
copies of each such letter; (vii) any Loan Party shall receive or shall have
knowledge that any member of the Controlled Group has received a notice
regarding the imposition of withdrawal liability, together with copies of each
such notice, if a Material Adverse Effect is reasonably likely to result;
(viii) any Loan Party or any member of the Controlled Group shall fail to make
a required installment or any other required payment under Section 412 of
the Code on or before the due date for such installment or payment and such
failure is reasonably likely to result in a Material Adverse Effect; (ix) any
Loan Party or any member of the Controlled Group knows that (a) a Multiemployer
Plan has been terminated, (b) the administrator or plan sponsor of a
Multiemployer Plan intends to terminate a Multiemployer Plan, or (c) the PBGC
has instituted or will institute proceedings under Section 4042 of ERISA
to terminate a Multiemployer Plan if, in any such case, a Material Adverse
Effect is likely to result.

 

83

 

9.14.                                                Additional
Documents.

 

Execute and deliver to Agent, upon request, such
documents and agreements as Agent may, from time to time, reasonably request to
carry out the purposes, terms or conditions of this Agreement.

 

X.                                    EVENTS
OF DEFAULT.

 

The occurrence of any one
or more of the following events shall constitute an “Event of Default”:

 

10.1.                        Failure by any Loan Party to
pay (a) any principal on the Obligations when due, whether at maturity or by
reason of acceleration pursuant to the terms of this Agreement or by notice of
intention to prepay, or by required prepayment or (b) any interest or any other
liabilities or make any other payment, fee or charge in accordance with the
terms provided for herein or in any Other Document within two (2) days after
such interest or other amount becomes due;

 

10.2.                        (i) Failure by Loan Parties to
perform, keep or observe any provision of Sections 4.2, 4.3, 4.4, 4.5, 4.6,
4.9, 4.10, 4.11, 4.15(h), 6.8, or Article VII or (ii) any
representation or warranty made or deemed made by any Loan Party in this
Agreement or any related agreement or in any certificate, document or financial
or other statement furnished at any time in connection herewith or therewith
shall prove to have been inaccurate in any material respect on the date when
made or deemed to have been made;

 

10.3.                        Failure by any Loan Party to
(i) furnish financial information (including, without limitation, information
to be furnished under Article IX) when due or when requested and,
solely with respect to the quarterly and monthly financial statements described
in Sections 6.10(a), 9.7 and 9.8, respectively, remaining unreceived for
five (5) days or (ii) permit the inspection of its books or records;

 

10.4.                        Issuance of a notice of  levy, assessment or attachment by the United
States or any department or instrumentality thereof or by any state, county,
municipality or other governmental agency against a material portion of any
Loan Party’s property which levy, assessment or attachment is not stayed or
lifted within the earlier of (x) thirty (30) days of issuance or (y) five (5)
days prior to the exercise of remedies with respect to any such levy,
assessment, injunction or attachment;

 

10.5.                        Failure or neglect of any Loan
Party to perform, keep or observe any term, provision, condition or covenant
herein contained, or contained in any Other Document, now or hereafter entered
into between any Loan Party, Agent and/or any Lender (to the extent such breach
is not otherwise embodied in any other provision of this Article X
for which a different grace or cure period is specified or which constitutes an
immediate Event of Default under this Agreement or the Other Documents), which
is not cured within fifteen (15) Business Days after the occurrence of such
Event of Default;

 

10.6.                        Any judgment or judgments (to
the extent Loan Parties’ insurance carrier has not confirmed coverage in
writing) are rendered against one or more Loan Parties for an aggregate amount
in excess of $2,000,000 which within thirty (30) days of such rendering is not
either satisfied, stayed or discharged of record;

 

84

 

10.7.                        Any Loan Party shall (i) apply
for, consent to or suffer the appointment of, or the taking of possession by, a
receiver, custodian, trustee, liquidator or similar fiduciary of itself or of
all or a substantial part of its property, (ii) make a general assignment for
the benefit of creditors, (iii) commence a voluntary case under any state or
federal bankruptcy laws (as now or hereafter in effect), (iv) be adjudicated a
bankrupt or insolvent, (v) file a petition seeking to take advantage of any
other law providing for the relief of debtors, (vi) acquiesce to, or fail to
have dismissed, within forty-five (45) days, any petition filed against it in
any involuntary case under such bankruptcy laws, or (vii) take any action for
the purpose of effecting any of the foregoing;

 

10.8.                        Any Loan Party shall admit in
writing its inability, or be generally unable, to pay its debts as they become
due or cease operations of its present business;

 

10.9.                        Any Significant Subsidiary of
any Loan Party shall (i) apply for, consent to or suffer the appointment of, or
the taking of possession by, a receiver, custodian, trustee, liquidator or
similar fiduciary of itself or of all or a substantial part of its property,
(ii) admit in writing its inability, or be generally unable, to pay its debts
as they become due or cease operations of its present business, (iii) make a
general assignment for the benefit of creditors, (iv) commence a voluntary case
under any state or federal bankruptcy laws (as now or hereafter in effect), (v)
be adjudicated a bankrupt or insolvent, (vi) file a petition seeking to take
advantage of any other law providing for the relief of debtors, (vii) acquiesce
to, or fail to have dismissed, within forty-five (45) days, any petition filed
against it in any involuntary case under such bankruptcy laws, or (viii) take
any action for the purpose of effecting any of the foregoing;

 

10.10.                  Any Lien created hereunder or
provided for hereby or under any Other Document for any reason ceases to be or
is not a valid and perfected Lien having a first priority interest with respect
to the Collateral (subject, as to priority, to (x) Liens described in clauses
(b), (f) and (k) of the definition of Permitted Encumbrances, and (y) the
terms of the Intercreditor Agreement);

 

10.11.                  An event of default has occurred and
been declared under the Senior Note Documents or the Subordinated Debt
Documentation, which default shall not have been cured or waived within any applicable
grace period and for which Senior Note Agent, Senior Noteholders and/or
Subordinated Lenders are permitted to take action;

 

10.12.                  A default of the obligations of any
Loan Party  (i) (x) with respect to the
payment of any Indebtedness in excess of $1,000,000 (including, for the purpose
of any interest rate swap or interest rate protection agreement, the notional
amount thereof) shall occur which would permit the holder of such Indebtedness
to accelerate it prior to its stated maturity or (ii) under any Indebtedness in
excess of $1,000,000 (including, for the purpose of any interest rate swap or
interest rate protection agreement, the notional amount thereof ) which would
permit the holder of such Indebtedness to accelerate it prior to its stated maturity
or (y) under any other agreement to which it is a party shall occur which could
reasonably be expected to have a Material Adverse Effect (financial or
otherwise), which default in each case is not cured or waived within any
applicable grace period;

 

10.13.                  Material breach of any Guaranty or
any similar agreement executed and delivered to Agent in connection with the
Obligations of any Loan Party or such Guaranty or similar agreement shall cease
to be in full force and effect, other than a partial or full release in
accordance with the express terms of this Agreement, or if any Guarantor or any
other Person obligated on any Guaranty

 

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attempts to terminate, challenges the validity of, or its liability under,
any such Guaranty or any similar agreement;

 

10.14.                  Any Change of Control shall occur;

 

10.15.                  Any material provision of this
Agreement or any Other Document shall, for any reason, other than a partial or
full release in accordance with the express terms of this Agreement, cease to
be valid and binding on any Loan Party, or any Loan Party shall so claim in
writing to Agent;

 

10.16.                  (i) Any Governmental Body shall (A)
revoke, terminate, suspend or adversely modify any license, permit, patent,
trademark or tradename of any Loan Party, the continuation of which is material
to the continuation of the Loan Parties’ business, or (B) commence proceedings
to suspend, revoke, terminate or adversely modify any such license, permit,
patent, trademark or tradename and such proceedings shall not be dismissed or
discharged within sixty (60) days, or (C) schedule or conduct a hearing on
the renewal of any license, permit, patent, trademark or tradename necessary
for the continuation of the Loan Parties’ business and the staff of such
Governmental Body issues a report recommending the termination, revocation,
suspension or material, adverse modification of such license, permit, patent,
trademark or tradename; and/or (ii) any agreement which is necessary or
material to the operation of the Loan Parties’ business shall be revoked or
terminated and not replaced by a substitute acceptable to Agent within thirty
(30) days after the date of such revocation or termination, and in the case of
clauses (i) and (ii) such revocation, termination, suspension, modification,
revocation and non-replacement would reasonably be expected to have a Material
Adverse Effect;

 

10.17.                  Any material portion of the
Collateral shall be seized or taken by a Governmental Body; or

 

10.18.                  An event or condition specified in Section 7.15
or Section 9.13 shall occur or exist and, as a result of such event or
condition, together with all other such events or conditions, any Loan Party or
any member of the Controlled Group shall incur, or in the opinion of Agent be
reasonably likely to incur, a liability to a Plan or the PBGC (or both) which,
in the reasonable judgment of Agent, would have a Material Adverse Effect; or

 

10.19.            The indictment of any Loan Party under any
criminal statute, or commencement of criminal or civil proceedings against any
Loan Party, pursuant to which statute or proceedings the penalties or remedies
sought or available include forfeiture to any Governmental Authority of any
material portion of the property of such Loan Party and in Agent’s reasonable
judgment there is a reasonable probability of an adverse determination;

 

10.20.            Any breach, default, event of default or
termination shall occur under any of the Acquisition Documents after giving
effect to applicable grace periods, if any, contained in any such Acquisition
Documents, in each case where the foregoing could reasonably be expected to
have a Material Adverse Effect.

 

10.21.            Any Loan Party of Affiliate thereof shall
be subject to any statute, rule, regulation or executive order which would
prohibit or restrict the Agent or the Lenders from entering into, or
consummating the transactions contemplated by, this Agreement, including
without limitation, (a) rules or regulations issued by the United States
Treasury Department, including, without limitation,

 

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the Office of Foreign Asset Control, and (b) executive orders, or lists
appending executive orders, pursuant to which (1) property or interests in
property have been blocked, or (2) persons have been identified as parties with
whom the Agent or the Lenders may not transact business.

 

XI.                                AGENT’S AND LENDERS’
RIGHTS AND REMEDIES AFTER DEFAULT.

 

11.1.                                                Rights
and Remedies.

 

Upon the occurrence (i) of an Event of Default
pursuant to Section 10.7, all Obligations shall be immediately due
and payable and this Agreement and the obligation of Lenders to make Advances
shall be deemed terminated; (ii) and during the continuance of any of the other
Events of Default and at any time thereafter, at the option of Required Lenders
all Obligations shall be immediately due and payable and Lenders shall have the
right to terminate this Agreement and to terminate the obligation of Lenders to
make Advances and (iii) of a filing of a petition against any Loan Party in any
involuntary case under any state or federal bankruptcy laws, the obligation of
Lenders to make Advances hereunder shall be terminated other than as may be
required by an appropriate order of the bankruptcy court having jurisdiction
over any Loan Party.  Upon the occurrence
and during the continuance of any Event of Default, Agent shall have the right
to exercise any and all other rights and remedies provided for herein, under
the UCC and at law or equity generally, including, without limitation, the
right to foreclose the security interests granted herein and to realize upon
any Collateral by any available judicial procedure and/or to take possession of
and sell any or all of the Collateral with or without judicial process.  Agent may enter any Loan Party’s premises or
other premises without legal process and without incurring liability to any
Loan Party therefor, and Agent may thereupon, or at any time thereafter, in its
discretion without notice or demand, take the Collateral and remove the same to
such place as Agent may deem advisable and Agent may require Loan Parties to
make the Collateral available to Agent at a convenient place.  With or without having the Collateral at the
time or place of sale, Agent may sell the Collateral, or any part thereof, at
public or private sale, at any time or place, in one or more sales, at such
price or prices, and upon such terms, either for cash, credit or future
delivery, as Agent may elect.  Except as
to that part of the Collateral which is perishable or threatens to decline
speedily in value or is of a type customarily sold on a recognized market,
Agent shall give Loan Parties reasonable notification of such sale or sales, it
being agreed that in all events written notice mailed to Loan Parties at least
five (5) days prior to such sale or sales is reasonable notification.  At any public sale Agent or any Lender may
bid for and become the purchaser, and Agent, any Lender or any other purchaser
at any such sale thereafter shall hold the Collateral sold absolutely free from
any claim or right of whatsoever kind, including any equity of redemption and
such right and equity are hereby expressly waived and released by each Loan
Party.  Agent may specifically disclaim
any warranties of title or the like at any sale of Collateral.  In connection with the exercise of the
foregoing remedies, Agent is granted permission to use all of each Loan Party’s
trademarks, trade styles, trade names, patents, patent applications, licenses,
franchises and other proprietary rights which are used in connection with (a)
Inventory for the purpose of disposing of such Inventory and (b) Equipment for
the purpose of completing the manufacture of unfinished goods.

 

11.2.                                                Application
of Proceeds.

 

The proceeds realized from the sale of any Collateral
shall be applied as follows: first, to the reasonable costs, expenses and
attorneys’ fees and expenses incurred by Agent for collection and for
acquisition, completion, protection, removal, storage, sale and delivery of the

 

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Collateral; second, to interest due upon any of the
Obligations; third, to fees payable in connection with this Agreement; fourth,
to furnish to Agent cash collateral in an amount not less than 105% of the
aggregate undrawn amount of all Letters of Credit, such cash collateral
arrangements to be in form and substance satisfactory to Agent; fifth, to the
principal of the Obligations; sixth, to all remaining unpaid Obligations; and
seventh, to the appropriate Loan Party (subject to the equal or prior claims of
other Persons under applicable law).  If
any deficiency shall arise, Loan Parties shall remain liable to Agent and
Lenders therefor.  If it is determined by
an authority of competent jurisdiction that a disposition by Agent did not
occur in a commercially reasonably manner, Agent may obtain a deficiency
judgment for the difference between the amount of the Obligation and the amount
that a commercially reasonable sale would have yielded.  Agent will not be considered to have offered
to retain the Collateral in satisfaction of the Obligations unless Agent has
entered into a written agreement with Loan Party to that effect.

 

11.3.                                                Agent’s
Discretion.

 

Agent shall have the right in its sole discretion to
determine which rights, Liens, security interests or remedies Agent may at any
time pursue, relinquish, subordinate, or modify or to take any other action
with respect thereto and such determination will not in any way modify or
affect any of Agent’s or Lenders’ rights hereunder.

 

11.4.                                                Setoff.

 

In addition to any other rights which Agent, any
Lender or any Issuer may have under applicable law, upon the occurrence and
during the continuance of an Event of Default, Agent, such Lender and such
Issuer shall have a right to apply any Loan Party’s property held by Agent,
such Lender or such Issuer to reduce the Obligations.

 

11.5.                                                Rights
and Remedies not Exclusive.

 

The enumeration of the foregoing rights and remedies
is not intended to be exhaustive and the exercise of any right or remedy shall
not preclude the exercise of any other right or remedies provided for herein or
otherwise provided by law, all of which shall be cumulative and not
alternative.

 

XII.                            WAIVERS AND JUDICIAL
PROCEEDINGS.

 

12.1.                                                Waiver
of Notice.

 

Each Loan Party hereby waives notice of non-payment of
any of the Receivables, demand, presentment, protest and notice thereof with
respect to any and all instruments, notice of acceptance hereof, notice of
loans or advances made, credit extended, Collateral received or delivered, or
any other action taken in reliance hereon, and all other demands and notices of
any description, except such as are expressly provided for herein.

 

12.2.                                                Delay.

 

No delay or omission on Agent’s or any Lender’s part
in exercising any right, remedy or option shall operate as a waiver of such or
any other right, remedy or option or of any default.

