Document:

Filed by Bowne Pure Compliance

 

Exhibit 10.2

 

EXHIBIT A to Unit Purchase Agreement

 

REGISTRATION RIGHTS AGREEMENT

BY AND AMONG

RIO VISTA ENERGY PARTNERS L.P.

AND

THE PURCHASERS NAMED ON SCHEDULE A HERETO

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	ARTICLE I   DEFINITIONS	 	 	1	 
	 	 	 	 	 	 	 
	Section 1.01
	 	Definitions	 	 	1	 
	Section 1.02
	 	Registrable Securities	 	 	3	 
	Section 1.03
	 	Rights and Obligations	 	 	3	 
	 
	 	 	 	 	 	 
	ARTICLE II   REGISTRATION RIGHTS	 	 	3	 
	 
	 	 	 	 	 	 
	Section 2.01
	 	Shelf Registration	 	 	3	 
	Section 2.02
	 	Piggyback Rights	 	 	6	 
	Section 2.03
	 	Underwritten Offerings	 	 	8	 
	Section 2.04
	 	Sale Procedures	 	 	9	 
	Section 2.05
	 	Cooperation by Holders	 	 	12	 
	Section 2.06
	 	Restrictions on Public Sale by Holders of Registrable Securities	 	 	13	 
	Section 2.07
	 	Expenses	 	 	13	 
	Section 2.08
	 	Indemnification	 	 	14	 
	Section 2.09
	 	Rule 144 Reporting	 	 	16	 
	Section 2.10
	 	Transfer or Assignment of Registration Rights	 	 	16	 
	Section 2.11
	 	Limitation on Subsequent Registration Rights	 	 	16	 
	 
	 	 	 	 	 	 
	ARTICLE III   MISCELLANEOUS	 	 	17	 
	 
	 	 	 	 	 	 
	Section 3.01
	 	Communications	 	 	17	 
	Section 3.02
	 	Successor and Assigns	 	 	18	 
	Section 3.03
	 	Assignment of Rights	 	 	18	 
	Section 3.04
	 	Recapitalization, Exchanges, Etc. Affecting the Units	 	 	18	 
	Section 3.05
	 	Aggregation of Purchased Units	 	 	18	 
	Section 3.06
	 	Specific Performance	 	 	18	 
	Section 3.07
	 	Counterparts	 	 	19	 
	Section 3.08
	 	Headings	 	 	19	 
	Section 3.09
	 	Governing Law	 	 	19	 
	Section 3.10
	 	Severability of Provisions	 	 	19	 
	Section 3.11
	 	Entire Agreement	 	 	19	 
	Section 3.12
	 	Amendment	 	 	19	 
	Section 3.13
	 	No Presumption	 	 	19	 
	Section 3.14
	 	Obligations Limited to Parties to Agreement	 	 	20	 
	Section 3.15
	 	Interpretation	 	 	20	 
	Section 3.16
	 	Equal Treatment of Purchasers.	 	 	20	 

 

 

 

REGISTRATION RIGHTS AGREEMENT

This REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into as of
December 3, 2007, by and among Rio Vista Energy Partners L.P., a Delaware limited partnership (the
“Partnership”), and each of the Purchasers set forth on Exhibit A to this Agreement
(each, a “Purchaser” and collectively, the “Purchasers”).

WHEREAS, this Agreement is made in connection with the Closing of the issuance and sale of the
Purchased Units pursuant to the Unit Purchase Agreement, dated as of November 29, 2007, by and
among the Partnership and the Purchasers (the “Purchase Agreement”); and

WHEREAS, the Partnership has agreed to provide the registration and other rights set forth in
this Agreement for the benefit of the Purchasers pursuant to the Purchase Agreement.

NOW THEREFORE, in consideration of the mutual covenants and agreements set forth herein and
for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged
by each party hereto, the parties hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01 Definitions. Capitalized terms used herein without definition shall have
the meanings given to them in the Purchase Agreement. The terms set forth below are used herein as
so defined:

“Agreement” has the meaning specified therefor in the introductory paragraph of this
Agreement.

“Effective Date Deadline” means the date that is 180 days after the Closing Date.

“Effectiveness Period” has the meaning specified therefor in Section 2.01(a)
of this Agreement.

“General Partner” means Rio Vista GP LLC, a Delaware limited liability company and the
general partner of the Partnership.

“Holder” means the record holder of any Registrable Securities.

“Included Registrable Securities” has the meaning specified therefor in Section
2.02(a) of this Agreement.

“Liquidated Damages” has the meaning specified therefor in Section 2.01(b) of
this Agreement.

“Liquidated Damages Multiplier” means the product of (a) $11.25 and (b)(i) the number
of Purchased Units purchased by such Purchaser, if no Rule 415 Event occurs, or (ii) in the event
of a Rule 415 Event, (A) the number of Units purchased by such Purchaser that are Covered
Registrable Securities that have not been registered by the Target Effective Date, plus (B) the
number of Units purchased by such Purchaser that are not Covered Registrable Securities that
have not been registered by the Effective Date Deadline (in each case, subject to adjustment for
unit splits, combinations and similar events).

 

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“Losses” has the meaning specified therefor in Section 2.08(a) of this
Agreement.

“Managing Underwriter” means, with respect to any Underwritten Offering, the
book-running lead manager of such Underwritten Offering.

“Nasdaq” means The Nasdaq National Market.

“Opt Out Notice” has the meaning specified therefor in Section 2.02(a) of this
Agreement.

“Partnership” has the meaning specified therefor in the introductory paragraph of this
Agreement.

“Purchase Agreement” has the meaning specified therefor in the recitals of this
Agreement.

“Purchaser” and “Purchasers” have the meanings specified therefor in the
introductory paragraph of this Agreement.

“Purchaser Underwriter Registration Statement” has the meaning specified therefor in
Section 2.04(p) of this Agreement.

“Registrable Securities” means: (i) the Purchased Units and (ii) any Units issued as
Liquidated Damages pursuant to Section 2.01 of this Agreement, if any, all of which
Registrable Securities are subject to the rights provided herein until such rights terminate
pursuant to the provisions hereof.

“Registration Expenses” has the meaning specified therefor in Section 2.07(b)
of this Agreement.

“Selling Expenses” has the meaning specified therefor in Section 2.07(b) of
this Agreement.

“Selling Holder” means a Holder who is selling Registrable Securities pursuant to a
registration statement.

“Selling Holder Indemnified Persons” has the meaning specified therefor in Section
2.08(a) of this Agreement.

“Shelf Registration Statement” means a registration statement under the Securities Act
to permit the public resale of the Registrable Securities from time to time, including as permitted
by Rule 415 under the Securities Act (or any similar provision then in force under the Securities
Act).

 

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“Target Effective Date” means the date that is the earlier of the filing of the Form
10-K for the year ended December 31, 2007 but no later than April 14, 2008.

“Underwritten Offering” means an offering (including an offering pursuant to a Shelf
Registration Statement) in which Units are sold to an underwriter on a firm commitment basis for
reoffering to the public or an offering that is a “bought deal” with one or more investment banks.

Section 1.02 Registrable Securities. Any Registrable Security will cease to be a
Registrable Security with respect to a Purchaser upon the first to occur of the following events:
(a) when a registration statement covering such Registrable Security becomes or has been declared
effective by the Commission and such Registrable Security has been sold or disposed of by such
Purchaser pursuant to such effective registration statement; (b) when such Registrable Security has
been disposed of by such Purchaser pursuant to any section of Rule 144 (or any similar provision
then in force) under the Securities Act; (c) when such Registrable Security can be disposed of by
such Purchaser pursuant to Rule 144 (or any similar provision then in force) under the Securities
Act; (d) when such Registrable Security is held by the Partnership or one of its subsidiaries; or
(e) when such Registrable Security has been sold in a private transaction in which the transferor’s
rights under this Agreement are not assigned to the transferee of such securities pursuant to
Section 2.10 hereof.

Section 1.03 Rights and Obligations. Except for the rights and obligations under
Section 2.08 herein, all rights and obligations of each Purchaser under this Agreement, and
all rights and obligations of the Partnership under this Agreement with respect to such Purchaser,
shall terminate when such Purchaser is no longer a Holder.

ARTICLE II

REGISTRATION RIGHTS

Section 2.01 Shelf Registration.

(a) Deadline To Become Effective. As soon as practicable following the Closing Date,
but in any event within 90 days after the Closing Date, the Partnership shall prepare and file a
Shelf Registration Statement under the Securities Act with respect to all of the Registrable
Securities. The Shelf Registration Statement filed pursuant to this Section 2.01(a) shall
be on such appropriate registration form of the Commission as shall be selected by the Partnership.
The Partnership shall use its best efforts to cause the Shelf Registration Statement to become
effective no later than the Target Effective Date. The Partnership will use its best efforts to
cause the Shelf Registration Statement filed pursuant to this Section 2.01 to be
continuously effective under the Securities Act until the earlier of (i) the date as of which all
such Registrable Securities are sold by the Purchasers and any transferee or assignee who was
transferred or assigned rights under this Agreement in accordance with Section 2.10 and
(ii) the date as of which all Registrable Securities cease to be Registrable Securities pursuant to
Section 1.02 of this Agreement (the “Effectiveness Period”). The Shelf
Registration Statement when declared effective (including the documents incorporated therein by
reference) will comply as to form in all material respects with all applicable requirements of the
Securities Act and the Exchange Act and will not contain an untrue statement of a material fact or
omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading (and, in the
case of any prospectus contained in such Shelf Registration Statement, in the light of the
circumstances under which a statement is made). As soon as practicable following the date that the
Shelf Registration Statement becomes effective, but in any event within two (2) Business Days of
such date, the Partnership shall provide the Purchasers with written notice of the effectiveness of
the Shelf Registration Statement.

 

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(b) Failure To Become Effective. Subject to the terms of Section 2.01(g)
below, if the Shelf Registration Statement required by Section 2.01 does not become or is
not declared effective as to all or any portion of the Registrable Securities on or before the
Target Effective Date (or the Effective Date Deadline in the event of a Rule 415 Event, as
applicable), then each Purchaser shall be entitled to a payment (with respect to the Registrable
Securities of each such Purchaser), as liquidated damages and not as a penalty, of 1.00% of the
Liquidated Damages Multiplier per each non-overlapping 30-day period following the Target Effective
Date (or the Effective Date Deadline in the event of a Rule 415 Event, as applicable) (the
“Liquidated Damages”) until such filing failure is cured or until the date two (2) years
after the Closing Date; provided, that the Liquidated Damages for any period of less than 30 days
shall be prorated by multiplying the Liquidated Damages to be paid in a full 30-day period by a
fraction, the numerator of which is the number of days for which such liquidated damages are owed,
and the denominator of which is 30; provided, further, that if there is a change in the Law or
accounting principles generally accepted in the United States that would result in the Purchased
Units being treated as debt securities instead of equity securities for purposes of the
Partnership’s financial statements because of the Liquidated Damages, then the aggregate amount of
the Liquidated Damages payable by the Partnership under this Agreement to each Purchaser shall not
exceed the maximum amount of the Liquidated Damages Multiplier with respect to such Purchaser
allowed for the Purchased Units not to be treated as debt securities for purposes of the
Partnership’s financial statements. The Liquidated Damages payable pursuant to the immediately
preceding sentence shall be payable within ten (10) Business Days after the end of each such
non-overlapping 30-day period. Any Liquidated Damages shall be paid to each Purchaser in cash or
immediately available funds; provided, however, if the Partnership certifies that it is unable to
pay Liquidated Damages in cash or immediately available funds because such payment would result in
a breach under a credit facility or other debt instrument filed as exhibits to the Partnership SEC
Documents, then the Partnership may pay the Liquidated Damages in kind in the form of the issuance
of additional Units. Upon any issuance of Units as Liquidated Damages, the Partnership shall
promptly (i) prepare and file a new Shelf Registration Statement or any existing Shelf Registration
Statement adding such Units to such Shelf Registration Statement as additional Registrable
Securities and (ii) prepare and file a supplemental listing application with Nasdaq to list such
additional Units. The determination of the number of Units to be issued as Liquidated Damages
shall be equal to the amount of Liquidated Damages divided by the volume weighted average closing
price of the Partnership’s Units on Nasdaq for the ten (10) trading days immediately preceding the
date on which the Liquidated Damages payment is due, less a discount of 5.0%. The payment of
Liquidated Damages to a Purchaser shall cease as to any Registrable Securities that cease to be
Registrable Securities as provided in Section 1.02 above, or at such time as the Purchased
Units can be disposed of by such Purchaser pursuant to Rule 144(k) (or any similar provision then
in force) under the Securities Act.