 

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12.3.                                                Jury
Waiver.

 

EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES
ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A)
ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM
WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED
HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY HEREBY
CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY
FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENTS OF THE PARTIES HERETO TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY.

 

XIII.                        EFFECTIVE DATE AND
TERMINATION.

 

13.1.                                                Term.

 

This Agreement, which shall inure to the benefit of and
shall be binding upon the respective successors and permitted assigns of each
Loan Party, Agent and each Lender, shall become effective on the date hereof
and shall continue in full force and effect until the earliest of (x) February 1,
2010 (the “Original Term”), (y) the acceleration of all Obligations
pursuant to the terms of this Agreement or (z) the date on which this Agreement
shall be terminated in accordance with the provisions hereof or by operation of
law (the earliest of
(x), (y) and (z), the “Termination Date”).  Loan Parties may terminate this Agreement at
any time upon ninety (90) days’ prior written notice upon payment in full of
the Obligations.

 

13.2.                                                Termination.

 

The termination of the Agreement shall not affect any
Loan Party’s, Agent’s or any Lender’s rights, or any of the Obligations having
their inception prior to the effective date of such termination, and the
provisions hereof shall continue to be fully operative until all transactions
entered into, rights or interests created or Obligations have been fully
disposed of, concluded or liquidated. 
The Liens and rights granted to Agent and Lenders hereunder and the
financing statements filed hereunder shall continue in full force and effect,
notwithstanding the termination of this Agreement or the fact that any or all
Borrowers’ Accounts may from time to time be temporarily in a zero or credit
position, until all of the Obligations of each Loan Party have been paid or
performed in full after the termination of this Agreement or each Loan Party
has furnished Agent and Lenders with an indemnification satisfactory to Agent
and Lenders in their sole discretion with respect thereto.  Accordingly, each Loan Party waives any
rights which it may have under Section 9-513(c) of the UCC to demand the
filing of termination statements with respect to the Collateral, and Agent
shall not be required to send such termination statements to each Loan Party,
or to file them with any filing office, unless and until this Agreement shall
have been terminated in accordance with its terms and all Obligations paid in
full in immediately available funds.  All
representations,

 

89

 

warranties, covenants, waivers and agreements
contained herein shall survive termination hereof until all Obligations are
paid or performed in full.

 

XIV.                        REGARDING
AGENT.

 

14.1.                                                Appointment.

 

Each Lender hereby designates GMAC CF to act as Agent
for such Lender under this Agreement and the Other Documents.  Each Lender hereby irrevocably authorizes
Agent to take such action on its behalf under the provisions of this Agreement
and the Other Documents and to exercise such powers and to perform such duties
hereunder and thereunder as are specifically delegated to or required of Agent
by the terms hereof and thereof and such other powers as are reasonably
incidental thereto and Agent shall hold all Collateral, payments of principal
and interest, fees (except the fees set forth in the Fee Letter), charges and
collections (without giving effect to any collection days) received pursuant to
this Agreement, for the ratable benefit of Lenders.  Agent may perform any of its duties hereunder
by or through its agents or employees.  As
to any matters not expressly provided for by this Agreement (including without
limitation, collection of the Note) Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Required Lenders, and such instructions shall be
binding; provided, however, that Agent shall not be required to
take any action which exposes Agent to liability or which is contrary to this
Agreement or the Other Documents or applicable law unless Agent is furnished
with an indemnification by the Lenders reasonably satisfactory to Agent with
respect thereto.

 

14.2.                                                Nature
of Duties.

 

Agent shall have no duties or responsibilities except
those expressly set forth in this Agreement and the Other Documents.  None of Agent, any Lender, or any Issuer nor
any of their respective officers, directors, employees or agents shall be (i)
liable for any action taken or omitted by them as such hereunder or in
connection herewith, unless caused by their gross (not mere) negligence or
willful misconduct, or (ii) responsible in any manner for any recitals,
statements, representations or warranties made by any Loan Party or any officer
thereof contained in this Agreement, or in any of the Other Documents or in any
certificate, report, statement or other document referred to or provided for
in, or received by Agent under or in connection with, this Agreement or any of
the Other Documents or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement, or any of the Other Documents
or for any failure of Loan Party to perform its obligations hereunder.  Agent shall not be under any obligation to
any Lender to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Agreement or any of
the Other Documents, or to inspect the properties, books or records of any Loan
Party.  The duties of Agent as respects
the Advances shall be mechanical and administrative in nature; Agent shall not
have by reason of this Agreement a fiduciary relationship in respect of any
Lender; and nothing in this Agreement, expressed or implied, is intended to or
shall be so construed as to impose upon Agent any obligations in respect of
this Agreement except as expressly set forth herein.

 

90

 

14.3.                                                Lack
of Reliance on Agent and Resignation.

 

(a)                                  Independently
and without reliance upon Agent, any Issuer or any other Lender, each Lender
has made and shall continue to make (i) its own independent investigation of
the financial condition and affairs of each Loan Party in connection with the
making and the continuance of the Advances hereunder and the taking or not
taking of any action in connection herewith, and (ii) its own appraisal of the
creditworthiness of each Loan Party. 
Agent shall have no duty or responsibility, either initially or on a
continuing basis, to provide any Lender with any credit or other information
with respect thereto, whether coming into its possession before making of the
Advances or at any time or times thereafter except as shall be provided by any
Loan Party pursuant to the terms hereof. 
Agent shall not be responsible to any Lender for any recitals,
statements, information, representations or warranties herein or in any
agreement, document, certificate or a statement delivered in connection with or
for the execution, effectiveness, genuineness, validity, enforceability,
collectibility or sufficiency of this Agreement or any Other Document, or of
the financial condition of any Loan Party, or be required to make any inquiry
concerning either the performance or observance of any of the terms, provisions
or conditions of this Agreement, the Other Documents or the financial condition
of any Loan Party, or the existence of any Event of Default or any Default.

 

(b)                                 Agent
may resign on sixty (60) days’ written notice to each of Lenders and each
Borrower and upon such resignation, the Required Lenders will promptly
designate a successor Agent reasonably satisfactory to Loan Parties.  If no such successor Agent is appointed at
the end of such sixty (60) day period, Agent may designate one of the Lenders
as a successor Agent.

 

(c)                                  Any
such successor Agent shall succeed to the rights, powers and duties of Agent,
and the term “Agent” shall mean such successor agent effective upon its
appointment, and the former Agent’s rights, powers and duties as Agent shall be
terminated, without any other or further act or deed on the part of such former
Agent.  After any Agent’s resignation as
Agent, the provisions of this Article XIV shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement.

 

14.4.                                                Certain
Rights of Agent.

 

(a)                                  If
Agent shall request instructions from Lenders with respect to any act or action
(including failure to act) in connection with this Agreement or any Other
Document, Agent shall be entitled to refrain from such act or taking such
action unless and until Agent shall have received instructions from the
Required Lenders; and Agent shall not incur liability to any Person by reason
of so refraining.  Without limiting the
foregoing, Lenders shall not have any right of action whatsoever against Agent
as a result of its acting or refraining from acting hereunder in accordance
with the instructions of the Required Lenders.

 

(b)                                 Anything
in this Agreement or otherwise to the contrary notwithstanding, each Lender
hereby agrees with each other Lender that no Lender shall take any action
(other than with respect to its right of setoff regarding property of Loan
Parties in its possession or control and/or actions against the Agent for
violating its obligations under this Agreement) to protect or enforce its
rights arising out of this Agreement or any Other Document without first
obtaining the prior written consent of Agent.

 

14.5.                                                Reliance.

 

Agent shall be entitled to rely, and shall be fully
protected in relying, upon any note, writing, resolution, notice, statement,
certificate, telex, teletype or telecopier message, cablegram,

 

91

 

order or other document, electronic or “e-mail”
message or telephone message believed by it to be genuine and correct and to
have been signed, sent or made by the proper person or entity, and, with
respect to all legal matters pertaining to this Agreement and the Other
Documents and its duties hereunder, upon advice of counsel selected by it.  Agent may employ agents and attorneys-in-fact
and shall not be liable for the default or misconduct of any such agents or
attorneys-in-fact selected by Agent with reasonable care, except to the extent
of the gross negligence or willful misconduct of such agents or
attorneys-in-fact.

 

14.6.                                                Notice
of Default.

 

Agent shall not be deemed to have knowledge or notice
of the occurrence of any Default or Event of Default hereunder or under the
Other Documents, unless Agent has received notice from a Lender or a Loan Party
referring to this Agreement or the Other Documents, describing such Default or
Event of Default and stating that such notice is a “notice of default”.  In the event that Agent receives such a
notice, Agent shall give notice thereof to Lenders.  Agent shall take such action with respect to
such Default or Event of Default (including, without limitation, the
institution of the Default Rate pursuant to Section 3.1 hereof) as
shall be reasonably directed by the Required Lenders; provided, that,
unless and until Agent shall have received such directions, Agent may (but shall
not be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default (including, without limitation, the
institution of the Default Rate pursuant to Section 3.1 hereof) as
it shall deem advisable in the best interests of Lenders.

 

14.7.                                                Indemnification.

 

To the extent Agent is not reimbursed and indemnified
by Loan Parties, each Lender will reimburse and indemnify Agent and each Issuer
in proportion to its respective portion of the Advances (or, if no Advances are
outstanding, according to its Commitment Percentage), from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever which may
be imposed on, incurred by or asserted against Agent and such Issuer in
performing its duties hereunder, or in any way relating to or arising out of
this Agreement or any Other Document; provided  that, Lenders
shall not be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the indemnified party’s gross (not mere) negligence or willful
misconduct.

 

14.8.                                                Agent
in its Individual Capacity.

 

With respect to the obligation of Agent to lend under
this Agreement, the Advances made by it shall have the same rights and powers
hereunder as any other Lender and as if it were not performing the duties as
Agent specified herein; and the term “Lender” or any similar term shall, unless
the context clearly otherwise indicates, include Agent in its individual
capacity as a Lender.  Agent may engage
in business with any Loan Party as if it were not performing the duties
specified herein, and may accept fees and other consideration from any Loan
Party for services in connection with this Agreement or otherwise without
having to give notice to or account for the same to Lenders.

 

92

 

14.9.                                                Delivery
of Documents.

 

To the extent Agent receives documents and information
from any Loan Party pursuant to Sections 9.6, 9.7 and 9.8, Agent will
promptly furnish such documents and information to Lenders.

 

14.10.                                          Loan
Parties’ Undertaking to Agent.

 

Without prejudice to their respective obligations to
Lenders under the other provisions of this Agreement, each Loan Party hereby
undertakes with Agent to pay to Agent from time to time on demand all amounts
from time to time due and payable by it for the account of Agent or Lenders or
any of them pursuant to this Agreement to the extent not already paid.  Any payment made pursuant to any such demand
shall pro  tanto satisfy the relevant Loan Party’s obligations to
make payments for the account of Lenders or the relevant one or more of them pursuant
to this Agreement.

 

XV.                            GUARANTY.

 

15.1.                                                Guaranty.

 

Each Guarantor hereby unconditionally guarantees, as a
primary obligor and not merely as a surety, jointly and severally with each
other Guarantor when and as due, whether at maturity, by acceleration, by
notice of prepayment or otherwise, the due and punctual performance of all
Obligations.  Each payment made by any
Guarantor pursuant to this Guaranty shall be made in lawful money of the United
States in immediately available funds.

 

15.2.                                                Waivers.

 

Each Guarantor hereby absolutely, unconditionally and
irrevocably waives (i) promptness, diligence, notice of acceptance, notice of
presentment of payment and any other notice hereunder, (ii) demand of payment,
protest, notice of dishonor or nonpayment, notice of the present and future
amount of the Obligations and any other notice with respect to the Obligations,
(iii) any requirement that the Agent or any Lender protect, secure, perfect or
insure any Lien or any property subject thereto or exhaust any right or take
any action against any other Loan Party, or any Person or any Collateral, (iv)
any other action, event or precondition to the enforcement hereof or the
performance by each such Guarantor of the Obligations, and (v) any defense
arising by any lack of capacity or authority or any other defense of any Loan
Party or any notice, demand or defense by reason of cessation from any cause of
Obligations other than payment and performance in full of the Obligations by
the Loan Parties and any defense that any other guarantee or security was or
was to be obtained by Agent.

 

15.3.                                                No
Defense.

 

No invalidity, irregularity, voidableness, voidness or
unenforceability of this Agreement or any Other Document or any other agreement
or instrument relating thereto, or of all or any part of the Obligations or of
any collateral security therefor shall affect, impair or be a defense
hereunder.

 

93

 

15.4.                                                Guaranty
of Payment.

 

The Guaranty hereunder is one of payment and performance,
not collection, and the obligations of each Guarantor hereunder are independent
of the Obligations of the other Loan Parties, and a separate action or actions
may be brought and prosecuted against any Guarantor to enforce the terms and
conditions of this Article XV, irrespective of whether any action
is brought against any other Loan Party or other Persons or whether any other
Loan Party or other Persons are joined in any such action or actions.  Each Guarantor waives any right to require
that any resort be had by Agent or any Lender to any security held for payment
of the Obligations or to any balance of any deposit account or credit on the
books of any Agent or any Lender in favor of any Loan Party or any other
Person.  No election to proceed in one
form of action or proceedings, or against any Person, or on any Obligations,
shall constitute a waiver of Agent’s right to proceed in any other form of
action or proceeding or against any other Person unless Agent has expressed any
such right in writing.  Without limiting
the generality of the foregoing, no action or proceeding by Agent against any
Loan Party under any document evidencing or securing indebtedness of any Loan
Party to Agent shall diminish the liability of any Guarantor hereunder, except
to the extent Agent receives actual payment on account of Obligations by such
action or proceeding.

 

15.5.                                                Liabilities
Absolute.

 

The liability of each Guarantor hereunder shall be
absolute, unlimited and unconditional and shall not be subject to any reduction,
limitation, impairment, discharge or termination for any reason, including,
without limitation, any claim of waiver, release, surrender, alteration or
compromise, and shall not be subject to any claim, defense or setoff,
counterclaim, recoupment or termination whatsoever by reason of the invalidity,
illegality or unenforceability of any other Obligation or otherwise.  Without limiting the generality of the
foregoing, the obligations of each Guarantor shall not be discharged or
impaired, released, limited or otherwise affected by:

 

(i)                                     any
change in the manner, place or terms of payment or performance, and/or any
change or extension of the time of payment or performance of, release, renewal
or alteration of, or any new agreements relating to any Obligation, any
security therefor, or any liability incurred directly or indirectly in respect
thereof, or any rescission of, or amendment, waiver or other modification of,
or any consent to departure from, this Agreement or any Other Document,
including any increase in the Obligations resulting from the extension of
additional credit to any Borrower or otherwise;

 

(ii)                                  any
sale, exchange, release, surrender, loss, abandonment, realization upon any
property by whomsoever at any time pledged or mortgaged to secure, or howsoever
securing, all or any of the Obligations, and/or any offset there against, or
failure to perfect, or continue the perfection of, any Lien in any such
property, or delay in the perfection of any such Lien, or any amendment or
waiver of or consent to departure from any other guaranty for all or any of the
Obligations;

 

(iii)                               the
failure of the Agent or any Lender to assert any claim or demand or to enforce
any right or remedy against any Borrower or any other Loan Party or any other
Person under the provisions of this Agreement or any Other Document or any
other document or instrument executed and delivered in connection herewith or
therewith;

 

(iv)                              any
settlement or compromise of any Obligation, any security therefor or any
liability (including any of those hereunder) incurred directly or indirectly in
respect thereof or hereof, and any subordination of the payment of all or any
part thereof to the

 

94

 

payment of any obligation
(whether due or not) of any Loan Party to creditors of any Loan Party other
than any other Loan Party;

 

(v)                                 any
manner of application of Collateral, or proceeds thereof, to all or any of the
Obligations, or any manner of sale or other disposition of any Collateral for
all or any of the Obligations or any other assets of any Loan Party; and

 

(vi)                              any
other agreements or circumstance of any nature whatsoever that may or might in
any manner or to any extent vary the risk of any Guarantor, or that might
otherwise at law or in equity constitute a defense available to, or a discharge
of, the Guaranty hereunder and/or the obligations of any Guarantor, or a
defense to, or discharge of, any Loan Party or any other Person or party hereto
or the Obligations or otherwise with respect to the Advances or other financial
accommodations to any Borrower pursuant to this Agreement and/or the Other
Documents.