 

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(c) Waiver of Liquidated Damages. If the Partnership is unable to cause a Shelf
Registration Statement to become effective by the Target Effective Date as a result of an
acquisition, merger, reorganization, disposition or other similar transaction, then the Partnership
may request a waiver of the Liquidated Damages, which may be granted by the consent of the Holders
of a majority of the outstanding Registrable Securities, in their sole discretion, and which such
waiver shall apply to all the Holders of Registrable Securities.

(d) Delay Rights. Notwithstanding anything to the contrary contained herein, the
Partnership may, upon written notice to any Selling Holder whose Registrable Securities are
included in the Shelf Registration Statement, suspend such Selling Holder’s use of any prospectus
which is a part of the Shelf Registration Statement (in which event the Selling Holder shall
discontinue sales of the Registrable Securities pursuant to the Shelf Registration Statement but
may settle any previously made sales of Registrable Securities) if (i) the Partnership is pursuing
an acquisition, merger, reorganization, disposition or other similar transaction and the
Partnership determines in good faith that the Partnership’s ability to pursue or consummate such a
transaction would be materially adversely affected by any required disclosure of such transaction
in the Shelf Registration Statement or (ii) the Partnership has experienced some other material
non-public event the disclosure of which at such time, in the good faith judgment of the
Partnership, would materially adversely affect the Partnership; provided, however, in no event
shall the Selling Holders be suspended from selling Registrable Securities pursuant to the Shelf
Registration Statement for a period that exceeds an aggregate of 30 days in any 90-day period or 90
days in any 365-day period, in each case, exclusive of days covered by any lock-up agreement
executed by a Purchaser in connection with any Underwritten Offering. Upon disclosure of such
information or the termination of the condition described above, the Partnership shall provide
prompt notice to the Selling Holders whose Registrable Securities are included in the Shelf
Registration Statement, and shall promptly terminate any suspension of sales it has put into effect
and shall take such other reasonable actions to permit registered sales of Registrable Securities
as contemplated in this Agreement.

(e) Additional Rights to Liquidated Damages. If (i) the Holders shall be prohibited
from selling their Registrable Securities under the Shelf Registration Statement as a result of a
suspension pursuant to Section 2.01(d) of this Agreement in excess of the periods permitted
therein or (ii) the Shelf Registration Statement is filed and declared effective but, during the
Effectiveness Period, shall thereafter cease to be effective without being succeeded by a
post-effective amendment to the Shelf Registration Statement, a supplement to the prospectus or a
report filed with the Commission pursuant to Section 13(a), 13(c), 14 or l5(d) of the Exchange Act,
then, until the suspension is lifted or a post-effective amendment, supplement or report is filed
with the Commission, but not including any day on which a suspension is lifted or such amendment,
supplement or report is filed and declared effective, if applicable, the Partnership shall pay the
Holders an amount equal to the Liquidated Damages, following (x) the date on which the suspension
period exceeded the permitted period or (y) the day after the Shelf Registration Statement ceased
to be effective or failed to be useable for its intended purposes, as liquidated damages and not as
a penalty. For purposes of this Section 2.01(e), a suspension shall be deemed lifted on
the date that notice that the suspension has been lifted is delivered to the Holders pursuant to
Section 3.01 of this Agreement. The parties confirm and agree that as long as a Shelf
Registration Statement is effective as to certain Registrable Securities, the registration
of such Registrable Securities shall not give rise to any Liquidated Damages even if the
Partnership or any Purchaser deems it inadvisable to sell such Registrable Securities.

 

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(f) Claw-Back of Units. The Partnership may exclude Registrable Securities from the
Registration Statement if required by the Commission in order for the Commission to declare the
Registration Statement effective; provided, however, that the Partnership will use its best efforts
to file and have declared effective a subsequent Registration Statement that includes the
Registrable Securities excluded from the initial Registration Statement at such time as it may do
so in accordance with the Securities Act as interpreted by the Commission, but in any event no
later than the Effective Date Deadline. With respect to any Registrable Securities that are not
included in the initial Registration Statement or a subsequent Registration Statement by the Target
Effective Date or the Effective Date Deadline, as applicable, the Partnership shall be required to
pay the Purchasers the Liquidated Damages in accordance with Section 2.01(b) of this Agreement.

(g) No Obligation for Primary Offering by Purchasers. If (i) the Commission deems the
registration of any Registrable Securities to be a primary offering by the Partnership or the
Purchasers and (ii) the Commission prohibits the use of Rule 415 under the Securities Act (or any
similar provision then in force) to sell all or a portion of the Registrable Securities on a
delayed or continuous basis (a “Rule 415 Event”), then the Partnership shall no later than
the Target Effective Date, cause a Shelf Registration Statement to become effective that covers the
maximum number of Registrable Securities capable of registration (the “Covered Registrable
Securities”) using Rule 415 under the Securities Act to sell the Registrable Securities on a
delayed or continuous basis. If such Registration Statement is not declared effective by the
Target Effective Date, then the Partnership shall be required to pay the Purchasers the Liquidated
Damages in accordance with Section 2.01(b) of this Agreement. The Purchasers hereby acknowledge
that the Partnership has granted registration rights as to its Common Units on a pari passu basis
with the Registrable Securities as described in Schedule 3.02(g) of the Purchase Agreement
(the “Additional Securities”); and in the event any Registrable Securities are excluded
from the coverage of the Shelf Registration Statement as a result of the inclusion of such
Additional Securities, the sole remedy of the Purchasers shall be the Partnership’s payment of
Liquidated Damages in respect of the Registrable Securities not so registered as herein provided.

Section 2.02 Piggyback Rights.

(a) Participation. If at any time the Partnership proposes to file (i) a shelf
registration statement other than the Shelf Registration Statement contemplated by Section
2.01, (ii) a prospectus supplement to an effective shelf registration statement, other than the
Shelf Registration Statement contemplated by Section 2.01 of this Agreement, and Holders
may be included without the filing of a post-effective amendment thereto, or (iii) a registration
statement, other than a shelf registration statement, in either case, for the sale of Units in an
Underwritten Offering for its own account and/or another Person, then as soon as practicable
following the engagement of counsel by the Partnership to prepare the documents to be used in
connection with an Underwritten Offering, the Partnership shall give notice (including, but not
limited to, notification by electronic mail) of such proposed Underwritten Offering to each Holders
holding $250,000 or more of Purchased Units based on the purchase price per unit under
the Purchase Agreement and such notice

 

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shall offer
such Holders the opportunity to include in
such Underwritten Offering such number of Registrable Securities (the “Included Registrable
Securities”) as each such Holder may request in writing; provided, however, that if the
Partnership has been advised by the Managing Underwriter that the inclusion of Registrable
Securities for sale for the benefit of the Holders will have a material adverse effect on the
price, timing or distribution of the Units in the Underwritten Offering, then (a) the Partnership
shall not be required to offer such opportunity to the Holders or (b) if any Registrable Securities
can be included in the Underwritten Offering in the opinion of the Managing Underwriter, then the
amount of Registrable Securities to be offered for the accounts of Holders shall be determined
based on the provisions of Section 2.02(b); and provided, further, that the Partnership
shall not be obligated to include any Registrable Securities in any Underwritten Offering unless
the Holders request inclusion of at least $1.0 million of Registrable Securities in the aggregate
in such Underwritten Offering. Any notice required to be provided in this Section 2.02(a)
to Holders shall be provided on a Business Day pursuant to Section 3.01 hereof and receipt
of such notice shall be confirmed by the Holder. Each such Holder shall then have three (3)
Business Days after receiving such notice to request inclusion of Registrable Securities in the
Underwritten Offering, except that such Holder shall have one (1) Business Day after such Holder
confirms receipt of the notice to request inclusion of Registrable Securities in the Underwritten
Offering in the case of a “bought deal” or “overnight transaction” where no preliminary prospectus
is used. If no written request for inclusion from a Holder is received within the specified time,
each such Holder shall have no further right to participate in such Underwritten Offering. If, at
any time after giving written notice of its intention to undertake an Underwritten Offering and
prior to the closing of such Underwritten Offering, the Partnership shall determine for any reason
not to undertake or to delay such Underwritten Offering, the Partnership may, at its election, give
written notice of such determination to the Selling Holders and, (x) in the case of a determination
not to undertake such Underwritten Offering, shall be relieved of its obligation to sell any
Included Registrable Securities in connection with such terminated Underwritten Offering, and (y)
in the case of a determination to delay such Underwritten Offering, shall be permitted to delay
offering any Included Registrable Securities for the same period as the delay in the Underwritten
Offering. Any Selling Holder shall have the right to withdraw such Selling Holder’s request for
inclusion of such Selling Holder’s Registrable Securities in such Underwritten Offering by giving
written notice to the Partnership of such withdrawal up to and including the time of pricing of
such Underwritten Offering. Notwithstanding the foregoing, any Holder holding $1,000,000 or more
of Purchased Units, based on the purchase price per unit under the Purchase Agreement, may deliver
written notice (an “Opt Out Notice”) to the Partnership requesting that such Holder not
receive notice from the Partnership of any proposed Underwritten Offering; provided, that, such
Holder may later revoke any such Opt Out Notice. Following receipt of an Opt Out Notice from a
Holder (unless subsequently revoked), the Partnership shall not be required to deliver any notice
to such Holder pursuant to this Section 2.02(a) and such Holder shall no longer be entitled
to participate in Underwritten Offerings by the Partnership pursuant to this Section
2.02(a).

 

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(b) Priority. If the Managing Underwriter or Underwriters of any proposed
Underwritten Offering of Units included in an Underwritten Offering involving Included Registrable
Securities advises the Partnership that the total amount of Registrable Securities that the Selling
Holders and any other Persons intend to include in such offering exceeds the number that can be
sold in such offering without being likely to have a material adverse effect on the
price, timing or distribution of the Units offered or the market for the Units, then the Units
to be included in such Underwritten Offering shall include the number of Registrable Securities
that such Managing Underwriter or Underwriters advises the Partnership can be sold without having
such adverse effect, with such number to be allocated (i) first, to the Partnership, (ii)
second, pro rata among the Selling Holders who have requested participation in such
Underwritten Offering and any other holders of securities of the Partnership having registration
rights pari passu with the Purchasers’ registration rights that are described in Schedule
3.02(g) of the Purchase Agreement, and (iii) third, any other holder of securities of
the Partnership, including the General Partner and its Affiliates. The pro rata allocations for
each Selling Holder who have requested participation in such Underwritten Offering shall be the
product of (a) the aggregate number of Registrable Securities proposed to be sold by all Selling
Holders in such Underwritten Offering multiplied by (b) the fraction derived by dividing (x) the
number of Registrable Securities owned on the Closing Date by such Selling Holder by (y) the
aggregate number of Registrable Securities owned on the Closing Date by all Selling Holders
participating in the Underwritten Offering. All participating Selling Holders shall have the
opportunity to share pro rata that portion of such priority allocable to any Selling Holder(s) not
so participating.

Section 2.03 Underwritten Offerings.

(a) General Procedures. In connection with any Underwritten Offering under this
Agreement, the Partnership shall be entitled to select the Managing Underwriter or Underwriters.
In connection with an Underwritten Offering contemplated by this Agreement in which a Selling
Holder participates, each Selling Holder and the Partnership shall be obligated to enter into an
underwriting agreement that contains such representations, covenants, indemnities and other rights
and obligations as are customary in underwriting agreements for firm commitment offerings of
securities. No Selling Holder may participate in such Underwritten Offering unless such Selling
Holder agrees to sell its Registrable Securities on the basis provided in such underwriting
agreement and completes and executes all questionnaires, powers of attorney, indemnities and other
documents reasonably required under the terms of such underwriting agreement. Each Selling Holder
may, at its option, require that any or all of the representations and warranties by, and the other
agreements on the part of, the Partnership to and for the benefit of such underwriters also be made
to and for such Selling Holder’s benefit and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement also be conditions precedent to
its obligations. No Selling Holder shall be required to make any representations or warranties to
or agreements with the Partnership or the underwriters other than representations, warranties or
agreements regarding such Selling Holder, its authority to enter into such underwriting agreement
and to sell, and its ownership of, the securities being registered on its behalf, its intended
method of distribution and any other representation required by Law. If any Selling Holder
disapproves of the terms of an underwriting, such Selling Holder may elect to withdraw therefrom by
notice to the Partnership and the Managing Underwriter; provided, however, that such withdrawal
must be made up to and including the time of pricing of such Underwritten Offering. No such
withdrawal or abandonment shall affect the Partnership’s obligation to pay Registration Expenses.
If Holders holding at least $1,000,000 of Purchased Units based on the purchase price per unit
under the Purchase Agreement request, the Partnership’s management shall be required to participate
in a roadshow or similar marketing effort in connection with any Underwritten Offering.