 

15.6.                                                Waiver
of Notice.

 

The Agent shall have the right to do any of the above
without notice to or the consent of any Guarantor and each Guarantor expressly
waives any right to notice of, consent to, knowledge of and participation in
any agreements relating to any of the above or any other present or future
event relating to Obligations whether under this Agreement or otherwise or any
right to challenge or question any of the above and waives any defenses of such
Guarantor which might arise as a result of such actions.

 

15.7.                                                Agent’s
Discretion.

 

Agent may at any time and from time to time (whether
prior to or after the revocation or termination of this Agreement) without the
consent of, or notice to, any Guarantor, and without incurring responsibility
to any Guarantor or impairing or releasing the Obligations, apply any sums by
whomsoever paid or howsoever realized to any Obligations regardless of what
Obligations remain unpaid.

 

15.8.                                                Reinstatement.

 

(a)                                  The
Guaranty provisions herein contained shall continue to be effective or be
reinstated, as the case may be, if claim is ever made upon the Agent or any
Lender for repayment or recovery of any amount or amounts received by such
Person in payment or on account of any of the Obligations and such Person
repays all or part of said amount for any reason whatsoever, including, without
limitation, by reason of any judgment, decree or order of any court or
administrative body having jurisdiction over such Person or the respective
property of each, or any settlement or compromise of any claim effected by such
Person with any such claimant (including any Loan Party); and in such event
each Guarantor hereby agrees that any such judgment, decree, order, settlement
or compromise or other circumstances shall be binding upon such Guarantor,
notwithstanding any revocation hereof or the cancellation of any note or other
instrument evidencing any Obligation, and each Guarantor shall be and remain
liable to the Agent and/or Lenders for the amount so repaid or recovered to the
same extent as if such amount had never originally been received by such
Person(s).

 

95

 

(b)                                 Agent
shall not be required to marshal any assets in favor of any Guarantor, or
against or in payment of Obligations.

 

(c)                                  No
Guarantor shall be entitled to claim against any present or future security
held by Agent for Obligations in priority to or equally with any claim of
Agent, any Lender or Issuer, or assert any claim for any liability of any Loan
Party to any Guarantor in priority to or equally with claims of Agent, any
Lender or Issuer for Obligations, and no Guarantor shall be entitled to compete
with Agent with respect to, or to advance any equal or prior claim to any
security held by Agent for Obligations.

 

(d)                                 If
any Loan Party makes any payment to Agent, which payment is wholly or partly
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to any Person under any federal or provincial statute
or at common law or under equitable principles, then to the extent of such
payment, the Obligation intended to be paid shall be revived and continued in full
force and effect as if the payment had not been made, and the resulting revived
Obligation shall continue to be guaranteed, uninterrupted, by each Guarantor
hereunder.

 

(e)                                  All
present and future monies payable by any Loan Party to any Guarantor, (other than
by virtue of Guarantor’s right of subrogation, which Guarantor waives pursuant
to Section 17.8), are assigned to Agent for its benefit and for the
ratable benefit of Lenders as security for such Guarantor’s liability to Agent
and Lenders hereunder and are postponed and subordinated to Agent’s prior right
to payment in full of Obligations. 
Except to the extent prohibited otherwise by this Agreement, all monies
received by any Guarantor from any Loan Party shall be held by such Guarantor
as agent and trustee for Agent.  This
assignment, postponement and subordination shall only terminate when the
Obligations are paid in full in cash and this Agreement is irrevocably
terminated.

 

(f)                                    Each
Loan Party acknowledges this assignment, postponement and subordination and,
except as otherwise set forth herein, agrees to make no payments to any
Guarantor without the prior written consent of Agent.  Each Loan Party agrees to give full effect to
the provisions hereof.

 

15.9.                                                Action
Upon Event of Default.

 

Upon the occurrence and during the continuance of any
Event of Default, the Agent may and upon written request of the Required
Lenders shall, without notice to or demand upon any Loan Party or any other
Person, declare any obligations of such Guarantor hereunder immediately due and
payable, and shall be entitled to enforce the obligations of each
Guarantor.  Upon such declaration by the
Agent, the Agent and Lenders (and any Affiliates thereof) are hereby authorized
at any time and from time to time to set off and apply any and all deposits
(general or special, time or demand, provisions or final) at any time held and
other indebtedness at any time owing by the Agent or Lenders (or such
Affiliate) to or for the credit or the account of any Guarantor against any and
all of the obligations of each Guarantor now or hereafter existing hereunder,
whether or not the Agent or Lenders shall have made any demand hereunder
against any other Loan Party and although such obligations may be contingent
and unmatured.  The rights of the Agent
and Lenders hereunder are in addition to other rights and remedies (including
other rights of set-off) which the Agent and Lenders may have.  Upon such declaration by the Agent, with
respect to any claims (other than those claims referred to in the immediately
preceding paragraph) of any Guarantor against any Loan Party (the “Claims”),
the Agent shall have the full right on the part of the Agent in its own name or
in the name

 

96

 

of such Guarantor to collect and enforce such Claims
by legal action, proof of debt in bankruptcy or other liquidation proceedings,
Guarantor will not vote with respect to such Claims in any bankruptcy or
proceeding for the arrangement of debts at any time proposed in a manner adverse
to Agent’s interest, the Agent and each of its officers being hereby
irrevocably constituted attorneys-in-fact for each Guarantor for the purpose of
such enforcement and for the purpose of endorsing in the name of each Guarantor
any instrument for the payment of money. 
Each Guarantor will receive as trustee for the Agent and will pay to the
Agent forthwith upon receipt thereof any amounts which such Guarantor may
receive from any Loan Party on account of the Claims.  Each Guarantor agrees that at no time
hereafter will any of the Claims be represented by any notes, other negotiable
instruments or writings, except and in such event they shall either be made
payable to the Agent, or if payable to any Guarantor, shall forthwith be
endorsed by such Guarantor to the Agent. 
Each Guarantor agrees that no payment on account of the Claims or any
security interest therein shall be created, received, accepted or retained
after the occurrence of any Event of Default which has not been waived in
writing by Agent nor shall any financing statement be filed with respect
thereto by any Guarantor.

 

15.10.                                          Statute of
Limitations.

 

Any acknowledgment or new promise, whether by payment
of principal or interest or otherwise and whether by any Loan Party or others
(including any Lenders) with respect to any of the Obligations shall, if the
statute of limitations in favor of any Guarantor against the Agent or Lenders
shall have commenced to run, toll the running of such statute of limitations
and, if the period of such statute of limitations shall have expired, prevent
the operation of such statute of limitations.

 

15.11.                                          Interest.

 

All amounts due, owing and unpaid from time to time by
any Guarantor hereunder shall bear interest at the interest rate per annum then
chargeable with respect to Domestic Rate Loans constituting Revolving Advances.

 

15.12.                                          Guarantor’s
Investigation.

 

Each Guarantor acknowledges receipt of a copy of each
of this Agreement and the Other Documents. 
Each Guarantor has made an independent investigation of the Loan Parties
and of the financial condition of the Loan Parties.  Neither Agent nor any Lender has made and
neither Agent nor any Lender does make any representations or warranties as to
the income, expense, operation, finances or any other matter or thing affecting
any Loan Party nor has Agent or any Lender made any representations or
warranties as to the amount or nature of the Obligations of any Loan Party to
which this Article XV applies as specifically herein set forth, nor
has Agent or any Lender or any officer, agent or employee of Agent or any
Lender or any representative thereof, made any other oral representations,
agreements or commitments of any kind or nature, and each Guarantor hereby
expressly acknowledges that no such representations or warranties have been
made and such Guarantor expressly disclaims reliance on any such
representations or warranties.

 

15.13.                                          Borrower
or Guarantor.

 

The fact that a Guarantor
is also a Borrower shall not reduce, limit or affect such Borrower’s independent
obligations as a Borrower and/or as a Guarantor under this Agreement and/or
under any Other Document.

 

97

 

15.14.                                          Termination.

 

The provisions of this Article XV shall
remain in effect until the indefeasible payment in full in cash of all
Obligations and irrevocable termination of this Agreement.

 

XVI.                        JOINT
AND SEVERAL BORROWINGS.

 

16.1.                                                Joint
and Several Obligations.

 

All Obligations of the Borrowers shall be their joint
and several obligation and liability, and each Borrower shall make payment upon
the maturity of the Obligations by acceleration or otherwise, and such
obligation and liability on the part of each Borrower shall in no way be
affected by any extensions, renewals and/or forbearance granted by Agent or any
Lender to any Loan Party, failure of Agent or any Lender to give any Borrower
notice of borrowing or any other notice, any failure of Agent or any Lender to
pursue or preserve its rights against any Loan Party and/or the release by
Agent or any Lender of any Collateral now or thereafter acquired from any Loan
Party, and such agreement by each Borrower to pay upon any notice issued
pursuant thereto is unconditional and unaffected by prior recourse by Agent or
any Lender to the other Borrower, any other Loan Party or any Collateral for
the Obligations or the lack thereof.

 

XVII.                    MISCELLANEOUS.

 

17.1.                                                Governing
Law.

 

This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applied to contracts to be performed
wholly within the State of New York.  Any
judicial proceeding brought by or against any Loan Party with respect to any of
the Obligations, this Agreement or any related agreement may be brought in any
court of competent jurisdiction in the State of New York, United States of
America, and, by execution and delivery of this Agreement, each party hereto
accepts for itself and in connection with its properties, generally and
unconditionally, the non-exclusive jurisdiction of the aforesaid courts, and irrevocably
agrees to be bound by any judgment rendered thereby in connection with this
Agreement.  Each Loan Party hereby
irrevocably waives the right to remove any action commenced by the Agent or any
Lender in a state court to federal court. 
Each Loan Party hereby waives personal service of any and all process
upon it and consents that all such service of process may be made by registered
mail (return receipt requested) directed to Holdings, the Agent or any Lender
at its address set forth in Section 17.6 and service so made shall
be deemed completed five (5) days after the same shall have been so deposited
in the mails of the United States of America, or, at the Agent’s and/or any
Lender’s option, by any other type of service authorized by law upon Holdings
which each Loan Party irrevocably appoints as such Loan Party’s agent for the
purpose of accepting service within the State of New York.  Nothing herein shall affect the right to
serve process in any manner permitted by law or shall limit the right of Agent
or any Lender to bring proceedings against any Loan Party in the courts of any
other jurisdiction.  Each Loan Party
waives any objection to jurisdiction and venue of any action instituted
hereunder and shall not assert any defense based on lack of jurisdiction or
venue or based upon forum non conveniens or upon the failure to name,
serve or join an allegedly indispensable or necessary party or parties.  Any judicial proceeding by any Loan Party
against Agent or any Lender involving, directly or indirectly, any matter or
claim in any way arising out of, related to or

 

98

 

connected with this Agreement or any related
agreement, shall be brought only in a federal or state court located in the
City of New York, State of New York.

 

17.2.                                                Entire
Understanding; Amendments.

 

(a)                                  This
Agreement and the documents executed concurrently herewith contain the entire
understanding between each Loan Party, Agent and each Lender and supersedes all
prior agreements and understandings, if any, relating to the subject matter
hereof.  Any promises, representations,
warranties or guarantees not herein contained and hereinafter made shall have
no force and effect unless in writing, signed by Loan Parties’, Agent’s and
each Lender’s respective officers as required under Section 17.2(b)
hereof.  Neither this Agreement nor any
portion or provisions hereof may be changed, modified, amended, waived,
supplemented, discharged, cancelled or terminated orally or by any course of
dealing, or in any manner other than by an agreement in writing complying with Section 17.2(b)
hereof.  Each Loan Party acknowledges
that it has been advised by counsel in connection with the execution of this
Agreement and Other Documents and is not relying upon oral representations or
statements inconsistent with the terms and provisions of this Agreement.

 

(b)                                 The
Required Lenders, Agent with the consent in writing of the Required Lenders,
and Borrowers may, subject to the provisions of this Section 17.2(b),
from time to time enter into written supplemental agreements to this Agreement
or the Other Documents executed by Borrowers, for the purpose of adding or
deleting any provisions or otherwise changing, varying or waiving in any manner
the rights of Lenders, Agent or Loan Parties hereunder or thereunder or the
conditions, provisions or terms hereof or thereof or waiving any Event of
Default hereunder or thereunder, but only to the extent specified in such
written agreements; provided, however, that no such supplemental
agreement shall, without the consent of all Lenders:

 

(i)                                     increase
the Commitment Percentage of any Lender;

 

(ii)                                  increase
the Maximum Revolving Advance Amount;

 

(iii)                               extend
the maturity of any Note or the due date for any amount payable hereunder, or
decrease the rate of interest (other than a waiver of the applicability of any
Default Interest) or reduce any scheduled principal payment or fee payable by
Borrowers to Lenders pursuant to this Agreement;

 

(iv)                              alter
the definition of the term Required Lenders or alter, amend or modify this Section 17.2(b);

 

(v)                                 release
any Collateral during any calendar year (other than in accordance with the
provisions of this Agreement) having an aggregate value in excess of $250,000;

 

(vi)                              change
the rights and duties of Agent;

 

(vii)                           permit
any Revolving Advance to be made if after giving effect thereto the total of
Revolving Advances and Letter of Credit Obligations outstanding hereunder would
exceed the Formula Amount for more than sixty (60) consecutive Business Days or
exceed one hundred and ten percent (110%) of the Formula Amount; or

 

99

 

(viii)                        increase
the Advance Rates above the Advance Rates in effect on the Closing Date.

 

Any such supplemental
agreement shall apply equally to each Lender and shall be binding upon Loan
Parties, Lenders and Agent and all future holders of the Obligations.  In the case of any waiver, Loan Parties,
Agent and Lenders shall be restored to their former positions and rights, and
any Event of Default waived shall be deemed to be cured and not continuing, but
no waiver of a specific Event of Default shall extend to any subsequent Event
of Default (whether or not the subsequent Event of Default is the same as the
Event of Default which was waived), or impair any right consequent thereon.

 

(c)                                  In
the event that Agent requests the consent of a Lender pursuant to this Section 17.2
and such Lender shall not respond or reply to Agent in writing within ten (10)
days of delivery of such request, such Lender shall be deemed to have consented
to the matter that was the subject of the request.  In the event that Agent requests the consent
of a Lender pursuant to this Section 17.2 and such consent is
denied, then GMAC CF may, at its option, require such Lender to assign its
interest in the Advances to GMAC CF or to another Lender or to any other Person
designated by the Agent (the “Designated Lender”), for a price equal to
the then outstanding principal amount thereof plus accrued and unpaid interest
and fees due such Lender, which interest and fees shall be paid when collected
from Borrowers.  In the event GMAC CF
elects to require any Lender to assign its interest to GMAC CF or to the
Designated Lender, GMAC CF will so notify such Lender in writing within
forty-five (45) days following such Lender’s denial, and such Lender will
assign its interest to GMAC CF or the Designated Lender no later than five (5)
days following receipt of such notice pursuant to a Commitment Transfer
Supplement executed by such Lender, GMAC CF or the Designated Lender, as
appropriate, and Agent.