 

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(b) No Demand Rights. Notwithstanding any other provision of this Agreement, no
Holder of Registrable Securities shall be entitled to any “demand” rights or similar rights that
would require the Partnership to effect an Underwritten Offering solely on behalf of such Holder.

Section 2.04 Sale Procedures. In connection with its obligations under this
Article II, the Partnership will, as expeditiously as possible:

(a) prepare and file with the Commission such amendments and supplements to the Shelf
Registration Statement and the prospectus used in connection therewith as may be necessary to keep
the Shelf Registration Statement effective for the Effectiveness Period and as may be necessary to
comply with the provisions of the Securities Act with respect to the disposition of all securities
covered by the Shelf Registration Statement;

(b) if a prospectus supplement will be used in connection with the marketing of an
Underwritten Offering from the Shelf Registration Statement and the Managing Underwriter at any
time shall notify the Partnership in writing that, in the sole judgment of such Managing
Underwriter, inclusion of detailed information to be used in such prospectus supplement is of
material importance to the success of the Underwritten Offering of such Registrable Securities, the
Partnership shall use its best efforts to include such information in such prospectus supplement;

(c) furnish to each Selling Holder (i) as far in advance as reasonably practicable before
filing the Shelf Registration Statement or any other registration statement contemplated by this
Agreement or any supplement or amendment thereto, upon request, copies of reasonably complete
drafts of all such documents proposed to be filed (including exhibits and each document
incorporated by reference therein to the extent then required by the rules and regulations of the
Commission), and provide each such Selling Holder the opportunity to object to any information
pertaining to such Selling Holder and its plan of distribution that is contained therein and make
the corrections reasonably requested by such Selling Holder with respect to such information prior
to filing the Shelf Registration Statement or such other registration statement or supplement or
amendment thereto, and (ii) such number of copies of the Shelf Registration Statement or such other
registration statement and the prospectus included therein and any supplements and amendments
thereto as such Persons may reasonably request in order to facilitate the public sale or other
disposition of the Registrable Securities covered by such Shelf Registration Statement or other
registration statement;

(d) if applicable, use its best efforts to register or qualify the Registrable Securities
covered by the Shelf Registration Statement or any other registration statement contemplated by
this Agreement under the securities or blue sky laws of such jurisdictions as the Selling Holders
or, in the case of an Underwritten Offering, the Managing Underwriter, shall reasonably request;
provided, however, that the Partnership will not be required to qualify generally to transact
business in any jurisdiction where it is not then required to so qualify or to take any action
which would subject it to general service of process in any such jurisdiction where it is not then
so subject;

 

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(e) promptly notify each Selling Holder, at any time when a prospectus relating thereto is
required to be delivered by any of them under the Securities Act, of (i) the filing of the
Shelf Registration Statement or any other registration statement contemplated by this
Agreement or any prospectus or prospectus supplement to be used in connection therewith, or any
amendment or supplement thereto, and, with respect to such Shelf Registration Statement or any
other registration statement or any post-effective amendment thereto, when the same has become
effective; and (ii) the receipt of any written comments from the Commission with respect to any
filing referred to in clause (i) and any written request by the Commission for amendments
or supplements to the Shelf Registration Statement or any other registration statement or any
prospectus or prospectus supplement thereto;

(f) immediately notify each Selling Holder, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of (i) the happening of any event as a result of
which the prospectus or prospectus supplement contained in the Shelf Registration Statement or any
other registration statement contemplated by this Agreement, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading (in the case of any prospectus contained
therein, in the light of the circumstances under which a statement is made); (ii) the issuance or
express threat of issuance by the Commission of any stop order suspending the effectiveness of the
Shelf Registration Statement or any other registration statement contemplated by this Agreement, or
the initiation of any proceedings for that purpose; or (iii) the receipt by the Partnership of any
notification with respect to the suspension of the qualification of any Registrable Securities for
sale under the applicable securities or blue sky laws of any jurisdiction. Following the provision
of such notice, the Partnership agrees to, as promptly as practicable, amend or supplement the
prospectus or prospectus supplement or take other appropriate action so that the prospectus or
prospectus supplement does not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing and to take such other action as is
necessary to remove a stop order, suspension, threat thereof or proceedings related thereto;

(g) upon request and subject to appropriate confidentiality obligations, furnish to each
Selling Holder copies of any and all transmittal letters or other correspondence with the
Commission or any other governmental agency or self-regulatory body or other body having
jurisdiction (including any domestic or foreign securities exchange) relating to such offering of
Registrable Securities;

(h) in the case of an Underwritten Offering, furnish upon request, (i) an opinion of counsel
for the Partnership, dated the effective date of the applicable registration statement or the date
of any amendment or supplement thereto, and a letter of like kind dated the date of the closing
under the underwriting agreement, and (ii) a “cold comfort” letter, dated the pricing date of such
Underwritten Offering and a letter of like kind dated the date of the closing under the
underwriting agreement, in each case, signed by the independent certified public accountants who
have certified the Partnership’s financial statements included or incorporated by reference into
the applicable registration statement, and each of the opinion and the “cold comfort” letter shall
be in customary form and covering substantially the same matters with respect to such registration
statement (and the prospectus and any prospectus supplement included therein) as have been
customarily covered in opinions of issuer’s counsel and in accountants’ letters
delivered to the underwriters in Underwritten Offerings of securities by the Partnership and
such other matters as such underwriters and Selling Holders may reasonably request;

 

10

 

(i) otherwise use its best efforts to comply with all applicable rules and regulations of the
Commission, and make available to its security holders, as soon as reasonably practicable, an
earnings statement, which earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 promulgated thereunder;

(j) make available to the appropriate representatives of the Managing Underwriter and Selling
Holders access to such information and Partnership personnel as is reasonable and customary to
enable such parties to establish a due diligence defense under the Securities Act; provided, that
the Partnership need not disclose any non-public information to any such representative unless and
until such representative has entered into a confidentiality agreement with the Partnership;

(k) cause all such Registrable Securities registered pursuant to this Agreement to be listed
on each securities exchange or nationally recognized quotation system on which similar securities
issued by the Partnership are then listed;

(l) use its best efforts to cause the Registrable Securities to be registered with or approved
by such other governmental agencies or authorities as may be necessary by virtue of the business
and operations of the Partnership to enable the Selling Holders to consummate the disposition of
such Registrable Securities;

(m) provide a transfer agent and registrar for all Registrable Securities covered by such
registration statement not later than the effective date of such registration statement;

(n) enter into customary agreements and take such other actions as are reasonably requested by
the Selling Holders or the underwriters, if any, in order to expedite or facilitate the disposition
of such Registrable Securities;

(o) if requested by a Purchaser, (i) incorporate in a prospectus supplement or post-effective
amendment such information as such Purchaser reasonably requests to be included therein relating to
the sale and distribution of Registrable Securities, including information with respect to the
number of Registrable Securities being offered or sold, the purchase price being paid therefor and
any other terms of the offering of the Registrable Securities to be sold in such offering; and (ii)
make all required filings of such prospectus supplement or post-effective amendment after being
notified of the matters to be incorporated in such prospectus supplement or post-effective
amendment; and

(p) The Partnership agrees that, if any Purchaser could reasonably be deemed to be an
“underwriter,” as defined in Section 2(a)(11) of the Securities Act, in connection with the
registration statement in respect of any registration of the Registrable Securities of any
Purchaser pursuant to this Agreement, and any amendment or supplement thereof (any such
registration statement or amendment or supplement a “Purchaser Underwriter Registration
Statement”), then the Partnership will cooperate with such Purchaser in allowing such Purchaser
to conduct customary “underwriter’s due diligence” with respect to the Partnership and satisfy its
obligations in respect thereof.

 

11

 

In addition, at any Purchaser’s request, the Partnership
will furnish to such Purchaser, on the date of the effectiveness of any Purchaser Underwriter
Registration Statement and thereafter from time to time on such dates as such Purchaser may
reasonably request, (i) a “cold comfort” letter, dated such date, from the Partnership’s
independent certified public accountants in form and substance as is customarily given by
independent certified public accountants to underwriters in an underwritten public offering,
addressed to such Purchaser, and (ii) an opinion, dated as of such date, of counsel representing
the Partnership for purposes of such Purchaser Underwriter Registration Statement, in form, scope
and substance as is customarily given in an underwritten public offering, including a standard
“10b-5” opinion for such offering, addressed to such Purchaser; provided, however, that with
respect to any Placement Agent, the Partnership’s obligations with respect to this Section
2.04(p) shall be limited to one time, with an additional bring-down request within 30 days of
the date of such documents. The Partnership will also permit legal counsel to such Purchaser to
review and comment upon any such Purchaser Underwriter Registration Statement at least two (2)
Business Days prior to its filing with the Commission and all amendments and supplements to any
such Purchaser Underwriter Registration Statement within a reasonable number of days prior to their
filing with the Commission and not file any Purchaser Underwriter Registration Statement or
amendment or supplement thereto in a form to which such Purchaser’s legal counsel reasonably
objects in writing.

Each Selling Holder, upon receipt of written notice from the Partnership of the happening of
any event of the kind described in subsection (f) of this Section 2.04, shall
forthwith discontinue offers and sales of the Registrable Securities until such Selling Holder’s
receipt of the copies of the supplemented or amended prospectus contemplated by subsection
(f) of this Section 2.04 or until it is advised in writing by the Partnership that the
use of the prospectus may be resumed and has received copies of any additional or supplemental
filings incorporated by reference in the prospectus, and, if so directed by the Partnership, such
Selling Holder will, or will request the managing underwriter or underwriters, if any, to deliver
to the Partnership (at the Partnership’s expense) all copies in their possession or control, other
than permanent file copies then in such Selling Holder’s possession, of the prospectus covering
such Registrable Securities current at the time of receipt of such notice.

Section 2.05 Cooperation by Holders. The Partnership shall have no obligation to
include Registrable Securities of a Holder in the Shelf Registration Statement or in an
Underwritten Offering pursuant to Section 2.02(a) who has failed to timely furnish such
information that the Partnership determines, after consultation with its counsel, is reasonably
required in order for the registration statement or prospectus supplement, as applicable, to comply
with the Securities Act, including the execution of the initial Selling Unitholder Notice and
Questionnaire attached at Exhibit B to this Agreement by the date specified thereon.

Section 2.06 Restrictions on Public Sale by Holders of Registrable Securities. For a
period of 365 days from the Closing Date, each Holder of Registrable Securities agrees not to
effect any public sale or distribution of any Registrable Securities during the 30-day period
beginning the day after the pricing date of an Underwritten Offering of equity securities by the
Partnership or its Affiliates (except as provided in this Section 2.06); provided, however,
that the duration of the foregoing restrictions shall be no longer than the duration of the
shortest restriction generally imposed by the underwriters on the officers or directors or any
other unitholder of the Partnership on whom a restriction is imposed. In addition, the lock-up
provisions in this Section 2.06 shall not apply with respect to a Holder that (A) owns
less than $1,000,000 of Purchased Units, based on the purchase price per unit under the Purchase
Agreement, (B) has delivered an Opt Out Notice to the Partnership pursuant to Section
2.02(a) or (C) has submitted a notice requesting the inclusion of Registrable Securities in an
Underwritten Offering pursuant to Section 2.02 hereof, but is unable to do so as a result of the
priority provisions contained in Section 2.02(b) hereof.

 

12

 

Section 2.07 Expenses.

(a) Expenses. The Partnership will pay all reasonable Registration Expenses as
determined in good faith, including, in the case of an Underwritten Offering, whether or not any
sale is made pursuant to such Underwritten Offering. Each Selling Holder shall pay its pro rata
share of all Selling Expenses in connection with any sale of its Registrable Securities hereunder.
In addition, except as otherwise provided in Section 2.08 hereof, the Partnership shall not
be responsible for legal fees incurred by Holders in connection with the exercise of such Holders’
rights hereunder.

(b) Certain Definitions. “Registration Expenses” means all expenses incident
to the Partnership’s performance under or compliance with this Agreement to effect the registration
of Registrable Securities on the Shelf Registration Statement pursuant to Section 2.01 or
an Underwritten Offering covered under this Agreement, and the disposition of such securities,
including, without limitation, all registration, filing, securities exchange listing and Nasdaq
fees, all registration, filing, qualification and other fees and expenses of complying with
securities or blue sky laws, fees of the National Association of Securities Dealers, Inc., fees of
transfer agents and registrars, all word processing, duplicating and printing expenses, any
transfer taxes and the fees and disbursements of counsel and independent certified public
accountants for the Partnership, including the expenses of any special audits or “cold comfort”
letters required by or incident to such performance and compliance. “Selling Expenses”
means all underwriting fees, discounts and selling commissions allocable to the sale of the
Registrable Securities.

Section 2.08 Indemnification.

(a) By the Partnership. In the event of a registration of any Registrable Securities
under the Securities Act pursuant to this Agreement, the Partnership will indemnify and hold
harmless each Selling Holder thereunder, its directors, officers, employees and agents and each
underwriter, pursuant to the applicable underwriting agreement with such underwriter, of
Registrable Securities thereunder and each Person, if any, who controls such Selling Holder or
underwriter within the meaning of the Securities Act and the Exchange Act, and its directors,
officers, employees or agents (collectively, the “Selling Holder Indemnified Persons”),
against any losses, claims, damages, expenses or liabilities (including reasonable attorneys’ fees
and expenses) (collectively, “Losses”), joint or several, to which such Selling Holder
Indemnified Person may become subject under the Securities Act, the Exchange Act or otherwise,
insofar as such Losses (or actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any
material fact (in the case of any prospectus, in light of the circumstances under which such
statement is made) contained in the Shelf Registration Statement or any other registration
statement contemplated by this Agreement, any preliminary prospectus, prospectus supplement, free
writing prospectus or final prospectus

 

13

 

contained therein, or any amendment or supplement
thereof, or arise out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements therein (in the
case of a prospectus, in light of the circumstances under which they were made) not misleading, and
will reimburse each such Selling Holder Indemnified Person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any such Loss or actions
or proceedings; provided, however, that the Partnership will not be liable in any such case if and
to the extent that any such Loss arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission so made in conformity with information furnished
by such Selling Holder Indemnified Person in writing specifically for use in the Shelf Registration
Statement or such other registration statement, or prospectus supplement, as applicable. Such
indemnity shall remain in full force and effect regardless of any investigation made by or on
behalf of such Selling Holder Indemnified Person, and shall survive the transfer of such securities
by such Selling Holder.

(b) By Each Selling Holder. Each Selling Holder agrees severally and not jointly to
indemnify and hold harmless the Partnership, its directors, officers, employees and agents and each
Person, if any, who controls the Partnership within the meaning of the Securities Act or of the
Exchange Act, and its directors, officers, employees and agents, to the same extent as the
foregoing indemnity from the Partnership to the Selling Holders, but only with respect to
information regarding such Selling Holder furnished in writing by or on behalf of such Selling
Holder expressly for inclusion in the Shelf Registration Statement or any other registration
statement contemplated by this Agreement, any preliminary prospectus, prospectus supplement, free
writing prospectus or final prospectus contained therein, or any amendment or supplement thereof;
provided, however, that the liability of each Selling Holder shall not be greater in amount than
the dollar amount of the proceeds (net of any Selling Expenses) received by such Selling Holder
from the sale of the Registrable Securities giving rise to such indemnification.

(c) Notice. Promptly after receipt by an indemnified party hereunder of notice of the
commencement of any action, such indemnified party shall, if a claim in respect thereof is to be
made against the indemnifying party hereunder, notify the indemnifying party in writing thereof,
but the omission so to notify the indemnifying party shall not relieve it from any liability which
it may have to any indemnified party other than under this Section 2.08. In any action
brought against any indemnified party, it shall notify the indemnifying party of the commencement
thereof. The indemnifying party shall be entitled to participate in and, to the extent it shall
wish, to assume and undertake the defense thereof with counsel reasonably satisfactory to such
indemnified party and, after notice from the indemnifying party to such indemnified party of its
election so to assume and undertake the defense thereof, the indemnifying party shall not be liable
to such indemnified party under this Section 2.08 for any legal expenses subsequently
incurred by such indemnified party in connection with the defense thereof other than reasonable
costs of investigation and of liaison with counsel so selected; provided, however, that, (i) if the
indemnifying party has failed to assume the defense or employ counsel reasonably acceptable to the
indemnified party or (ii) if the defendants in any such action include both the indemnified party
and the indemnifying party and counsel to the indemnified party shall have concluded that there may
be reasonable defenses available to the indemnified party that are different from or additional to
those available to the indemnifying party, or if the interests of the indemnified party reasonably
may be deemed to conflict with the interests of the indemnifying party, then the
indemnified party shall have the right to select a separate counsel and to assume such legal
defense and otherwise to participate in the defense of such action, with the reasonable expenses
and fees of such separate counsel and other reasonable expenses related to such participation to be
reimbursed by the indemnifying party as incurred. Notwithstanding any other provision of this
Agreement, no indemnifying party shall settle any action brought against any indemnified party with
respect to which such indemnified party is entitled to indemnification hereunder without the
consent of the indemnified party, unless the settlement thereof imposes no liability or obligation
on, and includes a complete and unconditional release from all liability of, the indemnified party.

 

14

 

(d) Contribution. If the indemnification provided for in this Section 2.08 is
held by a court or government agency of competent jurisdiction to be unavailable to any indemnified
party or is insufficient to hold them harmless in respect of any Losses, then each such
indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such Loss in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one hand and of such
indemnified party on the other in connection with the statements or omissions which resulted in
such Losses, as well as any other relevant equitable considerations; provided, however, that in no
event shall such Selling Holder be required to contribute an aggregate amount in excess of the
dollar amount of the proceeds (net of any Selling Expenses) received by such Selling Holder from
the sale of Registrable Securities giving rise to such indemnification. The relative fault of the
indemnifying party on the one hand and the indemnified party on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact has been made by, or relates to,
information supplied by such party, and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission. The parties hereto
agree that it would not be just and equitable if contributions pursuant to this paragraph were to
be determined by pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to herein. The amount paid by an indemnified
party as a result of the Losses referred to in the first sentence of this paragraph shall be deemed
to include any legal and other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any Loss which is the subject of this paragraph. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall
be entitled to contribution from any Person who is not guilty of such fraudulent misrepresentation.

(e) Other Indemnification. The provisions of this Section 2.08 shall be in
addition to any other rights to indemnification or contribution which an indemnified party may have
pursuant to law, equity, contract or otherwise.

Section 2.09 Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the Commission that may permit the sale of the Registrable
Securities to the public without registration, the Partnership agrees to use its best efforts to:

(a) Make and keep public information regarding the Partnership available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all times from and after the date
hereof;

 

15

 

(b) File with the Commission in a timely manner all reports and other documents required of
the Partnership under the Securities Act and the Exchange Act at all times from and after the date
hereof; and

(c) So long as a Holder owns any Registrable Securities, furnish, unless otherwise available
via Edgar, to such Holder forthwith upon request a copy of the most recent annual or quarterly
report of the Partnership, and such other reports and documents so filed as such Holder may
reasonably request in availing itself of any rule or regulation of the Commission allowing such
Holder to sell any such securities without registration.

Section 2.10 Transfer or Assignment of Registration Rights. The rights to cause the
Partnership to register Registrable Securities granted to the Purchasers by the Partnership under
this Article II may be transferred or assigned by any Purchaser to one or more
transferee(s) or assignee(s) of such Registrable Securities or counterparties to any total return
swaps; provided, however, that, (a) unless such transferee is an Affiliate of such Purchaser, or a
counterparty to a total return swap, each such transferee or assignee holds Registrable Securities
representing at least $250,000 of the Purchased Units, based on the purchase price per unit under
the Purchase Agreement, (b) the Partnership is given written notice prior to any said
transfer or assignment, stating the name and address of each such transferee and identifying
the securities with respect to which such registration rights are being transferred or assigned,
and (c) each such transferee assumes in writing responsibility for its portion of the obligations
of such Purchaser under this Agreement.

Section 2.11 Limitation on Subsequent Registration Rights. Except as set forth in
Section 3.02(g) or Schedule 3.02(g) of the Purchase Agreement, from and after the
date hereof, the Partnership shall not, without the prior written consent of the Holders of a
majority of the outstanding Registrable Securities, (i) enter into any agreement with any current
or future holder of any securities of the Partnership that would allow such current or future
holder to require the Partnership to include securities in any registration statement filed by the
Partnership on a basis that is superior in any way to the registration rights granted to the
Purchasers hereunder or (ii) grant registration rights to any other Person that would be superior
to the Purchasers’ registration rights hereunder.

ARTICLE III

MISCELLANEOUS

Section 3.01 Communications. All notices and other communications provided for or
permitted hereunder shall be made in writing by facsimile, electronic mail, courier service or
personal delivery:

(a) if to Purchasers, to the address set forth in Schedule 8.07 to the Purchase
Agreement,

with a copy to:

McDermott Will & Emery LLP

340 Madison Avenue

New York, New York 10173-1922

Attention:   Stephen E. Older, Esq.

Facsimile:   (212) 547-5444

Email:   solder@mwe.com

 

16

 

(b) if to a transferee of a Purchaser, to such Holder at the address provided pursuant to
Section 2.10 above; and

(c) if to the Partnership:

Rio Vista Energy Partners L.P.

1313 East Alton Gloor, Suite J

Brownsville, Texas 78526

Attention:   Mr. Ian T. Bothwell

Facsimile:   (956) 831-0887

Email:   POCITB2@aol.com

with a copy to:

Mr. Ian T. Bothwell

840 Apollo Street, Suite 313

El Segundo, California 90245

Facsimile:   (310) 563-6255

Email:   POCITB2@aol.com

And with an additional copy to:

Andrews Kurth LLP

600 Travis Street, Suite 4200

Houston, Texas 77002

Attention:   Roy E. Bertolatus

Facsimile:   (713) 238-7356

Email:   rbertolatus@akllp.com

All such notices and communications shall be deemed to have been received at the time
delivered by hand, if personally delivered; when receipt acknowledged, if sent via facsimile or
sent via Internet electronic mail; and when actually received, if sent by courier service or any
other means.

Section 3.02 Successor and Assigns. This Agreement shall inure to the benefit of and
be binding upon the successors and assigns of each of the parties, including subsequent Holders of
Registrable Securities to the extent permitted herein.

Section 3.03 Assignment of Rights. All or any portion of the rights and obligations
of any Purchaser under this Agreement may be transferred or assigned by such Purchaser in
accordance with Section 2.10 hereof.

Section 3.04 Recapitalization, Exchanges, Etc. Affecting the Units. The provisions of
this Agreement shall apply to the full extent set forth herein with respect to any and all units of
the Partnership or any successor or assign of the Partnership (whether by merger,
consolidation, sale of assets or otherwise) which may be issued in respect of, in exchange for or
in substitution of, the Registrable Securities, and shall be appropriately adjusted for
combinations, unit splits, recapitalizations and the like occurring after the date of this
Agreement.

 

17

 

Section 3.05 Aggregation of Purchased Units . All Purchased Units held or acquired by
Persons who are Affiliates of one another shall be aggregated together for the purpose of
determining the availability of any rights under this Agreement.

Section 3.06 Specific Performance. Damages in the event of breach of this Agreement
by a party hereto may be difficult, if not impossible, to ascertain, and it is therefore agreed
that each such Person, in addition to and without limiting any other remedy or right it may have,
will have the right to an injunction or other equitable relief in any court of competent
jurisdiction, enjoining any such breach, and enforcing specifically the terms and provisions
hereof, and each of the parties hereto hereby waives any and all defenses it may have on the ground
of lack of jurisdiction or competence of the court to grant such an injunction or other equitable
relief. The existence of this right will not preclude any such Person from pursuing any other
rights and remedies at law or in equity which such Person may have.