 

(d)                                 Notwithstanding
the foregoing, Agent may at its discretion and without the consent of the
Required Lenders, voluntarily permit the outstanding Revolving Advances at any
time to exceed the Formula Amount by up to one hundred and ten percent (110%)
of the Formula Amount for up to thirty (30) consecutive Business Days.  For purposes of the preceding sentence, the
discretion granted to Agent hereunder shall not preclude involuntary overadvances
that may result from time to time due to the fact that the Formula Amount was
unintentionally exceeded for any reason, including, but not limited to,
Collateral previously deemed to be either “Eligible Receivables” or “Eligible
Inventory”, as applicable, becomes ineligible, collections of Receivables
applied to reduce outstanding Revolving Advances are thereafter returned for
insufficient funds or overadvances are made to protect or preserve the
Collateral.  In the event Agent
involuntarily permits the outstanding Revolving Advances to exceed the Formula
Amount by more than ten percent (10%), Agent shall decrease such excess in as
expeditious a manner as is practicable under the circumstances and not
inconsistent with the reason for such excess. 
Revolving Advances made after Agent has determined the existence of
involuntary overadvances shall be deemed to be involuntary overadvances and
shall be decreased in accordance with the preceding sentence.

 

17.3.                                                Successors
and Assigns; Participations; New Lenders.

 

(a)                                  This
Agreement shall be binding upon and inure to the benefit of Loan Parties,
Agent, each Lender, all future holders of the Obligations and their respective
successors and assigns, except that no Loan Party may assign or transfer any of
its rights or obligations under this Agreement without the prior written
consent of Agent and each Lender.

 

100

 

(b)                                 Each
Loan Party acknowledges that in the regular course of commercial banking
business one or more Lenders may at any time and from time to time sell
participating interests in the Advances to other financial institutions (each
such transferee or purchaser of a participating interest, a “Transferee”).  Each Transferee may exercise all rights of
payment (including without limitation rights of set-off) with respect to the
portion of such Advances held by it or other Obligations payable hereunder as
fully as if such Transferee were the direct holder thereof provided that Loan
Parties shall not be required to pay to any Transferee more than the amount
which it would have been required to pay to Lender which granted an interest in
its Advances or other Obligations payable hereunder to such Transferee had such
Lender retained such interest in the Advances hereunder or other Obligations
payable hereunder and in no event shall Loan Parties be required to pay any
such amount arising from the same circumstances and with respect to the same
Advances or other Obligations payable hereunder to both such Lender and such
Transferee.  Each Loan Party hereby
grants to any Transferee a continuing security interest in any deposits, moneys
or other property actually or constructively held by such Transferee as
security for the Transferee’s interest in the Advances.  No Lender shall, as between Borrower and that
Lender, be relieved of any of its obligations hereunder as a result of any
granting of participation in, all or any part of the Advances or other
Obligations owed to such Lender.

 

(c)                                  Any
Lender may with the consent of Agent and, provided that no Event of Default
exists or is continuing, the Loan Parties (which consent shall not be
unreasonably withheld or delayed) sell, assign or transfer all or any part of
its rights under this Agreement and the Other Documents to one or more
additional banks or financial institutions and one or more additional banks or
financial institutions may commit to make Advances hereunder (each a “Purchasing
Lender”), in minimum amounts of not less than $5,000,000, pursuant to a
Commitment Transfer Supplement, executed by a Purchasing Lender, the transferor
Lender, and Agent and delivered to Agent for recording.  Upon such execution, delivery, acceptance and
recording, from and after the transfer effective date determined pursuant to
such Commitment Transfer Supplement, (i) Purchasing Lender thereunder shall be
a party hereto and, to the extent provided in such Commitment Transfer
Supplement, have the rights and obligations of a Lender thereunder with a
Commitment Percentage as set forth therein, and (ii) the transferor Lender
thereunder shall, to the extent provided in such Commitment Transfer
Supplement, be released from its obligations under this Agreement, the
Commitment Transfer Supplement creating a novation for that purpose.  Such Commitment Transfer Supplement shall be
deemed to amend this Agreement to the extent, and only to the extent, necessary
to reflect the addition of such Purchasing Lender and the resulting adjustment
of the Commitment Percentages arising from the purchase by such Purchasing
Lender of all or a portion of the rights and obligations of such transferor
Lender under this Agreement and the Other Documents.  Loan Parties hereby consent to the addition
of such Purchasing Lender and the resulting adjustment of the Commitment Percentages
arising from the purchase by such Purchasing Lender of all or a portion of the
rights and obligations of such transferor Lender under this Agreement and the
Other Documents.  Loan Parties shall
execute and deliver such further documents and do such further acts and things
in order to effectuate the foregoing.

 

(d)                                 Agent
shall maintain at its address a copy of each Commitment Transfer Supplement
delivered to it and a register (the “Register”) for the recordation of
the names and addresses of the Advances owing to each Lender from time to
time.  The entries in the Register shall
be conclusive, in the absence of manifest error, and Loan Parties, Agent and
Lenders may treat each Person whose name is recorded in the Register as the
owner of the Advance recorded therein for the purposes of this Agreement.  The Register shall be available for
inspection by Loan Parties or any Lender at any reasonable time and from time
to time upon reasonable prior notice. 
Agent shall

 

101

 

receive a fee in the amount of $3,500 payable by the applicable
Purchasing Lender upon the effective date of each transfer or assignment to
such Purchasing Lender.

 

(e)                                  Loan
Parties authorize each Lender to disclose to any Transferee or Purchasing
Lender and any prospective Transferee or Purchasing Lender any and all
financial information in such Lender’s possession concerning Loan Parties which
has been delivered to such Lender by or on behalf of Loan Parties pursuant to
this Agreement or in connection with such Lender’s credit evaluation of Loan
Parties.

 

(f)                                    (A)
If any Lender or participant is a “foreign corporation, partnership or trust”
within the meaning of the Code (hereinafter, “Foreign Lender”) and the Foreign
Lender claims exemption from, or a reduction of, U.S. withholding tax under
Sections 1441 or 1442 of the Code, such Foreign Lender agrees with and in favor
of the Agent and the Loan Parties, to deliver to the Agent and the Loan
Parties:

 

(1)                                  if
such Foreign Lender claims an exemption from, or a reduction of, withholding
tax under a United States of America tax treaty, properly completed IRS Forms
W-8BEN and W-8ECI before the payment of any interest in the first calendar year
and before the payment of any interest in each third succeeding calendar year
during which interest may be paid under this Agreement;

 

(2)                                  if
such Foreign Lender claims that interest paid under this Agreement is exempt
from United States of America withholding tax because it is effectively
connected with a United States of America trade or business of such Foreign
Lender, two properly completed and executed copies of IRS Form W-8ECI before
the payment of any interest is due in the first taxable year of such Foreign
Lender and in each succeeding taxable year of such Foreign Lender during which
interest may be paid under this Agreement, and IRS Form W-9; and

 

(3)                                  such
other form or forms as may be required under the Code or other laws of the
United States of America as a condition to exemption from, or reduction of,
United States of America withholding tax.

 

(B)                                Such
Foreign Lender agrees to promptly notify the Agent of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.

 

(C)                                If
any Foreign Lender claims exemption from, or reduction of, withholding tax
under a United States of America tax treaty by providing IRS Form W-8BEN and
such Foreign Lender sells, assigns, grants a participation in, or otherwise
transfers all or part of the Obligations owing to such Foreign Lender, such
Foreign Lender agrees to notify the Agent of the percentage amount in which it
is no longer the beneficial owner of Obligations of any Borrower to such
Foreign Lender.  To the extent of such
percentage amount, the Agent will treat such Foreign Lender’s IRS Form W-8BEN
as no longer valid.

 

(D)                               If
any Foreign Lender claiming exemption from United States of America withholding
tax by filing IRS Form W-8ECI with the Agent sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations owing
to such Foreign Lender, such Foreign Lender agrees to undertake sole
responsibility for complying with the withholding tax requirements imposed by
Sections 1441 and 1442 of the Code.

 

102

 

(E)                                 If
any Foreign Lender is entitled to a reduction in the applicable withholding
tax, the Agent may withhold from any interest payment to such Foreign Lender an
amount equivalent to the applicable withholding tax after taking into account
such reduction.  If the forms or other
documentation required by subsection (A) of this Section are
not delivered to the Agent, then the Agent may withhold from any interest
payment to such Foreign Lender not providing such forms or other documentation
an amount equivalent to the applicable withholding tax.

 

(F)                                 If
the IRS or any other Governmental Body of the United States of America or other
jurisdiction asserts a claim that the Agent did not properly withhold tax from
amounts paid to or for the account of any Foreign Lender (because the
appropriate form was not delivered, was not properly executed, or because such
Foreign Lender failed to notify the Agent of a change in circumstances which
rendered the exemption from, or reduction of, withholding tax ineffective, or
for any other reason) such Foreign Lender shall indemnify the Agent fully for
all amounts paid, directly or indirectly, by the Agent as tax or otherwise,
including penalties and interest, and including any taxes imposed by any
jurisdiction on the amounts payable to the Agent under this Section, together
with all costs and expenses (including the fees, expenses and disbursements of
counsel for Agent).  The obligation of
the Foreign Lenders under this subsection shall survive the payment of all
Obligations, the termination of this Agreement and the resignation or
replacement of the Agent.

 

(g)                                 At
the request of Agent from time to time both before and after the Closing Date,
the Loan Parties will assist Agent in the syndication of the credit facility
provided pursuant to this Agreement and the Other Documents.  Such assistance shall include, but not be
limited to (i) prompt assistance in the preparation of an information
memorandum and the verification of the completeness and accuracy of the
information and the reasonableness of the projections contained therein, (ii)
preparation of offering materials and financial projections by Loan Parties and
their advisors, (iii) providing Agent with all information reasonably deemed
necessary by Agent to successfully complete the syndication, (iv) confirmation
as to the accuracy and completeness of such offering materials and information
and confirmation that management’s projections are based on assumptions
believed by the Loan Parties to be reasonable at the time made, and (v)
participation of the Loan Parties’ senior management in meetings and conference
calls with potential lenders at such times and places as Agent may reasonably
request.

 

17.4.                                                Application
of Payments.

 

Subject to the express terms of this Agreement, Agent
shall have the continuing and exclusive right to apply or reverse and re-apply
any payment and any and all proceeds of Collateral to any portion of the
Obligations.  To the extent that any Loan
Party makes a payment or Agent or any Lender receives any payment or proceeds
of the Collateral for any Loan Party’s benefit, which are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required
to be repaid to a trustee, debtor in possession, receiver, custodian or any
other party under any bankruptcy law, common law or equitable cause, then, to
such extent, the Obligations or part thereof intended to be satisfied shall be
revived and continue as if such payment or proceeds had not been received by
Agent or such Lender.

 

17.5.                                                Indemnity.

 

Each Loan Party shall indemnify Agent, each Issuer,
each Lender and each of their respective officers, directors, Affiliates,
employees and agents from and against any and all

 

103

 

liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses and disbursements of any kind or
nature whatsoever (including, without limitation, reasonable fees and
disbursements of counsel) which may be imposed on, incurred by, or asserted
against Agent, such Issuer or any Lender in any litigation, proceeding or
investigation instituted or conducted by any governmental agency or
instrumentality or any other Person with respect to any aspect of, or any
transaction contemplated by, or referred to in, or any matter related to, this
Agreement or the Other Documents, whether or not Agent, any Issuer or any
Lender is a party thereto, except to the extent that any of the foregoing
arises out of the gross negligence or willful misconduct of the party being
indemnified.  Agent and Lenders shall be
indemnified and held harmless from any claims, demands, expenses (including
attorneys’ fees), losses or damages resulting from or arising out of their
refraining from taking any action based upon their uncertainty, for any reason,
as to the continuing effectiveness of the authority conferred by any of the
resolutions described in the resolutions described in Section 8.1(c)
or any other resolutions of any Loan Party until such time as Agent and Lenders
are satisfied as to such authority.

 

17.6.                                                Notice.

 

Any notice or request hereunder may be given to any
Loan Party or to Agent or any Lender at their respective addresses set forth
below or at such other address as may hereafter be specified in a notice designated
as a notice of change of address under this Section 17.6.  Any notice or request hereunder shall be
given by (a) hand delivery, (b) overnight courier, (c) registered or certified
mail, return receipt requested, or (d) telecopy to the number set out below (or
such other number as may hereafter be specified in a notice designated as a
notice of change of address) with electronic confirmation of its receipt.  Any notice or other communication required or
permitted pursuant to this Agreement shall be deemed given (a) when personally
delivered to any officer of the party to whom it is addressed (b) on the
earlier of actual receipt thereof or three (3) days following posting thereof
by certified or registered mail, postage prepaid, (c) upon actual receipt thereof
when sent by a recognized overnight delivery service or (d) upon actual receipt
thereof when sent by telecopier to the number set forth below with electronic
confirmation of its receipt, in each case addressed to each party at its
address set forth below or at such other address as has been furnished in
writing by a party to the other by like notice:

 

	
  (A)

  	
   

  	
  If to Agent or to

  	
   

  	
   

  
	
   

  	
   

  	
  GMAC CF as Lender:

  	
   

  	
  GMAC COMMERCIAL FINANCE
  LLC

  
	
   

  	
   

  	
   

  	
   

  	
  1290 Avenue of the
  Americas, 3rd Floor

  
	
   

  	
   

  	
   

  	
   

  	
  New York, New York
  10104

  
	
   

  	
   

  	
   

  	
   

  	
  Attention:

  	
  Director, Structured
  Finance Division

  
	
   

  	
   

  	
   

  	
   

  	
  Telephone:

  	
  212-884-7000

  
	
   

  	
   

  	
   

  	
   

  	
  Facsimile:

  	
  212-884-7692

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  with a copy to:

  	
   

  	
  GMAC COMMERCIAL FINANCE
  LLC

  
	
   

  	
   

  	
   

  	
   

  	
  1290 Avenue of the
  Americas, 3rd Floor

  
	
   

  	
   

  	
   

  	
   

  	
  New York, New York
  10104

  
	
   

  	
   

  	
   

  	
   

  	
  Attention:

  	
  Scott Yablonowitz, Esq.

  
	
   

  	
   

  	
   

  	
   

  	
  Telephone:

  	
  212-884-7187

  
	
   

  	
   

  	
   

  	
   

  	
  Telecopier:

  	
  212-884-7693

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  and:

  	
   

  	
  Hahn & Hessen LLP

  

 

104

 

	
   

  	
   

  	
   

  	
   

  	
  488 Madison Avenue

  
	
   

  	
   

  	
   

  	
   

  	
  New York, New York
  10022

  
	
   

  	
   

  	
   

  	
   

  	
  Attention:  Leonard Lee Podair, Esq.