Section 3.07 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of which counterparts,
when so executed and delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same agreement.

Section 3.08 Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

Section 3.09 Governing Law. The Laws of the State of New York shall govern this
Agreement without regard to principles of conflicts of Laws that would apply the substantive law of
some other jurisdiction.

Section 3.10 Severability of Provisions. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition or unenforceability without invalidating the remaining provisions
hereof or affecting or impairing the validity or enforceability of such provision in any other
jurisdiction.

Section 3.11 Entire Agreement. This Agreement is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject matter contained
herein. There are no restrictions, promises, warranties or undertakings, other than those set
forth or referred to herein with respect to the rights granted by the Partnership set forth herein.
This Agreement and the Purchase Agreement supersede all prior agreements and understandings
between the parties with respect to such subject matter.

Section 3.12 Amendment. This Agreement may be amended only by means of a written
amendment signed by the Partnership and the Holders of a majority of the then
outstanding Registrable Securities; provided, however, that no such amendment shall materially
and adversely affect the rights of any Holder hereunder without the consent of such Holder.

 

18

 

Section 3.13 No Presumption. If any claim is made by a party relating to any
conflict, omission, or ambiguity in this Agreement, no presumption or burden of proof or persuasion
shall be implied by virtue of the fact that this Agreement was prepared by or at the request of a
particular party or its counsel.

Section 3.14 Obligations Limited to Parties to Agreement. Each of the parties hereto
covenants, agrees and acknowledges that no Person other than the Purchasers (and their permitted
assignees) and the Partnership shall have any obligation hereunder and that, notwithstanding that
one or more of the Purchasers may be a corporation, partnership or limited liability company, no
recourse under this Agreement or under any documents or instruments delivered in connection
herewith shall be had against any former, current or future director, officer, employee, agent,
general or limited partner, manager, member, stockholder or Affiliate of any of the Purchasers or
any former, current or future director, officer, employee, agent, general or limited partner,
manager, member, stockholder or Affiliate of any of the foregoing, whether by the enforcement of
any assessment or by any legal or equitable proceeding, or by virtue of any applicable Law, it
being expressly agreed and acknowledged that no personal liability whatsoever shall attach to, be
imposed on or otherwise be incurred by any former, current or future director, officer, employee,
agent, general or limited partner, manager, member, stockholder or Affiliate of any of the
Purchasers or any former, current or future director, officer, employee, agent, general or limited
partner, manager, member, stockholder or Affiliate of any of the foregoing, as such, for any
obligations of the Purchasers under this Agreement or any documents or instruments delivered in
connection herewith or for any claim based on, in respect of or by reason of such obligation or its
creation, except in each case for any assignee of a Purchaser hereunder.

Section 3.15 Interpretation. Article, Section, Schedule and Exhibit
references are to this Agreement, unless otherwise specified. All references to instruments,
documents, contracts and agreements are references to such instruments, documents, contracts and
agreements as the same may be amended, supplemented and otherwise modified from time to time,
unless otherwise specified. The word “including” shall mean “including but not limited to.”
Whenever any determination, consent or approval is to be made or given by a Purchaser under this
Agreement, such action shall be in such Purchaser’s sole discretion unless otherwise specified.

Section 3.16 Equal Treatment of Purchasers. Neither the Partnership nor any of its
Affiliates shall, directly or indirectly, pay or cause to be paid any consideration, whether by way
of interest, fee, payment for the redemptions or exchange of Registrable Securities, or otherwise,
to any holder of Registrable Securities for or as an inducement to, or in connection with
solicitation of, any consent, waiver or amendment of any terms or provisions of the Registrable
Securities or this Agreement or any of the other agreements referred to in this Agreement unless
such consideration is paid to all Holders bound by such consent, waiver or amendment, whether or
not such holders so consent, waive or agree to amend.

[Signature pages follow]

 

19

 

IN WITNESS WHEREOF, the parties hereto execute this Registration Rights Agreement, effective
as of the date first above written.

	 	 	 	 	 
	 	 	RIO VISTA ENERGY PARTNERS L.P.
	 
	 	 	 	 
	 

	 	By:
	 	RIO VISTA GP LLC,

its General Partner
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Ian Bothwell
	 

	 	 	 	 
	 

	 	Name:
	 	Ian Bothwell
	 

	 	 	 	 
	 

	 	Title:
	 	Acting CEO and Acting President
	 

	 	 	 	 

 

[Signature Page to Registration Rights Agreement]

 

 

 

	 	 	 	 	 
	 	 	STANDARD GENERAL FUND L.P.
	 
	 	 	 	 
	 
	 	By:	 	STANDARD GENERAL GP LLC,

its general partner
	 
	 	 	 	 
	 
	 	By:	 	STANDARD GENERAL MANAGEMENT LLC,

its Managing Member
	 
	 	 	 	 
	 
	 	By:	 	/s/ Nicholas Singer
	 

	 	 	 	 
	 

	 	Name:
	 	Nicholas Singer
	 

	 	 	 	 
	 

	 	Title:
	 	Co-Managing Member
	 

	 	 	 	 

 

[Signature Page to Registration Rights Agreement]

 

 

 

	 	 	 	 	 
	 	 	CREDIT SUISSE MANAGEMENT LLC
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Parshu Shah
	 

	 	 	 	 
	 

	 	Name:
	 	Parshu Shah
	 

	 	 	 	 
	 

	 	Title:
	 	Director
	 

	 	 	 	 

 

[Signature Page to Registration Rights Agreement]

 

 

 

	 	 	 	 	 
	 	 	STRUCTURED FINANCE AMERICAS, LLC
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Sunil Hariani
	 

	 	 	 	 
	 

	 	Name:
	 	Sunil Hariani
	 

	 	 	 	 
	 

	 	Title:
	 	Vice President
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	By:
	 	/s/ John Arnone
	 

	 	 	 	 
	 

	 	Name:
	 	John Arnone
	 

	 	 	 	 
	 

	 	Title:
	 	Vice President
	 

	 	 	 	 

 

[Signature Page to Registration Rights Agreement]

 

 

 

Exhibit A

Purchasers

Standard General Fund L.P.

Credit Suisse Management LLC

Structured Finance Americas, LLC

 

Exhibit A - 1

 

Exhibit B

RIO VISTA ENERGY PARTNERS L.P.

Selling Unitholder Notice and Questionnaire

Beneficial owners of our Units that do not complete this Notice and Questionnaire and deliver
it to us as provided below will not be named as selling unitholders in the initial registration
statement that will be filed by Rio Vista Energy Partners L.P. with the Securities and Exchange
Commission.

Beneficial owners are encouraged to complete and deliver this Notice and Questionnaire as
promptly as practicable after their acquisition of Registrable Securities, and in any case no later
than [
____________
], 2007, so that such beneficial owners may be named. Please see the fax, email
and other contact information on the signature page below.

Certain legal consequences arise from being named a selling stockholder. Beneficial owners
are advised to consult their own securities law counsel regarding being named or not being named a
selling unitholder in the registration statement.

Notice

The undersigned beneficial owner (the “Selling Unitholder”) of Units representing
limited partner interests (“Units”) in Rio Vista Energy Partners L.P. (the
“Partnership”) acquired in a private placement by the Partnership (such Units, the
“Registrable Securities”) hereby gives notice to the Partnership of its intention to sell
or otherwise dispose of Registrable Securities beneficially owned by it and listed below in Item 3
(unless otherwise specified under Item 3) pursuant to a registration statement to be filed by the
Partnership (the “Shelf Registration Statement”) with the Securities and Exchange
Commission. The undersigned, by signing and returning this Notice and Questionnaire, understands
that it will be bound by the terms and conditions of this Notice and Questionnaire and the
Registration Rights Agreement, including the indemnification provisions thereof.

The undersigned hereby provides the following information to the Partnership and represents
and warrants that such information is accurate and complete as of the date hereof and undertakes to
provide the Partnership with updates of this information.

 

Exhibit B - 1

 

Questionnaire

	1.	(a)	 	Full legal name of Selling Unitholder: 
  

	 
	 	(b)	 	Full legal name of the broker-dealer or other third party
through which Registrable Securities listed in Item (3)
below are held:
  

	 
	 	(c)	 	Full legal name of The Depository Trust Company participant
(if applicable and if not the same as (b) above) through
which Registrable Securities listed in (3) below are held:
  

	 
	 	(d)	 	Full legal name of The Depository Trust Company participant
(if applicable and if not the same as (b) above) through
which Registrable Securities listed in (3) below are held:
  

	2.	 	Address for Notices to Selling Unitholder:
  

 

 

	 	 	 	 	 
	 

	 	Email:
	 	 
	 

	 	 	 	 

	 	 	 	 	 
	 

	 	Telephone, including area code:
	 	 
	 

	 	 	 	 

	 	 	 	 	 
	 

	 	Fax, including area code:
	 	 
	 

	 	 	 	 

	 	 	 	 	 
	 

	 	Contact Person:
	 	 
	 

	 	 	 	 

	3.	 	Ownership of Registrable Securities and Other Securities:

	 	 	 	Number of Units of Registrable Securities Beneficially Owned:
  

 

	 
	 	 	 	Unless otherwise indicated in the space provided below, all
Registrable Securities listed in response to Item (3) above
will be included in the Shelf Registration Statement. If
the undersigned does not wish all such Registrable
Securities to be so included, please indicate below the
number of shares to be included:
  

 

 

Exhibit B - 2

 

	 	 	 	A “beneficial owner” of a security includes:

	 	(1)	 	Any person who, directly or indirectly, through any contract,
arrangement, understanding, relationship, or otherwise has or
shares:

	 	(a)	 	voting power which includes the power to vote, or to direct the
voting of, such security; and/or,

	 
	 	(b)	 	investment power which includes the power to dispose, or to
direct the disposition of, such security;

	 	(2)	 	Any person who, directly or indirectly, creates or uses a
trust, proxy, power of attorney, pooling arrangement or any other
contract, arrangement, or device with the purpose or effect of
divesting such person of beneficial ownership of a security or
preventing the vesting of such beneficial ownership as part of a
plan or scheme to evade the reporting requirements of section 13(d)
or (g) of the Securities Exchange Act of 1934, as amended; and

	 
	 	(3)	 	Any person who has the right to acquire “beneficial ownership"
(defined by reference to paragraph (1) above) of such security
within sixty days, including but not limited to any right to
acquire: (a) through the exercise of any option, warrant or right;
(b) through the conversion of a security; (c) pursuant to the power
to revoke a trust, discretionary account, or similar arrangement;
or (d) pursuant to the automatic termination of a trust,
discretionary account or similar arrangement; provided, however,
any person who acquires a security or power specified in clauses
(a), (b) or (c) above, with the purpose or effect of changing or
influencing the control of the issuer, or in connection with or as
a participant in any transaction having such purpose or effect,
immediately upon such acquisition shall be deemed to be the
beneficial owner of the securities which may be acquired through
the exercise or conversion of such security or power.

	4.	 	Ownership of Other Securities Owned by the Selling Unitholder:

	 	 	 	 

Except as set forth below in this Item (4), the undersigned is not
the beneficial or registered owner of any securities of the
Partnership other than the Registrable Securities listed above in
Item (3).

	 
	 	(a)	 	Number of Other Securities of the Partnership beneficially owned by
the Selling Unitholder:
  

 

	 
	 	(b)	 	CUSIP No(s).of such other Partnership securities beneficially owned:
  

 

 

Exhibit B - 3

 

	5.	 	Voting or Investment Power Over the Selling Unitholder:
  

	 	(a)	 	Names of natural persons or entities who have sole or shared
investment power over the Registrable Securities and other
securities owned by the Selling Unitholder. For purposes of
this Item 5, “voting power” includes the power to vote or
direct the voting of such securities, and “investment power"
includes the power to dispose or direct the disposition of
such securities.
  

 

	 
	 	(b)	 	Describe whether the natural persons or entities named in
Item 5(a) have sole voting or investment power over the
Registrable Securities and other securities owned by the
Selling Unitholder.
  

 

	6.	 	Relationships with the Partnership
  

Except as set forth below, neither the undersigned nor any of
its affiliates, officers, directors or principal equity
holders (5% or more) has held any position or office or has
had any other material relationship with the Partnership (or
its predecessors or affiliates) during the past three years.  