  
	
   

  	
   

  	
   

  	
   

  	
  Telephone:

  	
  212-478-7200

  
	
   

  	
   

  	
   

  	
   

  	
  Telecopier:

  	
  212-478-7400

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (B)

  	
   

  	
  If to a Lender other
  than GMAC CF, as specified on the signature pages hereof.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (C)

  	
   

  	
  If to any Loan Party:

  	
   

  	
  c/o Edgen Louisiana
  Corporation

  
	
   

  	
   

  	
   

  	
   

  	
  18444 Highland Road

  
	
   

  	
   

  	
   

  	
   

  	
  Baton Rouge, Louisiana
  70809

  
	
   

  	
   

  	
   

  	
   

  	
  Attention:

  	
  David L. Laxton, III

  
	
   

  	
   

  	
   

  	
   

  	
  Telephone:

  	
  (225) 756-7223

  
	
   

  	
   

  	
   

  	
   

  	
  Facsimile:

  	
  (225) 756-7953

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  with a copy to:

  	
   

  	
  Dechert LLP

  
	
   

  	
   

  	
   

  	
   

  	
  1717 Arch Street

  
	
   

  	
   

  	
   

  	
   

  	
  Philadelphia,
  Pennsylvania 19103

  
	
   

  	
   

  	
   

  	
   

  	
  Attention:

  	
  Sarah Gelb, Esq.

  
	
   

  	
   

  	
   

  	
   

  	
  Telephone:

  	
  (215) 994-4000

  
	
   

  	
   

  	
   

  	
   

  	
  Facsimile:

  	
  (215) 994-2222

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  and

  	
   

  	
  Jefferies Capital
  Partners

  
	
   

  	
   

  	
   

  	
   

  	
  520 Madison Avenue, 12th
  Floor

  
	
   

  	
   

  	
   

  	
   

  	
  New York, New York
  10022

  
	
   

  	
   

  	
   

  	
   

  	
  Attention:

  	
  James Luikart and
  Nicholas Daraviras

  
	
   

  	
   

  	
   

  	
   

  	
  Telephone:

  	
  (212) 284-1706

  
	
   

  	
   

  	
   

  	
   

  	
  Facsimile:

  	
  (212) 284-1717

  

 

17.7.                                                Survival.

 

The obligations of Loan Parties under Sections
2.2(g), 3.6, 3.8, 3.11, 4.19(h), 14.7 and 17.5 shall survive termination of
this Agreement and the Other Documents and payment in full of the Obligations.

 

17.8.                                                Waiver
of Subrogation.

 

Each Loan Party expressly waives any and all rights of
subrogation, reimbursement, indemnity, exoneration, contribution or any other
claim which such Loan Party may now or hereafter have against the other Loan
Parties or other Person directly or contingently liable for the Obligations
hereunder, or against or with respect to the other Loan Parties’ property
(including, without limitation, any property which is Collateral for the
Obligations), arising from the existence or performance of this Agreement,
until termination of this Agreement and indefeasible repayment in full of the
Obligations.

 

17.9.                                                Severability.

 

If any part of this Agreement is contrary to,
prohibited by, or deemed invalid under applicable laws or regulations, such provision
shall be inapplicable and deemed omitted to the extent

 

105

 

so contrary, prohibited or invalid, but the remainder
hereof shall not be invalidated thereby and shall be given effect so far as
possible.

 

17.10.                                          Expenses.

 

All costs and expenses including, without limitation:

 

(a)                                  reasonable
attorneys’ fees and disbursements incurred by Agent and/or Agent on behalf of
Lenders (i) in all efforts made to enforce payment of any Obligation or effect
collection of any Collateral, or (ii) in connection with the entering into of,
and/or any modification, amendment, administration and/or enforcement of, this
Agreement or any consents or waivers hereunder and all related agreements,
documents and instruments, or (iii) in instituting, maintaining, preserving,
enforcing and foreclosing on Agent’s Lien on any of the Collateral, whether
through judicial proceedings or otherwise, or (iv) in defending or prosecuting
any actions or proceedings arising out of or relating to Agent’s or any
Lender’s transactions with any Loan Party, or (v) in connection with any advice
given to Agent or any Lender with respect to its rights and obligations under
this Agreement and all related agreements;

 

(b)                                 reasonable
fees and disbursements incurred by Agent or Agent on behalf of Lenders in
connection with any appraisals of Inventory or other Collateral, field
examinations, collateral analysis or monitoring or other business analysis
conducted by outside Persons in connection with this Agreement and all related
agreements; and

 

(c)                                  reasonable
attorneys’ fees and disbursements incurred by Lenders (i) in all efforts made
to enforce payment of any Obligation or effect collection of any Collateral,
(ii) in connection with the enforcement of this Agreement and all related
agreements, documents and instruments or (iii) in defending or prosecuting any
actions or proceedings arising out of or relating to Agent’s or any Lender’s
transactions with any Loan Party in connection with this Agreement and/or the
Other Documents;

 

may be charged to any Borrower’s Account and shall be
part of the Obligations; provided, however, that so long as no Default or Event
of Default shall be in existence, the Loan Parties shall be obligated to pay
for no more than one (1) appraisal and two (2) collateral audits per calendar
year.

 

17.11.                                          Injunctive
Relief.

 

Each Loan Party recognizes that, in the event any Loan
Party fails to perform, observe or discharge any of its obligations or
liabilities under or in connection with this Agreement, any remedy at law may
prove to be inadequate relief to Lenders; therefore, Agent, if Agent so
requests, shall be entitled to temporary and permanent injunctive relief in any
such case without the necessity of proving that actual damages are not an
adequate remedy.

 

17.12.                                          Consequential
Damages.

 

None of Agent, any Issuer, any Lender, nor any agent
or attorney for any of them, shall be liable to any Loan Party for
consequential damages arising from any breach of contract, tort or other wrong relating
to the establishment, administration or collection of the Obligations.

 

106

 

17.13.                                          Captions.

 

The captions at various places in this Agreement are
intended for convenience only and do not constitute and shall not be
interpreted as part of this Agreement.

 

17.14.                                          Counterparts;
Telecopied Signatures.

 

This Agreement may be executed in any number of and by
different parties hereto on separate counterparts, all of which, when so
executed, shall be deemed an original, but all such counterparts shall
constitute one and the same agreement. 
Any signature delivered by a party by facsimile transmission shall be
deemed to be an original signature hereto.

 

17.15.                                          Construction.

 

The parties acknowledge that each party and its
counsel have reviewed this Agreement and that the normal rule of construction
to the effect that any ambiguities are to be resolved against the drafting
party shall not be employed in the interpretation of this Agreement or any
amendments, schedules or exhibits thereto.

 

17.16.                                          Confidentiality;
Sharing Information.

 

(a)                                  Agent,
each Lender and each Transferee shall hold all non-public information obtained
by Agent, such Lender or such Transferee pursuant to the requirements of this
Agreement in accordance with Agent’s, such Lender’s and such Transferee’s
customary procedures for handling confidential information of this nature; provided,
however, Agent, each Lender and each Transferee may disclose such
confidential information (i) to its examiners, affiliates, outside auditors,
counsel and other professional advisors, (ii) to Agent, any Lender or to any
prospective Transferees and Purchasing Lenders, and (iii) as required or
requested by any Governmental Body or representative thereof or pursuant to
legal process; provided, further that (x) unless specifically
prohibited by applicable law or court order, Agent, each Lender and each
Transferee shall use reasonable efforts prior to disclosure thereof, to notify
the Borrowers of the applicable request for disclosure of such non-public
information (A) by a Governmental Body or representative thereof (other than
any such request in connection with an examination of the financial condition
of a Lender or a Transferee by such Governmental Body) or (B) pursuant to legal
process and (y) in no event shall Agent, any Lender or any Transferee be
obligated to return any materials furnished by any Loan Party other than those
documents and instruments in possession of Agent or any Lender in order to
perfect its Lien on the Collateral once the Obligations have been paid in full
and this Agreement has been terminated.

 

(b)                                 Each
Loan Party acknowledges that from time to time financial advisory, investment
banking and other services may be offered or provided to such Loan Party or one
or more of its Affiliates (in connection with this Agreement or otherwise) by
any Lender or by one or more Subsidiaries or Affiliates of such Lender and each
Loan Party hereby authorizes each Lender to share any information delivered to such
Lender by such Loan Party and its Subsidiaries pursuant to this Agreement, or
in connection with the decision of such Lender to enter into this Agreement, to
any such Subsidiary or Affiliate of such Lender, it being understood that any
such Subsidiary or Affiliate of any Lender receiving such information shall be
bound by the provision of this Section 17.16 as if it were a Lender
hereunder.  Such authorization shall
survive the repayment of the Obligations and the termination of this Agreement.

 

107

 

17.17.                                          Publicity.

 

Each Loan Party hereby authorizes Agent at its sole
expense to make appropriate announcements of the financial arrangement entered
into among Loan Parties, Agent and Lenders, including, without limitation,
announcements which are commonly known as tombstones, in such publications and
to such selected parties as Agent shall deem appropriate after obtaining the
consent of the Borrower (which shall not be unreasonably withheld).  In addition, each Loan Party authorizes Agent
to include such Loan Party’s name and logo in select transaction profiles and
client testimonials prepared by Agent for use in publications, company
brochures and other marketing materials of Agent after obtaining the consent of
the Borrower (which shall not be unreasonably withheld).

 

17.18.                                          Amendment
and Restatement.

 

(a)                                  As
of the date of this Agreement, the terms, conditions, covenants, agreements,
representations and warranties contained in the Existing Loan Agreement shall
be deemed amended and restated in their entirety pursuant to this Agreement,
and the Existing Loan Agreement shall be consolidated with and into and
superseded by this Agreement; provided, however, that nothing
contained in this Agreement shall constitute a repayment of any indebtedness
under the Existing Loan Agreement, or shall impair, limit or affect the Liens
heretofore granted, pledged and/or assigned to Agent for the ratable benefit of
the Lenders as security for the Obligations under the Existing Loan Agreement,
except as otherwise herein provided.

 

(b)                                 By their signatures hereto, (i) each of
the Existing Lenders assigns to each Lender its Commitment Percentage of the
Commitments under the Existing Loan Agreement, and (ii) each of the Lenders
accepts from each Existing Lender a percentage of the Commitments equal to such
Lender’s Commitment Percentages as set forth on the signature pages hereto, all
pursuant to the same terms and conditions as contained in the form of
Commitment Transfer Supplement set forth in Exhibit 17.3.

 

17.19.                                          Confirmation
and Ratification of Collateral Security and of Existing Other Documents.

 

(a)                                  By their respective signatures hereto,
each of the Loan Parties hereby confirm and ratify all of their respective
agreements, undertakings, covenants, representations and warranties under all
Existing Other Documents (including, without limitation, all collateral
security granted thereunder (except as otherwise provided in Section 17.19(b)
below)) and acknowledge and agree that all of the foregoing shall remain in
full force and effect on and after the Closing Date and shall remain applicable
to all Obligations as defined in this Agreement and to all Other Documents.

 

(b)                                 Notwithstanding
the terms of any Existing Other Documents, the grant of Collateral security
under this Agreement and the Other Documents shall be deemed amended to release
any assets of Loan Parties to the extent not included within the definition of
“Collateral” as used in this Agreement (provided, however, that
the foregoing shall not restrict the ability of the Loan Parties to grant Liens
to Agent in assets described in clause (c)(vi) of the definition of Collateral
in their future sole discretion).

 

[THE REMAINDER OF
THIS PAGE HAS INTENTIONALLY BEEN LEFT BLANK.]

 

[SIGNATURE PAGES
FOLLOW.]

 

108

 

Each of the parties has
signed this Agreement as of the day and year first above written.

 

	
  WITNESS:

  	
  EDGEN CARBON PRODUCTS
  GROUP, L.L.C.,

  
	
   

  	
  as a Borrower and as a
  Guarantor

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ David L. Laxton, III

  	
   

  
	
  /s/ Heather Carmody

  	
   

  	
  Name: David L. Laxton,
  III

  
	
   

  	
  Title: Secretary and
  Manager

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  18444 Highland Road

  
	
   

  	
   

  	
  Baton Rouge, LA 70809

  
						

 

 

	
  WITNESS:

  	
  EDGEN ALLOY PRODUCTS
  GROUP, L.L.C.,

  
	
   

  	
  as a Borrower and as a
  Guarantor

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ David L. Laxton, III

  	
   

  
	
  /s/ Heather Carmody

  	
   

  	
  Name: David L. Laxton,
  III

  
	
   

  	
  Title: Secretary and
  Manager

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  18444 Highland Road

  
	
   

  	
   

  	
  Baton Rouge, LA 70809

  
						

 

 

	
  WITNESS:

  	
  EDGEN CORPORATION, as a
  Guarantor

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ David L. Laxton, III

  	
   

  
	
  /s/ Heather Carmody

  	
   

  	
  Name: David L. Laxton,
  III

  
	
   

  	
  Title:
  Secretary, Chief Financial Officer

  and Senior Vice President

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  c/o Jefferies Capital
  Partners

  520 Madison Avenue, 12th Floor

  New York, NY 10022

  
						

 

 

	
  WITNESS:

  	
  EDGEN LOUISIANA
  CORPORATION,

  
	
   

  	
  as a Guarantor

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ David L. Laxton, III

  	
   

  
	
  /s/ Heather Carmody

  	
   

  	
  Name: David L. Laxton,
  III

  
	
   

  	
  Title:
  Secretary, Chief Financial Officer

  and Senior Vice President

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  18444 Highland Road

  Baton Rouge, LA 70809

  
						

 

 

	
   

  	
  GMAC COMMERCIAL
  FINANCE LLC,

  
	
   

  	
  as a Lender and
  as Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Frank DiCeglie

  	
   

  
	
   

  	
  Name:

  	
  Frank DiCeglie

  	
   

  
	
   

  	
  Title:

  	
  Director

  	
   

  
	
   

  	
  Address:

  	
  1290 Avenue of
  the Americas, 3rd Floor

  
	
   

  	
   

  	
  New York, New
  York 10104

  
	
   

  	
   

  	
   

  
	
   

  	
  Commitment
  Percentage: 100%

  
	
   

  	
  Commitment:
  $20,000,000

  
							

 

 

	
  STATE OF NEW YORK

  	
  )

  
	
   

  	
  ) ss.

  
	
  COUNTY OF NEW YORK

  	
  )

  

 

On this 1st day of
February, 2005, before me personally came David L. Laxton, III, to me known,
who, being by me duly sworn, did depose and say that he is the Secretary and
Manager of Edgen Carbon Products Group, L.L.C., the limited liability company
described in and which executed the foregoing instrument, and that he signed
his name thereto by order of such limited liability company.

 

	
   

  	
   /s/ Yvonne Cappelletti

  	
   

  
	
   

  	
  NOTARY PUBLIC

  

 

 

	
  STATE OF NEW YORK

  	
  )

  
	
   

  	
  ) ss.

  
	
  COUNTY OF NEW YORK

  	
  )

  

 

On this 1st day of
February, 2005, before me personally came David L. Laxton, III, to me known,
who, being by me duly sworn, did depose and say that he is the Secretary and
Manager of Edgen Alloy Products Group, L.L.C., the limited liability company
described in and which executed the foregoing instrument, and that he signed
his name thereto by order of such limited liability company.

 

	
   

  	
   /s/ Yvonne Cappelletti

  	
   

  
	
   

  	
  NOTARY PUBLIC

  

 

 

	
  STATE OF NEW YORK

  	
  )

  
	
   

  	
  ) ss.

  
	
  COUNTY OF NEW YORK

  	
  )

  

 

On this 1st day
of February, 2005, before me personally came David L. Laxton, III, to me known,
who, being by me duly sworn, did depose and say that he is the Secretary, Chief
Financial Officer and Senior Vice President of Edgen Corporation, the
corporation described in and which executed the foregoing instrument, and that
he signed his name thereto by order of the board of directors of such
corporation.