 

State any exceptions here:  

 

 

 

 

 

Exhibit B - 4

 

	7.	 	Plan of distribution:

	 
	 	 	Except as set forth below, the undersigned (including its donees or
pledgees) intends to distribute the Registrable Securities listed
above in Item (3) pursuant to the Shelf Registration Statement only as
follows (if at all): Such Registrable Securities may be sold from time
to time directly by the undersigned or alternatively through
underwriters or broker-dealers or agents. If the Registrable
Securities are sold through underwriters or broker-dealers, the
Selling Unitholder will be responsible for underwriting discounts or
commissions and agents’ commissions. Such Registrable Securities may
be sold in one or more transactions at fixed prices, at prevailing
market prices at the time of sale, at varying prices determined at the
time of sale, or at negotiated prices. Such sales may be effected in
transactions (which may involve block transactions) (i) on any
national securities exchange or quotation service on which the
Registrable Securities may be listed or quoted at the time of sale,
(ii) in the over-the-counter market, (iii) in transactions otherwise
than on such exchanges or services or in the over-the-counter market
or (iv) through the writing of options. In connection with the sales
of Registrable Securities or otherwise, the undersigned may enter into
hedging transactions with broker-dealers, which may in turn engage in
short sales of Registrable Securities in the course of hedging
positions they assume. The undersigned may also sell Registrable
Securities short and deliver Registrable Securities to close out short
positions, or loan or pledge Registrable Securities to broker-dealers
that in turn may sell such securities. The Selling Unitholder may
pledge or grant a security interest in some or all of the Registrable
Securities owned by it and, if it defaults in the performance of its
secured obligations, the pledgees or secured parties may offer and
sell the Registrable Securities from time to time. The Selling
Unitholder also may transfer and donate Registrable Securities in
other circumstances in which case the transferees, donees, pledgees or
other successors in interest will be the Selling Unitholder for
purposes of the prospectus.

	 
	 	 	State any exceptions here:
  

 

 

Note: In no event will such method(s) of distribution take the form
of an underwritten offering of the Registrable Securities without the
prior agreement of the Partnership.  

 

Exhibit B - 5

 

The undersigned acknowledges that it understands its obligation to comply with the provisions
of the Securities Exchange Act of 1934, as amended, and the rules thereunder relating to stock
manipulation, particularly Regulation M thereunder (or any successor rules or regulations) and the
provisions of the Securities Act relating to prospectus delivery, in connection with any offering
of Registrable Securities pursuant to the Shelf Registration Statement. The undersigned agrees
that neither it nor any person acting on its behalf will engage in any transaction in violation of
such provisions.

The Selling Unitholder hereby acknowledges its obligations under the Registration Rights
Agreement to indemnify and hold harmless certain persons set forth therein.

In accordance with the undersigned’s obligation under the Registration Rights Agreement to
provide such information as may be required by Law for inclusion in the Shelf Registration
Statement, the undersigned agrees to promptly notify the Partnership of any inaccuracies or changes
in the information provided herein that may occur subsequent to the date hereof at any time while
the Shelf Registration Statement remains effective.

All notices hereunder and pursuant to the Registration Rights Agreement shall be made in
writing at the address set forth below.

By signing below, the undersigned consents to the disclosure of the information contained
herein in its answers to items (1) through (7) above and the inclusion of such information in the
Shelf Registration Statement and the related prospectus. The undersigned understands that such
information will be relied upon by the Partnership in connection with the preparation or amendment
of the Shelf Registration Statement and the related prospectus.

By signing below, the undersigned agrees that if the Partnership notifies the undersigned in
writing that the Shelf Registration Statement is not available, the undersigned will suspend use of
the prospectus until receipt of written notice from the Partnership that the prospectus is again
available.

 

Exhibit B - 6

 

IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused this Notice and
Questionnaire to be executed and delivered either in person or by its duly authorized agent.

	 	 	 	 	 
	 	 	Beneficial Owner
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	By:
	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 

Dated: _________________

PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE: (1) by fax or email by
[
_________________
], 2007 to:

RIO VISTA ENERGY PARTNERS L.P.

1313 East Alton Gloor, Suite J

Brownsville, Texas 78526

Attention:    Mr. Ian T. Bothwell

Facsimile:    (956) 831-0887

Email:    POCITB2@aol.com

and (2) return the original, executed notice and questionnaire to the same at the address above.

 

Exhibit B - 7ex10-1.htm

    
      

      

    

     

    
 

    __________________________________________________

     

    KATY
      INDUSTRIES, INC.,

     

    GLIT/GEMTEX,
      LTD.,

     

    AND

     

    CEH
      LIMITED

     

    __________________________________________________

     

    __________________________________________________

    __________________________________________________

     

    SECOND
      AMENDED AND RESTATED LOAN AGREEMENT

     

    Dated:  November
      30, 2007

     

    $50,600,000

     

    __________________________________________________

    __________________________________________________

     

    __________________________________________________

     

    BANK
      OF AMERICA, N.A.,

    Individually
      and as Agent for any Lender which is

    or
      becomes a Party hereto

     

    __________________________________________________

     

    
      
              

          
            	 	 	 

          
      

                                          
    

        
        

      

      
        
        

        
          

        

      

      
        
        

              

                  TABLE
            OF
            CONTENTS      
      

                  
      
      

                  Page      

           
      

                  
      
    

      

    

    
      	
               

            	
              SECTION 1.    CREDIT
                FACILITY                                                                                                                                                                                                                                              
                 1

            

    

     

    
      	
               

            	
              1.1

            	
              Loans 

            	
              2

            

    

    
      	
               

            	
              1.2

            	
              Letters
                of Credit; LC Guaranties 

            	
              6

            

    

    
      	
               

            	
              1.3

            	
              Guarantees;
                Limitations on U.K. Borrower’s and Canadian Borrower’s
                Liability 

            	
              8

            

    

    
      	
               

            	
              1.4

            	
              Conversion
                to Dollars 

            	
              11

            

    

    
      	
               

            	
              1.5

            	
              Judgment
                Currency; Contractual Currency 

            	
              11

            

    

    
      	
               

            	
              1.6

            	
              Term
                Loan 

            	
              12

            

    

     

    
      	
               

            	
              SECTION 2.    INTEREST,
                FEES
                AND
                CHARGES                                                                                                                                                                                                                     13

            

    

     

    
      	
               

            	
              2.1

            	
              Interest 

            	
              13

            

    

    
      	
               

            	
              2.2

            	
              Computation
                of Interest and Fees 

            	
              15

            

    

    
      	
               

            	
              2.3

            	
              Fee
                Letter 

            	
              15

            

    

    
      	
               

            	
              2.4

            	
              Letter
                of Credit and LC Guaranty Fees 

            	
              15

            

    

    
      	
               

            	
              2.5

            	
              Unused
                Line Fee 

            	
              16

            

    

    
      	
               

            	
              2.6

            	
              Fronting
                Fees and Participation Fees 

            	
              16

            

    

    
      	
               

            	
              2.7

            	
              Examination
                Fees 

            	
              17

            

    

    
      	
               

            	
              2.8

            	
              Reimbursement
                of Expenses 

            	
              17

            

    

    
      	
               

            	
              2.9

            	
              Bank
                Charges 

            	
              18

            

    

    
      	
               

            	
              2.10

            	
              Collateral
                Protection Expenses 

            	
              18

            

    

    
      	
               

            	
              2.11

            	
              Payment
                of Charges 

            	
              18

            

    

    
      	
               

            	
              2.12

            	
              No
                Deductions 

            	
              18

            

    

    
      	
               

            	
              2.13

            	
              Allocation
                of Fees and Expenses 

            	
              23

            

    

     

    
      	
               

            	
              SECTION 3.    LOAN
                ADMINISTRATION                                                                                                                                                                                                                      
                          23

            

    

     

    
      	
               

            	
              3.1

            	
              Manner
                of Borrowing Revolving Credit Loans/LIBOR Option 

            	
              23

            

    

    
      	
               

            	
              3.2

            	
              Payments 

            	
              28

            

    

    
      	
               

            	
              3.3

            	
              Mandatory
                and Optional Prepayments 

            	
              30

            

    

    
      	
               

            	
              3.4

            	
              Application
                of Payments and Collections 

            	
              33

            

    

    
      	
               

            	
              3.5

            	
              All
                Loans to Constitute One Obligation 

            	
              34

            

    

    
      	
               

            	
              3.6

            	
              Loan
                Accounts; Registration 

            	
              35

            

    

    
      	
               

            	
              3.7

            	
              Statements
                of Account 

            	
              35

            

    

    
      	
               

            	
              3.8

            	
              Increased
                Costs 

            	
              35

            

    

    
      	
               

            	
              3.9

            	
              Basis
                for Determining Interest Rate Inadequate 

            	
              37

            

    

    
      	
               

            	
              3.10

            	
              Sharing
                of Payments, Etc 

            	
              37

            

    

    
      	
               

            	
              3.11

            	
              Location
                of Payments and Notices 

            	
              38

            

    

    
      	
               

            	
              3.12

            	
              Appointment
                of Borrower Representative 

            	
              38

            

    

    
      	
               

            	
              3.13

            	
              Canadian
                Revolving Credit Loans Refunding 

            	
              38

            

    

    
      	
               

            	
              3.14

            	
              U.K.
                Revolving Credit Loans Refunding 

            	
              40

            

    

    
      	
               

            	
              3.15

            	
              Mitigation
                Obligations 

            	
              41

            

    

     

    
      	
               

            	
              SECTION 4.    TERM
                AND
                TERMINATION                                                                                                                                                                                                                       
                     41

            

    

     

    
      	
               

            	
              4.1

            	
              Term
                of Agreement 

            	
              41

            

    

    
      	
               

            	
              4.2

            	
              Termination 

            	
              41

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
               

            	
              SECTION 5.    COLLATERAL
                ADMINISTRATION                                                                                                                                                                                                                
                42

            

    

     

    
      	
               

            	
              5.1

            	
              General 

            	
              42

            

    

    
      	
               

            	
              5.2

            	
              Administration
                of Accounts 

            	
              43

            

    

    
      	
               

            	
              5.3

            	
              Administration
                of Inventory 

            	
              45

            

    

    
      	
               

            	
              5.4

            	
              Administration
                of Equipment 

            	
              45

            

    

    
      	
               

            	
              5.5

            	
              Payment
                of Charges 

            	
              46

            

    

    
      	
               

            	
              5.6

            	
              Lien
                on Realty 

            	
              46

            

    

     

    
      	
               

            	
              SECTION 6.    REPRESENTATIONS
                AND
                WARRANTIES                                                                                                                                                                                                    47

            

    

     

    
      	
               

            	
              6.1

            	
              General
                Representations and Warranties 

            	
              47

            

    

    
      	
               

            	
              6.2

            	
              Continuous
                Nature of Representations and Warranties 

            	
              55

            

    

    
      	
               

            	
              6.3

            	
              Survival
                of Representations and Warranties 

            	
              55

            

    

     

    
      	
               

            	
              SECTION 7.    COVENANTS
                AND
                CONTINUING
                AGREEMENTS                                                                                                                                                                                       55

            

    

     

    
      	
               

            	
              7.1

            	
              Affirmative
                Covenants 

            	
              55

            

    

    
      	
               

            	
              7.2

            	
              Negative
                Covenants 

            	
              58

            

    

     

    
      	
               

            	
              SECTION 8.    CONDITIONS
                PRECEDENT                                                                                                                                                                                                                               
                65

            

    

     

    
      	
               

            	
              8.1

            	
              Documentation 

            	
              65

            

    

    
      	
               

            	
              8.2

            	
              No
                Default 

            	
              65

            

    

    
      	
               

            	
              8.3

            	
              Other
                Conditions 

            	
              65

            

    

    
      	
               

            	
              8.4

            	
              Aggregate
                Availability 

            	
              65

            

    

    
      	
               

            	
              8.5

            	
              No
                Litigation 

            	
              65

            

    

    
      	
               

            	
              8.6

            	
              Material
                Adverse Effect 

            	
              66

            

    

     

    
      	
               

            	
              SECTION 9.    EVENTS
                OF DEFAULT; RIGHTS AND REMEDIES ON
                DEFAULT                                                                                                                                                           
                66

            

    

     

    
      	
               

            	
              9.1

            	
              Events
                of Default 

            	
              66

            