 

	
   

  	
   /s/ Yvonne Cappelletti

  	
   

  
	
   

  	
  NOTARY PUBLIC

  

 

 

	
  STATE OF NEW YORK

  	
  )

  
	
   

  	
  ) ss.

  
	
  COUNTY OF NEW YORK

  	
  )

  

 

On this 1st day of
February, 2005, before me personally came David L. Laxton, III, to me known,
who, being by me duly sworn, did depose and say that he is the Secretary, Chief
Financial Officer and Senior Vice President of Edgen Louisiana Corporation, the
corporation described in and which executed the foregoing instrument, and that
he signed his name thereto by order of the board of directors of such
corporation.

 

	
   

  	
   /s/ Yvonne Cappelletti

  	
   

  
	
   

  	
  NOTARY PUBLIC

  

 

 

	
  STATE OF NEW YORK

  	
  )

  
	
   

  	
  ) ss.

  
	
  COUNTY OF NEW YORK

  	
  )

  

 

On this 1st day of
February, 2005, before me personally came Frank DiCeglie, to me known, who,
being by me duly sworn, did depose and say that he is the Director of GMAC
COMMERCIAL FINANCE LLC, the limited liability company described in and which
executed the foregoing instrument, and that he signed his name thereto on
behalf of said limited liability company.

 

	
   

  	
   /s/ Yvonne Cappelletti

  	
   

  
	
   

  	
  NOTARY PUBLICExhibit 10.5

 

Execution
copy

 

AMENDED AND
RESTATED EMPLOYMENT AGREEMENT

 

AMENDED AND
RESTATED EMPLOYMENT AGREEMENT effective as of the 1st day of January 2005 (the “Effective Date”), by and
between Daniel J. O’Leary, an
individual whose address is 17741 Brookcrest Avenue, Baton Rouge, Louisiana
70817 (the “Executive”), Edgen
Louisiana Corporation, a Louisiana corporation (“EDGEN” or
the “Company”), and Edgen Corporation, a Nevada corporation (“Parent”).

 

W I T N E S S E T H

 

WHEREAS, the Executive served as the President/Chief Operating Officer
of Parent and EDGEN, pursuant to an Employment Agreement, dated January 8,
2004 (the “Prior Agreement”), by and between EDGEN and the Executive and
since August of 2003 has served as the President/Chief Operating Officer
of Parent and EDGEN;

 

WHEREAS,
Parent and EDGEN seek to utilize the Executive’s knowledge, experience, talents
and abilities; EDGEN desires to continue to employ the Executive as the
President and to employ the Executive as Chief Executive Officer of Parent and
of EDGEN, and the Executive desires to be so employed, subject to the terms and
conditions set forth herein;

 

WHEREAS, EDGEN
is a wholly-owned subsidiary of Parent; and

 

WHEREAS, the Executive and EDGEN wish to amend and restate the Prior
Agreement in its entirety in accordance with the terms and conditions set forth
herein.

 

NOW,
THEREFORE, in consideration of the foregoing and of the respective covenants
and agreements herein contained, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties hereto
hereby amend and restate the Prior Agreement as follows:

 

1.                                       Employment.

 

1.1                                 General
Provision.  Subject to the terms
and conditions hereinafter set forth, EDGEN hereby agrees to employ the
Executive, and the Executive hereby agrees to serve as the President/Chief
Executive Officer of Parent and of EDGEN, effective on the Effective Date.  The Executive agrees to perform such services
customary to such office as shall from time to time be assigned to him by the
Board of Directors of Parent and/or EDGEN. 
The Executive further agrees to use his best efforts to promote the
interests of EDGEN and Parent, and to devote his full business time, business
energies, and skill to the business and affairs of EDGEN and of Parent in
accordance with the directions and orders of the Board of Directors of EDGEN
and/or Parent.  The Executive may
participate in reasonable outside charitable or unrelated business activities
as long as such activities do not take up a significant amount of the Executive’s
time and energies or interfere in any way with the performance of the Executive’s
duties hereunder, and to the extent that any such activities do require the
Executive to devote a significant amount of his time and energies, such
activities must be approved in advance by the Board of Directors of EDGEN.

 

 

1.2                                 Location
of Employment.  Unless otherwise
agreed by Executive, Executive’s principal place of employment shall be within
50 miles of the Company’s principal executive offices located in Baton Rouge,
Louisiana.  If executive should agree to
any other location, the Company shall (a) pay all out of pocket expenses
incurred by Executive in connection with the relocation; and (b) if
requested by Executive, shall purchase his residence at fair market value as
determined by a real estate appraiser, mutually selected by the Company and
Executive.  If agreement cannot be
reached, each party may select one appraiser and they shall agree on a third
appraiser.  The average of the three
appraisals shall become the fair market value. 
All expenses incurred in connection with the appraisers shall be paid by
the Company.

 

1.3                                 Board
Membership.  During the term of this
agreement, the Company shall use its best efforts to nominate and cause the
election of the Executive to the Company’s Board of Directors and its Executive
Committee, if one is constituted. Except as may otherwise be provided or
prohibited in accordance with appropriate law, the Company shall use its best
efforts to amend its Articles of Incorporation and Bylaws to provide that
directors may only be removed for cause by a vote of the majority of the shares
of voting stock of the Company then outstanding, if necessary.  If Executive is not elected to the Board of Directors
at any time during the term hereof, he shall be entitled to terminate this
agreement and receive the Severance benefits set forth in Section 5.5 of
this Agreement.

 

2.                                       Term
of Employment. The Executive’s “Employment
Term” pursuant to this Agreement shall commence on the Effective Date and,
unless terminated earlier pursuant to Section 4 hereof, shall terminate
upon the third anniversary of the Effective Date; provided, however,
that after the third anniversary, the Employment Term shall automatically be
extended for additional periods of one (1) year each unless either EDGEN
or the Executive elects not to extend such term by giving written notice
thereof at least thirty (30) days prior to the end of the then current term; provided,
further, however, that if the Executive is terminated pursuant to
Section 4 below, there shall be no automatic renewal of the Employment
Term.  For purposes hereof, the
last day of the Employment Term shall be deemed the “Expiration Date.”

 

3.                                       Compensation
and Other Related Matters.

 

3.1.                              Base
Salary.  As compensation for the
services rendered by the Executive hereunder, EDGEN shall pay, or shall cause
to be paid, to the Executive during the Employment Term, and the Executive
shall accept, compensation at the rate of Two Hundred Seventy-Five Thousand
Dollars ($275,000) per annum (the “Annual Base Salary”).  EDGEN’s obligation to pay the Annual Base
Salary shall begin to accrue on the Effective Date and shall be paid in
accordance with EDGEN’s customary payroll practices which are in effect from
time to time during the Employment Term. 
The Annual Base Salary may be increased at any time during the
Employment Term by action of the Board of Directors.  The Executive’s Annual Base Salary shall be
subject to all applicable withholding and other taxes.

 

3.2.                              Annual
Bonus.  In addition to the Annual
Base Salary set forth above, during the Employment Term, with respect to each
fiscal year of EDGEN, subject to Section 5.1, the Executive shall be
entitled to receive an annual bonus (the “Annual Bonus”) calculated in
accordance with Schedule A attached hereto.  The Annual Bonus shall be payable by EDGEN to
the Executive with respect to each year ending on December 31 by April 1
of the following year.

 

2

 

3.3.                              Other
Employment Benefits.  During the
Employment Term, the Executive shall be entitled to the following employment
benefits:

 

(a)                                  four
(4) weeks of paid vacation in each fiscal year of EDGEN while the
Executive is employed hereunder (one week of which, if not used by the
Executive in any given fiscal year, may be carried over to the next fiscal
year; provided, that the Executive shall not have more than five (5) weeks
of paid vacation in any given fiscal year as a result of such carry over), and
sick leave in accordance with EDGEN’s policies from time to time in effect for
executive officers of EDGEN; provided, that, except as provided herein,
vacation and/or sick leave time not used in any year may not be carried over or
transferred from one year to another or converted to cash, except in a year in which there is a Change of
Control (as hereinafter defined) where the Executive is no longer employed;

 

(b)                                 participation,
subject to qualification requirements, in medical, life or other insurance or
hospitalization plans and long-term disability policies which are presently in
effect or hereinafter instituted by EDGEN and applicable to its executive
officers generally;

 

(c)                                  participation,
subject to classification requirements and continued maintenance thereof by
EDGEN in other Executive benefit plans, such as pension and profit sharing
plans, which are from time to time applicable to EDGEN’s executive officers
generally;

 

(d)                                 an
automobile allowance of $1,200 per month, which shall be used by the Executive
to cover all lease and insurance payments with respect to one automobile of the
Executive’s choice for business purposes, which automobile’s retail value shall
not exceed $75,000.  The Executive shall
provide proof of insurance in limits and with a company approved by EDGEN.  EDGEN shall also be listed as a “named
insured” under the policy.  EDGEN shall
reimburse the Executive, upon the presentation of appropriate receipts, for all
reasonable and necessary maintenance, repair and gasoline costs incurred by the
Executive in connection with the use of such automobile; provided, that
such costs are directly related to the performance by the Executive of his
obligations to EDGEN and/or to Parent hereunder;

 

(e)                                  EDGEN
shall purchase (subject to the insurability of the Executive at standard rates)
a life insurance policy in the amount of $1,000,000 on the life of the
Executive to provide benefits under Section 5.2 (b) hereof; and

 

(f)                                    a
supplemental payment of $9500 per annum (the “Supplemental Payment”), which
shall be paid in accordance with EDGEN’s customary payroll practices which are
in effect from time to time during the Employment Term.

 

3.4.                              Expenses.  During the Employment Term, the Executive
shall be entitled to receive prompt reimbursement from EDGEN or all travel,
entertainment and out-of-pocket expenses which are reasonably and necessarily
incurred by the Executive in the performance of his duties hereunder (including up to $400 monthly for club dues in
connection with membership in one country club or similar organization);
provided, that, the Executive properly accounts therefor in accordance
with EDGEN’s policies as in effect from time to time and such expenses are
approved by the Board of Directors of EDGEN.

 

3

 

3.5                                 Tax Preparation.  The Company will reimburse Executive for the
cost of tax and financial preparation and planning, including services that may
be requested by Executive from time to time pertaining to this Agreement, which
shall be limited to $1,500 per year, increased by the greater of (i) six
(6%) percent per year or (ii) the annual percentage increase in the Consumer
Price Index for All Urban Consumers (CPI-U) as published by the Bureau of Labor
Statistics, U.S. Department of Labor.

 

4.                                       Termination.

 

4.1.                              Disability.  In the event that at any time during the
Employment Term, the Executive, due to physical or mental injury, illness,
disability or incapacity, including “disability” within the meaning of the
disability plan(s) that EDGEN then has in effect entitling the Executive to
benefits thereunder (a “Disability”), shall fail to perform
satisfactorily and continuously the duties assigned to him and the services to
be performed by him hereunder for a period of three (3) consecutive months
or for a non-consecutive period of five (5) months within any twelve (12)
month period, EDGEN may terminate his employment for Disability upon not less
than thirty (30) days prior written notice by delivery of a Termination Notice
(as defined below) to the Executive specifying
that the Executive is being terminated for Disability.

 

4.2.                              Death.  The Executive’s employment shall terminate
immediately upon the death of the Executive.

 

4.3.                              Cause.  EDGEN may, at any time and in its sole
discretion, terminate the Executive’s employment for Cause (as herein defined)
by delivery to the Executive of a Termination Notice specifying the nature of
such Cause, effective as of the date (such effective date referred to herein as
a “Termination Date”) of such Termination Notice.  For purposes hereof, termination for “Cause”
shall mean (i) a conviction of, a plea of nolo  contendere, a
guilty plea or confession by the Executive to an act of fraud, misappropriation
or embezzlement or to a felony; (ii) the commission of a fraudulent act or
practice by the Executive affecting EDGEN and/or Parent; (iii) the willful
failure by the Executive to follow the directions of the Board of Directors of
EDGEN; (iv) the Executive’s habitual drunkenness or use of illegal substances,
each as determined in the reasonable discretion of the Board of Directors of
EDGEN; (v) the material breach by the Executive of this Agreement; or (vi) an
act of gross neglect or gross or willful misconduct that relates to the affairs
of Parent and/or EDGEN which Board of Directors of EDGEN, in its reasonable
discretion, deems to be good and sufficient cause; provided, that if the
Executive shall receive a Termination Notice with respect to a termination for
Cause pursuant to subsections (iii), (v) and/or (vi) hereof, then the
Executive shall have the thirty (30) days following his receipt of the
Termination Notice to cure the breach specified therein, if capable of being
cured, to the reasonable satisfaction of Board of Directors of EDGEN prior to
his employment being terminated for Cause pursuant thereto; provided, however,
the Executive shall have the right to cure any such breach only one (1) time
in any twelve (12) month period.

 

4.4.                              Voluntary
Termination by EDGEN.  EDGEN may, at
any time, and in its sole discretion, terminate the employment of the Executive
hereunder for any reason other than for Cause by the delivery to the Executive
of a Termination Notice, effective as of the date of such Termination Notice.

 

4

 

4.5.                              Termination
by EDGEN in Conjunction with a Change of Control.  For purposes of this Agreement, a “Change
of Control” means the sale of Parent whether by, merger, consolidation,
recapitalization, reorganization, sale of securities, sale of assets or
otherwise in one transaction or a series of related transactions to a person or
persons (other than to funds managed by Jefferies Capital
Partners or to any person, persons or entities affiliated therewith), pursuant
to which such person or persons (together with its affiliates) acquires (i) securities
representing at least a majority of the voting power of all securities including
all securities convertible, exchangeable or exercisable for or into voting
securities of Parent, assuming the conversion, exchange or exercise of all
securities convertible, exchangeable or exercisable for or into voting
securities (other than in connection with a successfully completed firm
commitment underwritten public offering pursuant to an effective registration
statement under the Securities Act), or (ii) all or substantially all of
the consolidated assets of Parent.  EDGEN
may terminate the employment of the Executive hereunder in conjunction with any
Change of Control by delivery to the Executive of a Termination Notice,
effective as of the date stated in the Termination Notice.

 

4.6                                 Resignation
by Executive in Conjunction with a Change of Control.  In the event of a “Change of Control” as
defined above, the Executive may elect to resign his position and upon such
resignation shall be entitled to a Severance Package and benefits as set forth
in Section  5.5 below.

 

4.7                                 Termination Notice.  For the
purposes hereof “Termination Notice” shall mean a written notice
delivered by EDGEN and/or Parent to the Executive specifying that EDGEN and/or
Parent has terminated the Executive’s employment hereunder.

 

5.                                       Compensation
and Benefits During Disability and Upon Termination.  During a Disability Period (as herein
defined) or upon the termination of the Executive’s employment hereunder, the
Executive shall be entitled to the following benefits:

 

5.1.                              Disability.
 During
any period (the “Disability Period”) that the Executive, due to
Disability fails to perform satisfactorily and continuously the duties assigned
to him and the services to be performed by him hereunder, EDGEN shall continue
to pay to the Executive the Annual Base Salary (as in effect at such time) in
accordance with the provisions of Section 3.1 hereof, less any
compensation payable to the Executive under the applicable disability insurance
plan(s) of EDGEN during such Disability Period. 
Thereafter, if the Executive’s employment hereunder is terminated
pursuant to Section 4.1 hereof, EDGEN shall have no further obligations
hereunder after the Termination Date other than the payment of (a) any Annual
Base Salary accrued and unpaid on the Termination Date; (b) the Annual
Base Salary (as in effect during the year of such termination) payable in
accordance with EDGEN’s customary payroll practices (less any compensation
payable to the Executive under the applicable disability insurance plan(s) of
EDGEN), for the twelve (12) month period immediately following the Termination
Date; and (c) any Annual Bonus accrued and unpaid on the Termination Date
for the year prior to the year in which the Executive’s termination occurs and
the Executive’s pro rata portion
of the Annual Bonus due pursuant to Section 3.2 hereof for the year in
which such termination occurs (based upon the number of days during such year
that the Executive was employed (excluding any Disability Period) over 365
days), payable on the same date as such

 

5

 

Annual
Bonus would have been payable for such year pursuant to Section 3.2 hereof
had the Employment Term not been so terminated.