    

    
      	
               

            	
              9.2

            	
              Acceleration
                of the Obligations 

            	
              69

            

    

    
      	
               

            	
              9.3

            	
              Other
                Remedies 

            	
              69

            

    

    
      	
               

            	
              9.4

            	
              Set
                Off and Sharing of Payments 

            	
              71

            

    

    
      	
               

            	
              9.5

            	
              Remedies
                Cumulative; No Waiver 

            	
              71

            

    

     

    
      	
               

            	
              SECTION 10.    AGENT;
                ASSIGNMENTS;
                AMENDMENTS                                                                                                                                                                                                 
                72

            

    

     

    
      	
               

            	
              10.1

            	
              Authorization
                and Action 

            	
              72

            

    

    
      	
               

            	
              10.2

            	
              Agent’s
                Reliance, Etc 

            	
              73

            

    

    
      	
               

            	
              10.3

            	
              Bank
                of America and Affiliates 

            	
              73

            

    

    
      	
               

            	
              10.4

            	
              Lender
                Credit Decision 

            	
              74

            

    

    
      	
               

            	
              10.5

            	
              Indemnification 

            	
              74

            

    

    
      	
               

            	
              10.6

            	
              Rights
                and Remedies to be Exercised by Agent Only 

            	
              74

            

    

    
      	
               

            	
              10.7

            	
              Agency
                Provisions Relating to Collateral 

            	
              75

            

    

    
      	
               

            	
              10.8

            	
              Agents’
                Right to Purchase Commitments 

            	
              75

            

    

    
      	
               

            	
              10.9

            	
              Right
                of Sale, Assignment, Participations 

            	
              75

            

    

    
      	
               

            	
              10.10      
                Amendment                                                                                                                                                                                                                                                                
                     77

            

    

    
      	
               

            	
              10.11      
                Resignation of Agent; Appointment of
                Successor                                                                                                                                                                                                   78

            

    

    
      	
               

            	
              10.12      
                Audit and Examination Reports; Disclaimer by
                Lenders                                                                                                                                                                                          79

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
               

            	
              SECTION 11.    MISCELLANEOUS                                                                                                                                                                                                                                             
                79

            

    

     

    
      	
               

            	
              11.1

            	
              Power
                of Attorney 

            	
              79

            

    

    
      	
               

            	
              11.2

            	
              Indemnity 

            	
              80

            

    

    
      	
               

            	
              11.3

            	
              Sale
                of Interest 

            	
              81

            

    

    
      	
               

            	
              11.4

            	
              Severability 

            	
              81

            

    

    
      	
               

            	
              11.5

            	
              Successors
                and Assigns 

            	
              81

            

    

    
      	
               

            	
              11.6

            	
              Cumulative
                Effect; Conflict of Terms 

            	
              81

            

    

    
      	
               

            	
              11.7

            	
              Execution
                in Counterparts 

            	
              81

            

    

    
      	
               

            	
              11.8

            	
              Notice 

            	
              81

            

    

    
      	
               

            	
              11.9

            	
              Consent 

            	
              82

            

    

    
      	
               

            	
              11.10      
                Credit
                Inquiries                                                                                                                                                                                                                                                                83

            

    

    
      	
               

            	
              11.11      
                Time of
                Essence                                                                                                                                                                                                                                                             
                83

            

    

    
      	
               

            	
              11.12      
                Entire
                Agreement                                                                                                                                                                                                                                                           
                83

            

    

    
      	
               

            	
              11.13       Interpretation                                                                                                                                                                                                                                                                  
                83

            

    

    
      	
               

            	
              11.14      
                Confidentiality                                                                                                                                                                                                                                                                
                83

            

    

    
      	
               

            	
              11.15      
                GOVERNING LAW; CONSENT TO
                FORUM                                                                                                                                                                                                            
                83

            

    

    
      	
               

            	
              11.16       WAIVERS
                BY
                BORROWER                                                                                                                                                                                                                                         
                84

            

    

    
      	
               

            	
              11.17      
                No
                Novation                                                                                                                                                                                                                                                                   
                 85

            

    

    
      	
               

            	
              11.18      
                Advertisement                                                                                                                                                                                                                                                      
                          
                85

            

    

    
      	
               

            	
              11.19      
                English
                Language                                                                                                                                                                                                                                                           
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    SECOND
      AMENDED AND RESTATED LOAN AGREEMENT

     

    THIS
      SECOND AMENDED AND RESTATED LOAN AGREEMENT (“Agreement”) is made as of
      this 30th day
      of November, 2007, by and among BANK OF AMERICA, N.A. with an
      office at 231 South LaSalle Street, 7th Floor,
      Chicago,
      Illinois 60604 (“Bank of America”) (“Agent”) for itself and any other financial
      institution which is or becomes a party hereto (each such financial institution,
      including Bank of America, is referred to hereinafter individually as a “Lender”
and collectively as the “Lenders”), the CANADIAN PARTICIPANTS
party hereto, the U.K. PARTICIPANTS party hereto,
BANK OF AMERICA, N.A. (acting through its
      Canadian Branch)
      (“Canadian Agent”), BANK OF AMERICA, N.A., London branch,
      individually as a Lender and as a U.K. Agent (“U.K. Agent”), the
LENDERS, KATY INDUSTRIES, INC., a Delaware corporation, with
      its chief executive office and principal place of business at 2461 South Clark
      Street, Suite 630, Arlington, Virginia 22202 (“Katy” or “U.S. Borrower”),
GLIT/GEMTEX, LTD., a Canadian corporation with its chief
      executive offices and principal place of business at 60 Belfield Road, Toronto,
      Ontario, Canada M9W 1G1 (“Glit” or “Canadian Borrower”), CEH LIMITED
(“CEH” or “U.K. Borrower”), a private limited company incorporated
      under the laws of England and Wales and registered with Company No. 4992300
      whose registered office is Cardew Way, Redruth Cornwall, TR15 1ST,
      England.  Katy, Glit and CEH are sometimes hereinafter referred to
      individually as a “Borrower” and collectively as
“Borrowers.”  Capitalized terms used in this Agreement have the
      meanings assigned to them in Appendix A, General
      Definitions.  Accounting terms not otherwise specifically defined
      herein shall be construed in accordance with GAAP consistently
      applied.

     

    WHEREAS,
      Borrowers, Canadian Agent, U.K. Agent, Woods Industries (Canada) Inc., Contico
      Manufacturing Limited, the lender signatories thereto (“Existing Lenders”) and
      Agent entered into a certain Amended and Restated Loan and Security Agreement
      dated as of April 20, 2004 (said Loan Agreement, as amended from time to time,
      the “2004 Loan Agreement”), which in turn amended and restated the “Original
      Loan Agreement” (as defined in the 2004 Loan Agreement); and

     

    WHEREAS,
      Borrowers, Lenders, U.K. Agent and Agent desire to amend and restate the 2004
      Loan Agreement pursuant to the terms hereof.

     

    ACCORDINGLY,
      the parties hereto agree as follows:

     

    SECTION 1.                                CREDIT
      FACILITY

     

    Subject
      to the terms and conditions of, and in reliance upon the representations and
      warranties made in, this Agreement and the other Loan Documents, Lenders agree
      to make a Total Credit Facility of up to $50,600,000 available to Borrowers
      upon
      Borrower Representative’s request therefor, as follows:

     

    
      
              

          
            	 	 	 

          
      

                                        
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    1.1  Loans.

     

    1.1.1  Revolving
      Credit Loans.

     

    (a)  U.S.
      Revolver.  Each Lender (except the U.K. Lender and Canadian
      Lender) agrees, severally and not jointly, for so long as no Default or Event
      of
      Default exists, to make Revolving Credit Loans to U.S. Borrower (each such
      loan
      or extension of credit, a “U.S. Revolving Credit Loan”) from time to time
      during the period from the date hereof to but not including the last day of
      the
      Term, as requested by Borrower Representative, on behalf of U.S. Borrower,
      in
      the manner set forth in subsection 3.1.1 hereof, up to a maximum principal
      amount in Dollar Equivalents at any time outstanding equal to the lesser of
      (i) the product of such Lender’s Revolving Loan Percentage and the U.S.
      Revolving Loan Commitment minus the product of such Lender’s Revolving
      Loan Percentage and the U.S. LC Obligations and (ii) the product of such
      Lender’s Revolving Loan Percentage and an amount equal to the U.S. Borrowing
      Base at such time minus the product of such Lender’s Revolving Loan
      Percentage and the U.S. LC Obligations.  The U.S. Revolving Credit
      Loans made by the Lenders for the benefit of U.S. Borrower shall be denominated
      in Dollars.  The U.S. Revolving Credit Loans shall be repayable in
      accordance with the terms of the U.S. Revolving Notes and shall be secured
      by
      all of the U.S. Collateral and all of the U.K. Collateral.

     

    (b)  U.K.
      Revolving Loans.  As of the U.K. Effective Date, U.K. Lender
      agrees, for so long as no Default or Event of Default exists, to make revolving
      credit loans and extensions of credit under an overdraft sub-facility to U.K.
      Borrower (each such loan or extension of credit, a “U.K. Revolving Credit Loan”)
      from time to time during the period from the date hereof to but not including
      the last day of the Term, as requested by Borrower Representative, on behalf
      of
      U.K. Borrower, in the manner set forth in subsection 3.1.1 hereof, up to a
      maximum principal amount at any time outstanding in Dollar Equivalents equal
      to
      the lesser of (i) the U.K. Sublimit minus the Dollar Equivalent of
      U.K. LC Obligations and (ii) an amount equal to the Dollar Equivalent of
      the U.K. Borrowing Base at such time minus the Dollar Equivalent of the
      U.K. LC Obligations.  The U.K. Revolving Credit Loans made by U.K.
      Lender to U.K. Borrower shall be denominated in Sterling or
      Euros.  The U.K. Revolving Credit Loans shall be repayable in
      accordance with the terms of the Revolving Notes and shall be secured by all
      of
      the U.K. Collateral and all of the U.S. Collateral.

     

    (c)  Canadian
      Revolving Credit Loans.  As of the Canadian Effective Date,
      Canadian Lender agrees, for so long as no Default or Event of Default exists,
      to
      make Revolving Credit Loans to Canadian Borrower (each such loan or extension
      of
      credit, a “Canadian Revolving Credit Loan”) from time to time during the
      period from the date hereof to but not including the last day of the Term,
      as
      requested by Borrower Representative, on behalf of Canadian Borrower, in the
      manner set forth in subsection 3.1.1 hereof, up to a maximum principal
      amount at any time outstanding in Dollar Equivalents equal to the lesser of
      (i) the Canadian Sublimit minus the Dollar Equivalent of the
      Canadian LC Obligations and (ii) an amount equal to the Dollar Equivalent
      of the Canadian Borrowing Base at such time minus the Dollar Equivalent
      of the Canadian LC Obligations.  The Canadian Revolving Credit Loans
      made by Canadian Lender for the benefit of Canadian Borrower shall be
      denominated in Canadian Dollars.  The Canadian Revolving Credit Loans
      shall be repayable in accordance with the terms of the Revolving Notes and
      shall
      be secured by all of the Canadian Collateral and the U.S.
      Collateral.

     

    
      
        
        

      

      
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    (d)  Aggregate
      Revolving Loans.  Notwithstanding anything in
      subsection 1.1.1(a), (b), and (c) to the contrary, no Lender shall make
      Revolving Credit Loans to Borrowers if the Dollar Equivalent of the Revolving
      Credit Loans outstanding advanced by that Lender after taking into account
      the
      Dollar Equivalent of the contemplated Revolving Credit Loan would exceed the
      lesser of (i) such Lender’s Revolving Loan Commitment minus the
      product of such Lender’s Revolving Loan Percentage and the LC Obligations and
      (ii) except as provided in subsections 1.1.2 and 1.1.5, the product of such
      Lender’s Revolving Loan Percentage and an amount equal to the Dollar Equivalent
      of the Aggregate Borrowing Base at such time minus the Dollar Equivalent
      of the LC Amount.