 

5.2.                              Death.  If the Executive’s employment is terminated
pursuant to Section 4.2 hereof as a result of the Executive’s death, EDGEN
shall have no further obligations hereunder after the date of the Executive’s
death other than the payment to the Executive’s spouse, or in default thereof,
to the Executive’s estate, legal representative, or heirs (“Appropriate
Beneficiary”) of:

 

(a)                                  any
Annual Base Salary and Annual Bonus accrued and unpaid at the date of the
Executive’s death; and

 

(b)                                 the
proceeds of a life insurance policy on the life of the Executive in the amount
of $1,000,000, obtained by EDGEN.  In the
event that payment of the proceeds of the policy are refused by the insurer,
for whatever reason, and suit is filed against the insurer to force payment of
the proceeds, commencing the first EDGEN payroll after suit is filed, EDGEN
shall begin paying the Appropriate Beneficiary, in accordance with its
customary payroll practices, one twelfth (1/12) of the Annual Base Salary (as in
effect during the year of such death) each month, up to a maximum equal to the
Annual Base Salary (as in effect during the year of such death).  In the event the suit against the insurer is
successful, and insurance proceeds are obtained, EDGEN shall first be
reimbursed for all death benefits paid under Section 5.2(b) and all
expenses of the suit, and the remainder, or balance of the proceeds, if any,
shall be paid to the Appropriate Beneficiary within thirty (30) days of receipt
of proceeds from the insurer by EDGEN. 
EDGEN shall have sole discretion in deciding if any suit will be filed
against the insurer and whether or not, and in what amount, any such suit
should be settled or compromised.  In the
event that such policy is not procured, for whatever reason, EDGEN shall pay to
the Appropriate Beneficiary the Annual Base Salary (as in effect during the
year of such death), payable in accordance with EDGEN’s customary payroll
practices, for the 12-month period immediately following the date of the
Executive’s death.

 

5.3.                              Cause.  If the Executive’s employment is terminated
by EDGEN for Cause pursuant to Section 4.3 hereof, EDGEN shall have no
further obligations hereunder after the Termination Date other than the payment
to the Executive of the Annual Base Salary accrued and unpaid through the
Termination Date.  EDGEN shall not be
obligated to make any bonus payments to the Executive pursuant to Section 3.2
hereof for the year in which such termination occurs or to provide any of the benefits set forth in Section 3.3 of this
Agreement after the Termination Date, except as may be required by applicable
law. Upon termination of employment
for Cause, the Executive shall be responsible for the payment of any COBRA
premiums.

 

5.4.                              Voluntary
Termination by EDGEN.  If EDGEN
voluntarily terminates the Executive’s employment hereunder pursuant to Section 4.4
hereof, EDGEN shall have no further obligations hereunder after the Termination
Date, except (a) the payment for the greater of either the 12-month
period immediately following the Termination Date or the remainder of the
Employment Term of the Annual Base Salary (as in effect during the year of such
termination) payable in accordance with EDGEN’s customary payroll practices; (b) the
payment of the premiums, co-payments and deductible expenses due by the
Executive for EDGEN-sponsored

 

6

 

medical and health benefits (or
the reimbursement of COBRA premiums), but only to the extent permitted by such
policies or plans, or as otherwise required by law; provided, however,
if the Executive becomes eligible for coverage under any other medical and
health policy after termination of employment, or is, or becomes covered by any
other medical and health policy, EDGEN’s obligation to pay the premiums,
co-payments and deductible expenses due by the Executive for EDGEN-sponsored
medical and health benefits shall cease immediately; and (c) the payment
of any Annual Bonus accrued and unpaid on
the Termination Date for the year prior to the year in which the Executive’s
termination occurs and the payment of the Annual Bonus due pursuant to Section 3.2
hereof for the year in which such termination occurs, payable on the same date
as such Annual Bonus would have been payable for such year pursuant to Section 3.2
hereof had the Employment Term not been so terminated, provided, however,
the Annual Bonus for the year in which such termination occurs, shall be pro rated, based on the number of days the
Executive was employed (less any Disability Period) over 365 days.

 

5.5                                 Termination
in Conjunction with a Change of Control; Severance Package.  If (a) EDGEN terminates the employment
of the Executive hereunder in conjunction with any Change of Control, pursuant
to Section 4.5 hereof; or if the Executive resigns his position in
conjunction with a Change in Control, pursuant to Section 1.3 or 4.6, the
Executive shall be entitled to a severance package consisting of: (i) the
payment of twelve (12) months of Annual Base Salary (as in effect during the
year of such termination) payable in a lump sum, (ii) any Annual Bonus accrued and unpaid on the
Termination Date or resignation date for the year prior to the year in which
the Executive’s termination occurs and the payment of the Annual Bonus
due pursuant to Section 3.2 hereof for the year in which such termination
occurs, payable on the same date as such Annual Bonus would have been payable
for such year pursuant to Section 3.2 hereof had the Employment Term not
been so terminated; provided, however, the Annual Bonus for the
year in which such termination or resignation occurs, shall be pro rated, based on the number of days the
Executive was employed (less any Disability Period) over 365 days, and (iii) the
payment of the premiums, co-payments and deductible expenses due by the
Executive for EDGEN-sponsored medical and health benefits (or the reimbursement
of COBRA premiums), but only to the extent permitted by such policies or plans,
or as otherwise required by law for the period of one year from the date of
termination or resignation; provided, however, if the Executive
becomes eligible for coverage under any other medical and health policy after
termination of employment, or is, or becomes covered by any other medical and
health policy EDGEN’s obligation to pay the premiums, co-payments and
deductible expenses due by the Executive for EDGEN-sponsored medical and health
benefits shall cease immediately.  Notwithstanding
the foregoing, in the event that the Executive, or any of his Affiliates,
participates in any Change of Control transaction as an equity participant
and/or as a purchaser of securities or assets and, immediately after the
consummation of the Change of Control transaction remains, or within six (6) months
of such transaction, becomes actively involved in the operation of the Company,
Parent or any successor entity thereto as an officer, director or employee, the
provisions of this Section 5.5 shall terminate and be of no further force
and effect provided, however, that if the Executive is first terminated in
connection with a Change of Control and then subsequently becomes actively
involved in EDGEN within six (6) months of a Change of Control transaction
the Executive shall pay to the stockholders of the Company immediately prior to
the Change of Control (the “Stockholders”), by delivery to Jefferies
Capital Partners, as representative for the Stockholders pursuant to that
certain Stockholders Agreement, by and among the Stockholders, of cash, bank
check or wire transfer of immediately available

 

7

 

funds, an
amount equal to the aggregate amount paid to the Executive under Sections
5.5(i), (ii) and (iii) above minus an amount equal to the pro rated
Annual Bonus for the year in which the Executive was terminated (based on the
number of days the Executive was employed (less any Disability Period) over 365
days).

 

5.6                                 Resignation
by Executive.  If at any time during
the Employment Term, the Executive resigns from the employ of EDGEN and/or
Parent for any reason whatsoever (other than in conjunction with a Change of
Control or for failure to be elected to the Board of Directors), EDGEN shall
have no further obligations hereunder after the date of resignation other than
the payment to the Executive of the Annual Base Salary accrued and unpaid
through the date of resignation.  EDGEN
shall not be obligated and shall be released from all obligations to make any
bonus payments to the Executive pursuant to Section 3.2 hereof.

 

5.7                                 Executive
Benefit Plans and Premiums.  During
any Disability Period, and upon termination of employment for any cause, the
right of the Executive (and that of his dependents) to participate in any
Executive benefit plan(s) of EDGEN, including any health benefit plan(s), shall
be controlled by applicable law, including COBRA, and the terms and conditions
of the Executive benefit plan.  Upon
termination of employment for Cause, the Executive shall be responsible for the
payment of any COBRA premiums.

 

6.                                       Confidentiality.  The Executive acknowledges that it is the
policy of EDGEN and Parent to maintain as secret and confidential all
Confidential Information (as defined herein). 
The parties hereto recognize that the services to be performed by the Executive
pursuant to this Agreement are special and unique, and that by reason of his
employment by EDGEN, Parent, or any Affiliates thereof both before and after
the Effective Date, the Executive will acquire, or may have acquired,
Confidential Information.  The Executive
recognizes that all such Confidential Information is and shall remain the sole
property of EDGEN and Parent, as applicable, free of any rights of the
Executive, and acknowledges that EDGEN and Parent have a vested interest in
assuring that all such Confidential Information remains secret and
confidential.  Therefore, in
consideration of the Executive’s employment with EDGEN and Parent pursuant to
this Agreement, the Executive agrees that at all times from and after the
Effective Date, he will not, directly or indirectly, disclose to any person,
firm, company or other entity, other than Parent, or any of its Affiliates (for
the purposes of this Employment Agreement, the term “Affiliate(s)” means
Parent, its successor(s), any direct or indirect subsidiary of Parent, or its
successor(s), or any division of a subsidiary), any Confidential Information,
except as required in the performance of his duties hereunder, without the
prior written consent of Parent or EDGEN, as applicable, except to the extent
that (i) any such Confidential Information becomes generally available to
the public, other than as a result of a breach by the Executive of this Section 6,
or (ii) any such Confidential Information becomes available to the
Executive on a non-confidential basis from a source other than Parent, or any
of its Affiliates or advisors; provided, that such source is not known
by the Executive to be bound by a confidentiality agreement with, or other
obligation of secrecy to Parent, any of its Affiliates or another party.  In addition, it shall not be a breach of the
confidentiality obligations hereof if the Executive is required by law to
disclose any Confidential Information; provided, that in such case, the
Executive shall (a) give Parent and/or EDGEN, as applicable, the earliest
notice possible that such disclosure is or may be required and (b) cooperate
with Parent and/or EDGEN, as applicable, at Parent’s and/or EDGEN’s expense, as
applicable, in protecting, to the maximum extent legally permitted, the

 

8

 

confidential or proprietary
nature of the Confidential Information which must be so disclosed.  The obligations of the Executive under this Section 6
shall survive any termination of this Agreement.  During the Employment Term, the Executive shall
exercise all due and diligent precautions to protect the integrity of the
business plans, customer lists, statistical data and compilation, agreements,
contracts, manuals or other documents of Parent and/or EDGEN, as applicable
which embody the Confidential Information, and upon the expiration or the
termination of the Employment Term, the Executive agrees that all Confidential
Information in his possession, directly or indirectly, that is in writing,
computer generated, or other tangible form (together with all duplicates
thereof) will forthwith be returned to Parent and/or EDGEN, as applicable, and
will not be retained by the Executive or furnished to any person, either by
sample, facsimile, film, audio or video cassette, electronic data, verbal communication
or any other means of communication.  The
Executive agrees that the provisions of this Section 6 are reasonably
necessary to protect the proprietary rights of Parent and EDGEN in the
Confidential Information and their trade secrets, goodwill and reputation.

 

For purposes
hereof, the term “Confidential Information” means all information
heretofore or hereafter developed or used by Parent, or any of its Affiliates
relating to the Business (as herein defined), and the operations, employees,
customers, suppliers and distributors of Parent and/or any of its Affiliates,
including, but not limited to, customer lists, customer orders, purchase
orders, financial data, pricing information and price lists, business plans and
market strategies and arrangements, all books, records, manuals, advertising
materials, catalogues, correspondence, mailing lists, production data, sales
materials and records, purchasing materials and records, personnel records,
quality control records and procedures included in or relating to the Business
or any of the assets of Parent and/or its Affiliates, and all trademarks, trade
names, copyrights and patents, and applications therefor, all trade secrets,
inventions, processes, procedures, research records, market surveys and
marketing know-how and other technical papers of Parent and/or any of its Affiliates, except that notwithstanding
anything to the contrary contained herein, the term Confidential Information
shall not include any such information that is publicly known or that becomes
publicly known (other than as a result of any action on the part of, or a
breach of the provisions of this Section 6, by the Executive).

 

For purposes
hereof, the term “Business” shall mean the business of (a) distributing
and selling industrial steel pipe, including large OD pipe, heavy wall and
X-grade pipe, DSAW, seamless, continuous weld, ERW pipe and abrasive resistant
pipe (mine pipe), and valves, alloy pipe, flanges and fittings, welded fittings
and flanges (high yield, stainless, exotic carbon, chrome and low temp) per
ANSI B16.9 and B16.5 (commodity lines and specials, i.e. anchor flanges and
swivel ring flanges) forged steel fittings, outlets, pipe nipples, swage
nipples, hot induction bends and Pikotek gaskets/insulation kits, stainless
steel and other nickel alloy and hastelloy pipe, valves, fittings and flanges,
including all chrome grades, (collectively, the “Products”); (b) providing
added value services to such pipe and steel Products, including, flame cutting,
sawing, welding, sandblasting, priming, top coat painting, epoxy applications
and end finishing, and conversion of pipe to other components or products; (c) entering
into joint venture, partnership or agency arrangements relating to the sale or
distribution of surplus stainless steel pipe, fittings and flanges, but
excluding value-added services if not sold as part of the Products; and (d) any
endeavor entered into by Parent or any Affiliates after the signing of this
agreement,

 

9

 

but before termination of the employment of the Executive.  Notwithstanding anything herein to the
contrary, the definition of the Business shall not include the manufacturing of
steel pipe.

 

7.                                       Noncompetition;
Nonsolicitation.

 

7.1.                              If
the Executive’s employment is terminated for Disability or for Cause, pursuant
to Section 4.1 or 4.3 hereof, respectively, or if the Executive resigns,
pursuant to Section 5.6 hereof, during the Employment Term and for a
period of twelve (12) months following the date of the termination of the
Executive’s employment with EDGEN, or for a period of twelve (12) months
following the date of receipt of the last payment by the Executive of any
payment made pursuant to any part of Section 5, whichever is longer, the
Executive agrees he will not, directly or indirectly, engage in, own, manage,
operate, provide financing to, control or participate in the ownership,
management or control of, or be connected as an officer, employee, partner,
director, or otherwise with, or have any financial interest in, or aid or
assist anyone else in the conduct of, any business, that competes, directly or
indirectly, with the Business or is otherwise engaged in activities competitive
with the Business, in each and every area (as designated in Schedule B
attached hereto) [Need to confirm Schedule B remains accurate] where
Parent and/or EDGEN is engaged in the sale and/or distribution of the Products
on the date the Executive’s employment is terminated pursuant to Section 4.1
or 4.3 hereof, or resigns, pursuant to Section 5.6 hereof, and he will
not, either personally or by his agent or by letters, circulars or
advertisements, whether for himself or on behalf of any other person, company,
firm or other entity, canvass or solicit, or enter into or effect (or cause or
authorize to be solicited, entered into or effected) directly or indirectly,
for or on behalf of himself or any other person, any business relating to the
sale and/or distribution of any Products from any person, company, firm or
other entity, who is, or has at any time within two (2) years prior to the
date of such action been a customer or supplier of Parent or any of its
Affiliates.

 

7.2.                              If
the Executive’s employment is terminated without Cause pursuant to Section 4.4
of this Agreement, and provided that EDGEN (pursuant to Section 5.4 of
this Agreement) pays Executive the Annual Base Salary as set forth in Section 3.1
and the employment benefits set forth in Section 3.3(b) hereof in
effect at the time of termination of employment (but only to the extent
permitted by such policies or plans, or as otherwise required by law) in
accordance with EDGEN’s customary payroll practices which are in effect at the
time payments are due (the “Post-termination Benefits”), the Executive
agrees he will not, directly or indirectly, engage in, own, manage, operate,
provide financing to, control or participate in the ownership, management or
control of, or be connected as an officer, employee, partner, director, or
otherwise with, or have any financial interest in, or aid or assist anyone else
in the conduct of, any business, that competes, directly or indirectly, with
the Business or is otherwise engaged in activities competitive with the
Business, in each and every area (as designated in Schedule B
attached hereto), where EDGEN is engaged in the sale and/or distribution of the
Products on the date the Executive’s employment is terminated hereunder for a
period of twelve (12) months from the date of the termination (the “Initial
Period of Noncompetition”).  EDGEN
will have the option of extending the Period of Noncompetition for an
additional consecutive twelve (12) months (the “Extended Period of
Noncompetition”) upon giving written notice to the Executive at least one
hundred and twenty (120) days before expiration of the Initial Period of
Noncompetition.  During the Extended
Period of Noncompetition, EDGEN shall pay the Executive the Annual Base Salary
and the Post-termination Benefits, in accordance with

 

10

 

EDGEN’s customary payroll
practices which are in effect at the time payments are due, for the entire
Extended Period of Noncompetition.  In
the event that EDGEN fails to pay the Annual Base Salary and the
Post-termination Benefits called for herein, the Executive shall be
automatically released from all restrictions on the right to compete, but shall
still be entitled to all rights called for under any other section of this
Agreement, including but not limited to payments and benefits due under Section 5.4
of this Agreement. If the Executives employment is terminated pursuant to Section 4.4
(voluntary termination by EDGEN) hereof, and upon condition that the Annual Base
Salary and Post-termination Benefits are paid for the period designated, the
Executive further agrees he will not during the Period of Noncompetition or the
Extended Period of Noncompetition, either personally or by his agent or by
letters, circulars, or advertisements, and whether for himself or on behalf of
any other person, company, firm or other entity, canvass or solicit, or enter
into or effect (or cause or authorize to be solicited, entered into or
effected), directly or indirectly, for or on behalf of himself or any other
person, any business relating to the sale and/or distribution of any Products
from any person, company, firm or other entity, who is, or has at any time
within two (2) years prior to the date of such action been a customer or
supplier of Parent or any of its Affiliates.

 

7.3.                              If
the Executive’s employment is terminated due to the Change of Control of Parent
pursuant to Section 4.5 of this Agreement or if the Executive resigns his
position due to the Change in Control pursuant to Section 4.6, and
provided that EDGEN (pursuant to Section 5.5 of this Agreement) pays
Executive the Annual Base Salary and Post-termination Benefits to the extent
applicable, the Executive agrees he will not, directly or indirectly, engage
in, own, manage, operate, provide financing to, control or participate in the
ownership, management or control of, or be connected as an officer, employee,
partner, director, or otherwise with, or have any financial interest in, or aid
or assist anyone else in the conduct of, any business, that competes, directly
or indirectly, with the Business or is otherwise engaged in activities
competitive with the Business, in each and every area (as designated in Schedule B
annexed hereto), where EDGEN is engaged in the sale and/or distribution of the
Products on the date the Executive’s employment is terminated hereunder for a
period of twelve (12) months from the date of the termination (the “Change
of Control Period of Noncompetition”). 
EDGEN shall pay the Executive the Annual Base Salary and
Post-termination Benefits for the entire Change of Control Period of
Noncompetition.  In the event that EDGEN
fails to pay the Annual Base Salary and Post-termination Benefits, the
Executive shall be automatically released from all restrictions on the right to
compete, but shall still be entitled to all rights called for under any other section of
this Agreement, including but not limited to payments and benefits due under Section 5.5
of this Agreement.

 

7.4.                              If
the Executive’s employment is terminated pursuant to Section 4.5 hereof or
if the Executive resigns his position due to the Change in Control pursuant to Section 4.6,
and provided that EDGEN (pursuant to Section 5.5 of this Agreement) pays
Executive the Annual Base Salary and Post-termination Benefits to the extent
applicable, the Executive further agrees he will not during the Change of Control
Period of Noncompetition, either personally or by his agent or by letters,
circulars, or advertisements, and whether for himself or on behalf of any other
person, company, firm or other entity, canvass or solicit, or enter into or
effect (or cause or authorize to be solicited, entered into or effected),
directly or indirectly, for or on behalf of himself or any other person, any
business relating to the sale and/or distribution of any Products from any
person, company, firm or other entity, who is, or has at any time within

 

11

 

twenty-four (24) months prior
to the date of such action been a customer or supplier of Parent or any of its
Affiliates.

 

7.5.                              The
Executive agrees that, at all times from after the Effective Date hereof and
for a period of two (2) years following the date of the termination of his
employment with Parent or EDGEN for any reason whatsoever, the Executive will
not, either personally or by his agent or by letters, circulars or advertisements,
and whether for himself or on behalf of any other person, company, firm or
other entity, (i) seek to persuade any Executive of Parent or any of its
Affiliates, subsidiaries or divisions to discontinue his or her status or
employment therewith or to become employed or to provide consulting or contract
services in a business or activities likely to be competitive with the
Business; or (ii) solicit, employ or engage any such person at any time
following the date of cessation of employment of such person with the Parent or
any of its Affiliates.

 

8.                                       Inventions.  Any and all inventions made, developed or
created by the Executive (whether at the request or suggestion of Parent and/or
EDGEN or otherwise, whether alone or in conjunction with others, and whether
during regular working hours or otherwise) during the period of his employment
with Parent and EDGEN, which may be directly or indirectly useful in, or relate
to, the Business of the business of any of Parent’s Affiliates, shall be
promptly and fully disclosed by the Executive to the Board of Directors of
Edgen, and shall be Parent’s and/or EDGEN’s, as applicable, exclusive property
as against the Executive.  The Executive
shall promptly deliver to the Board of Directors of EDGEN all papers, drawings,
models, data and other material relating to any invention made, developed or
created by him as aforesaid.  The
Executive hereby assigns any and all such inventions to EDGEN and hereby agrees
to execute and deliver such agreements, certificates, assignments or other
documents as may be necessary to effect the assignment to EDGEN of any and all
such inventions as contemplated by this Section 8.  The Executive shall, upon EDGEN’s or Parent’s
request, as applicable, and without any payment therefor, execute any documents
necessary or advisable in the opinion of EDGEN’s counsel to direct issuance of
patents or copyrights to EDGEN or Parent, as applicable, with respect to such
inventions as are to be in EDGEN’s or Parent’s exclusive property, as
applicable as against the Executive under this Section 8 or to vest in
EDGEN or Parent, as applicable, title to such inventions as against the
Executive, the expense of securing any such patent or copyright, to be borne by
EDGEN or Parent, as applicable.

 

9.                                       Breach.

 

9.1.                              Both parties recognize that the services to be rendered under this
Agreement by the Executive are special, unique and extraordinary in character,
and that in the event of a breach by Executive of the material terms and
conditions of the obligations to be performed by him hereunder, EDGEN shall be
entitled, if it so elects, to institute and prosecute proceedings in any court
of competent jurisdiction, either in law or in equity, to obtain damages for
any breach of this Agreement, or to enforce the specific performance thereof by
the Executive.  Without limiting the
generality of the foregoing, the parties acknowledge that a breach by the
Executive of his material obligations under Sections 6, 7 or 8 could cause
EDGEN irreparable harm for which no adequate remedy at law would be available
in respect thereof and that therefore upon proof of the same EDGEN would be
entitled to seek and obtain injunctive relief with respect thereto.

 

12

 

9.2.                              In
the event of a breach by EDGEN of the material terms and conditions of the
obligations to be performed by it hereunder, the Executive shall provide EDGEN
with written notice thereof, specifying the nature of the breach, within seven (7) days
of such breach and EDGEN shall have thirty (30) days followings its receipt of
such notice to cure the breach specified therein to the reasonable satisfaction
of Executive.  To the extent EDGEN fails
to cure such breach as provided herein, the Executive shall then be entitled,
if he so elects, to institute and prosecute proceedings in any court of
competent jurisdiction, either in law or in equity, to obtain damages for such
breach.  To the extent EDGEN fails to
cure such breach as provided herein, the non-competition restrictions set forth
in Section 7 shall terminate.

 

10.                                 Parent’s
Guaranty. Parent hereby guarantees all of EDGEN’s obligations under this
Agreement, including, but not limited to, prompt and full payment of any and
all amounts due the Executive under this Agreement.

 

11.                                 Insurance.   The Executive acknowledges and agrees that
EDGEN may obtain a life insurance policy on the life of the Executive with
EDGEN named as the beneficiary.  If EDGEN
so elects, the Executive covenants and agrees to cooperate fully with EDGEN’s
efforts to obtain such insurance policy.

 

12.                                 Conflicting
Agreements.  The Executive hereby
represents and warrants to EDGEN that (a) neither the execution of this
Agreement by the Executive nor the performance by the Executive of any of his
obligations or duties hereunder will conflict with or violate or constitute a
breach of the terms of any employment or other agreement to which the Executive
is a party or by which the Executive is bound; and (b) the Executive is
not required to obtain the consent of any person, firm, corporation or other
entity in order to enter into this Agreement or to perform any of his
obligations or duties hereunder.

 

13.                                 Further
Assurances.  The Executive hereby
agrees to execute and deliver such agreements, certificates or other documents as
may be reasonably requested by EDGEN, which may be necessary or are required
hereunder.

 

14.                                 Miscellaneous.

 

14.1.                        Successors;
Binding Agreement.  This Agreement
and all rights of the Executive hereunder shall inure to the benefit of the
parties hereto and their respective heirs, personal representatives, successors
and assigns; provided, that the duties of the Executive hereunder are
personal to the Executive and may not be delegated or assigned by him.

 

14.2                           Notice.  All notices and other communications provided
for in this Agreement shall be in writing and shall be deemed to have been duly
given when delivered personally, by registered or certified mail, postage
prepaid, or by a nationally recognized overnight courier service as follows:

 

(a)                                  If
to the Executive:

 

at his then current address

included in the employment records of EDGEN;

 

13

 

With a copy
to:

 

John C. Miller

Kantrow,
Spaht, Weaver, and Blitzer

PO Box  2997

Baton Rouge, LA    70821-2997

 

(b)                                 If
to EDGEN:

 

c/o EDGEN LOUISIANA CORPORATION

18444 Highland Road

Baton Rouge, LA  70809

Attention: 
Chief Executive Officer

with a simultaneous
copy to:

 

Jefferies Capital Partners

520 Madison Avenue, 8th
Floor

New York, New York
10022

Attention:  James Luikart and Nicholas Daraviras

 

and to:

 

Dechert LLP

4000 Bell Atlantic
Tower

1717 Arch Street

Philadelphia,
Pennsylvania 19103

Attention:  Carmen J. Romano, Esq.

 

Or to such
other address as any party may have furnished to the other parties in writing
in accordance herewith.

 

14.3                           Governing
Law.  This Agreement shall be
governed by and in accordance with the laws of the State of Louisiana without
regard to conflict of law rules thereof.

 

14.4                           Waivers.  The waiver of either party hereto of any
right hereunder or of any failure to perform or breach by the other party
hereto shall not be deemed a waiver of any other right hereunder or of any
other failure or breach by the other party hereto, whether of the same or a
similar nature or otherwise.  No waiver
shall be deemed to have occurred unless set forth in a writing executed by or
on behalf of the waiving party.  No such
written waiver shall be deemed a continuing waiver unless specifically stated
therein, and each such waiver shall operate only as to the specific term or
condition waived and shall not constitute a waiver of such term or condition
for the future or as to any act other than that specifically waived.

 

14.5                           Most
Favored Status.  The Company and
Executive intend that Executive receive the benefit of any new or additional
compensation programs developed by the Company hereafter.  Accordingly, at such times as the Board of
Directors approves any new or additional compensation concepts or programs for
any officer of the Company (other than compensation

 

14

 

based on sales or other commissions), then such new or additional
concept or program shall also apply to Executive and the Agreement shall be
amended by the Company and Executive upon request by Executive to incorporate
such new or additional concept or program.

 

14.6                           Validity.  The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall otherwise remain in full
force and effect.  Moreover, if any one
or more of the provisions contained in this Agreement is held to be excessively
broad as to duration or scope, such provisions shall be construed by limiting and
reducing them so as to be enforceable to the maximum extent compatible with
applicable law.  Specifically, the
Executive acknowledges that substantial funds, goodwill and assets will have
been expended by EDGEN and/or Parent to fully utilize the knowledge, talent and
skills of the Executive, accordingly, if any portion of Section 7 shall be
held to be unenforceable, the obligations of the Executive stated in Section 7
shall nonetheless be held to be enforceable for the longest period of time, for
the largest geographical area, and to the fullest extent allowed by law.

 

14.7                           Entire
Agreement.  This Agreement sets forth
the entire agreement and understanding of the parties in respect of the subject
matter contained herein, and supersedes all prior agreements, promises,
covenants, arrangements, communications, representations or warranties, whether
oral or written, by any officer, Executive or representative of either party in
respect of said subject matter.

 

14.8                           Headings
Descriptive.  The headings of the
several paragraphs of this Agreement are inserted for convenience only and
shall not in any way affect the meaning or construction of any provision of
this Agreement.

 

14.9                           Obligations
Absolute.  The obligations of EDGEN
and the Executive shall be absolute and unconditional and shall not be affected
by any circumstances, including without limitation the Executive’s receipt of
compensation and benefits from another employer in the event that the Executive
accepts new employment following the termination of his employment under this
Agreement.

 

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

 

14.11                     Survival.  The rights and obligations set forth in Section 5.5
shall survive the termination of this Agreement.

 

15

 

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

 

	
   

  	
  EXECUTIVE:

  	 

	
   

  	
   

  	 

	
   

  	
   

  	 

	
   

  	
  /s/ DANIEL
  J. O’LEARY

  	
   

  	 

	
   

  	
  Daniel J. O’Leary

  	 

	
   

  	
   

  	 

	
   

  	
   

  	 

	
   

  	
  EDGEN LOUISIANA CORPORATION

  	 

	
   

  	
   

  	 

	
   

  	
   

  	 

	
   

  	
  By:

  	
  /s/ DAVID L.
  LAXTON, III

  	
   

  	 

	
   

  	
   

  	
  Name: David
  L. Laxton, III

  	
   

  	 

	
   

  	
   

  	
  Title: EVP
  and CFO

  	
   

  	 

	
   

  	
   

  	 

	
   

  	
  Only with respect to Section 10
  hereof:

  	 

	
   

  	
   

  	 

	
   

  	
  EDGEN CORPORATION

  	 

	
   

  	
   

  	 

	
   

  	
   

  	 

	
   

  	
  By:

  	
  /s/ DAVID L.
  LAXTON, III

  	
   

  
	
   

  	
   

  	
  Name: David
  L. Laxton, III

  	
   

  
	
   

  	
   

  	
  Title: EVP
  and CFO

  	
   

  

 

16

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