     

    (e)  Canadian
      and U.K. Sublimit.  Although Canadian Revolving Credit Loans will
      be funded in Canadian Dollars and U.K. Revolving Credit Loans will be funded
      in
      Sterling or Euros, the Canadian Sublimit and U.K. Sublimit are denominated
      in
      Dollars.  As of the Closing Date, the Canadian Sublimit and U.K.
      Sublimit are allocated as set forth below:

     

    
      	
              Canadian
                Sublimit

            	
              $3,000,000

               

            
	
              U.K.
                Sublimit

            	
              $0

               

            

    

    

    (f)  Euro
      Sublimit.  U.K. Lender shall not be required to fund U.K.
      Revolving Credit Loans in Euros or issue or cause to be issued U.K. Letters
      of
      Credit denominated in Euros if the Dollar Equivalent of the aggregate principal
      amount of the U.K. Revolving Credit Loans funded or to be funded in Euros and
      the undrawn available amount of outstanding U.K. Letters of Credit issued or
      to
      be issued and denominated in Euros exceeds $0.

     

    1.1.2  Overadvances.  Insofar
      as Borrower Representative may request and Agent or Majority Lenders (as
      provided below) may be willing in their sole and absolute discretion to make
      Revolving Credit Loans to the respective Borrowers as to which they have
      Revolving Loan Commitments at a time when the unpaid balance of Revolving Credit
      Loans plus the sum of the LC Amount plus the amount of LC
      Obligations that have not been reimbursed by Borrowers or funded with a
      Revolving Credit Loan, exceeds, or would exceed with the making of any such
      Revolving Credit Loan or the incurrence of any LC Obligation, the Canadian,
      U.K.
      or U.S. Borrowing Bases, as applicable, (any such Loan or Loans being herein
      referred to individually as an “Overadvance” and collectively, as
“Overadvances”), Agents shall enter such Overadvances as debits in the
      applicable Loan Account.  All Overadvances shall be repaid on demand,
      shall be secured by the Collateral (provided that Overadvances to U.S. Borrower
      or U.K. Borrower shall only be secured by the U.S. Collateral and the U.K.
      Collateral and Overadvances to Canadian Borrower shall only be secured by the
      Canadian Collateral and U.S. Collateral) and shall bear interest as provided
      in
      this Agreement for Base Rate Portions of Revolving Credit Loans (for the
      applicable Borrower) generally.  

     

    
      
        
        

      

      
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      Any
        Overadvance made pursuant to the terms hereof shall be made to the respective
        Borrowers:  (i) with respect to Overadvances to U.S. Borrower, by
        all Lenders (except the U.K. Lender and the Canadian Lender) ratably in
        accordance with their respective Revolving Loan Percentages, (ii) with
        respect to Overadvances to U.K. Borrower, by the U.K. Lender, ratably with
        respect to the U.K. Lender and, following a refunding under Section 3.14,
        the U.K. Participants and (iii) with respect to Overadvances to the
        Canadian Borrower, by the Canadian Lender, ratably with respect to the Canadian
        Lender and, following a refunding under Section 3.13, the Canadian
        Participants.  Overadvances in the aggregate amount of the Dollar
        Equivalent of $1,000,000 or less may, unless a Default or Event of Default
        has
        occurred and is continuing, be made in the sole and absolute discretion of
        Agent.  Overadvances in an aggregate amount of more than the Dollar
        Equivalent of $1,000,000 but less than the Dollar Equivalent of $2,500,000
        may,
        unless a Default or an Event of Default has occurred and is continuing, be
        made
        in the sole and absolute discretion of the Majority
        Lenders.  Overadvances in an aggregate amount of the Dollar Equivalent
        of $2,500,000 or more and Overadvances to be made after the occurrence and
        during the continuation of a Default or an Event of Default shall require
        the
        consent of all Lenders.  The foregoing notwithstanding, in no event,
        unless otherwise consented to by all Lenders, (w) shall any Overadvances be
        outstanding for more than 60 consecutive days, (x) after all outstanding
        Overadvances have been repaid, shall Agents or Lenders make any additional
        Overadvances unless 60 days or more have expired since the last date on which
        any Overadvances were outstanding, (y) shall Overadvances be outstanding on
        more than 90 days within any one 180 day period or (z) shall Agents
        make Revolving Credit Loans on behalf of Lenders under this
        subsection 1.1.2 to the extent such Revolving Credit Loans would cause a
        Lender’s share of the Revolving Credit Loans to exceed such Lender’s Revolving
        Loan Commitment minus such Lender’s Revolving Loan Percentage of the LC
        Amount.

    

     

    1.1.3  Use
      of
      Proceeds.  The Revolving Credit Loans and the 2007 Term Loan shall
      be used solely for (i) the repayment of loans and advances owed pursuant to
      the 2004 Loan Agreement to any Existing Lender who is not a Lender in this
      Agreement; (ii) Borrowers’ general operating capital needs including, but
      not limited to, Capital Expenditures, in a manner consistent with the provisions
      of this Agreement and all applicable laws; (iii) the making of intercompany
      loans to any other Loan Party (other than Parent) in accordance with subsection
      7.2.2 for their own general operating capital needs in a manner consistent
      with
      the provisions of this Agreement and all applicable laws; and (iv) other
      purposes permitted under this Agreement.  On the Closing Date, Agent
      shall disburse from the proceeds of Revolving Credit Loans and the 2007 Term
      Loan amounts sufficient to repay all principal, interest and fees owed to
      Existing Lenders who are not Lenders hereunder pursuant to a schedule agreed
      upon by Agent and Borrower Representative.

     

    1.1.4  Swingline
      Loans.  In order to reduce the frequency of transfers of funds
      from Lenders to Agent for making Revolving Credit Loans and for so long as
      no
      Default or Event of Default exists, Agent shall be permitted (but not required)
      to make Revolving Credit Loans to U.S. Borrower upon request by Borrower
      Representative (such Revolving Credit Loans to be designated as “Swingline
      Loans”) provided that the aggregate amount of Swingline Loans
      outstanding at any time will not (i) exceed $5,000,000; (ii) when
      added to the principal amount of Agent’s other Revolving Credit Loans then
      outstanding plus Agent’s Revolving Loan Percentage of the LC Amount, exceed
      Agent’s Revolving Credit Commitment; or (iii) when added to the principal
      amount of all other Revolving Credit Loans then outstanding plus the LC Amount,
      exceed the U.S. Borrowing Base.  Within the foregoing limits, U.S.
      Borrower may borrow, repay and reborrow Swingline
      Loans.  

     

    
      
        
        

      

      
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      All
        Swingline Loans shall be treated as Revolving Credit Loans for purposes of
        this
        Agreement, except that (a) all Swingline Loans shall be Base Rate Revolving
        Portions and (b) notwithstanding anything herein to the contrary (other
        than as set forth in the next succeeding sentence), all principal and interest
        paid with respect to Swingline Loans shall be for the sole account of Agent
        in
        its capacity as the lender of Swingline Loans.  Notwithstanding the
        foregoing, not more than 2 Business Days after (1) Lenders receive notice
        from Agent that a Swingline Loan has been advanced in respect of a drawing
        under
        a Letter of Credit or LC Guaranty or (2) in any other circumstance, demand
        is made by Agent during the continuance of an Event of Default, each Lender
        shall irrevocably and unconditionally purchase and receive from Agent, without
        recourse or warranty from Agent, an undivided interest and participation
        in each
        Swingline Loan to the extent of such Lender’s Revolving Loan Percentage thereof,
        by paying to Agent, in same day funds, an amount equal to such Lender’s
        Revolving Loan Percentage of such Swingline Loan.

    

     

    1.1.5  Agent
      Loans.  Upon the occurrence and during the continuance of an Event
      of Default, each Agent, in its sole discretion, may make Revolving Credit Loans
      to the Borrowers to which it has a Revolving Loan Commitment on behalf of the
      applicable Lender(s) (to (i) U.S. Borrower, in Dollars, (ii) U.K.
      Borrower, in Sterling or Euros and (iii) Canadian Borrower, in Canadian
      Dollars), so long as the aggregate amount of such Revolving Credit Loans shall
      not exceed the Dollar Equivalent of $2,500,000, if Agents, in their reasonable
      business judgment, deem that such Revolving Credit Loans are necessary or
      desirable (i) to protect all or any portion of the Collateral, (ii) to
      enhance the likelihood, or maximize the amount of, repayment of the Loans and
      the other Obligations, or (iii) to pay any other amount chargeable to any
      Borrower pursuant to this Agreement, including without limitation costs, fees
      and expenses as described in Sections 2.9 and 2.10 (such Revolving Credit
      Loans, hereinafter, “Agent Loans”); provided that (a) in no
      event shall the maximum principal amount of the Revolving Credit Loans and
      the
      LC Obligations exceed the aggregate Revolving Loan Commitments and (b) any
      Revolving Credit Loans made to protect all or any portion of the Canadian
      Collateral shall not be made to U.S. Borrower or the U.K.
      Borrower.  Each applicable Lender shall be obligated to advance to the
      applicable Borrower its Revolving Loan Percentage of each Agent Loan made in
      accordance with this subsection 1.1.5.  If Agent Loans are made in
      accordance with the preceding sentence, then (a) the Aggregate Borrowing
      Base U.S. Borrowing Base or Canadian Borrowing Base, as applicable, shall be
      deemed increased by the amount of such permitted Agent Loans, but only for
      so
      long as Agents allow such Agent Loans to be outstanding, and (b) all
      Lenders shall be bound to make, or permit to remain outstanding, such Agent
      Loans based upon their Revolving Loan Percentages in accordance with the terms
      of this Agreement.  All Agent Loans shall be repaid on demand, shall
      be secured by the Collateral (provided that Agent Loans to U.S. Borrower
      or U.K. Borrower shall only be secured by the U.S. Collateral and U.K.
      Collateral and that Agent Loans to the Canadian Borrower shall only be secured
      by the Canadian Collateral and the U.S. Collateral) and shall bear interest
      at
      the Default Rate as provided in this Agreement for Base Rate Portions of
      Revolving Credit Loans (for the applicable Borrower) generally.

     

    
      
        
        

      

      
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    1.2  Letters
      of Credit; LC Guaranties.

     

    (a)  U.S.
      Letters of Credit; U.S. LC Guaranties.  Agent agrees, for so long
      as no Default or Event of Default exists and if requested by Borrower
      Representative on behalf of U.S. Borrower, to (i) issue or cause to be
      issued by Bank or another Affiliate of Agent, on the date requested by Borrower
      Representative, U.S. Letters of Credit for the account of any U.S. Loan Party
      or
      (ii) execute U.S. LC Guaranties by which Agent, Bank, or another Affiliate
      of Agent, on the date requested by Borrower Representative, shall guaranty
      the
      payment or performance by U.S. Loan Parties of their reimbursement obligations
      with respect to letters of credit and letters of credit issued for any U.S.
      Loan
      Party’s account by other Persons in support of such U.S. Loan Party’s
      obligations (other than obligations for the repayment of Money Borrowed);
provided that the U.S. LC Obligations shall not exceed $10,000,000 at any
      time.  Such U.S. Letters of Credit and U.S. LC Guaranties shall be
      denominated in Dollars or such other currency as consented to by Agent in its
      sole discretion.  Unless otherwise consented to by Agent, no U.S.
      Letter of Credit or U.S. LC Guaranty that is a (i) standby letter of credit
      shall have an expiration date greater than one year from the date of issuance
      (provided that any standby letter of credit with a one-year term may provide
      for
      the customary evergreen renewals thereof for additional one-year periods (which
      shall in no event extend beyond the date referred to in the immediately
      succeeding sentence, unless cash-collateralized to Agent’s satisfaction)) or
      (ii) documentary letter of credit shall have an expiration date greater
      than 180 days from the date of issuance.  Notwithstanding anything
      else herein to the contrary, no U.S. Letter of Credit or U.S. LC Guaranty may
      have an expiration date after the last day of the Term, unless
      cash–collateralized to Agent’s satisfaction.  Notwithstanding anything
      to the contrary contained herein, U.S. Borrower, Agent and Lenders hereby agree
      that all U.S. LC Obligations and all obligations of U.S. Borrower relating
      thereto shall be satisfied by the prompt issuance of one or more Revolving
      Credit Loans in Dollars to U.S. Borrower that are Base Rate Portions, which
      U.S.
      Borrower hereby acknowledges are requested and Lenders hereby agree to
      fund.  In the event that Revolving Credit Loans to U.S. Borrower are
      not, for any reason, promptly made to satisfy all then existing U.S. LC
      Obligations, each Lender hereby agrees to pay to Agent, on demand, an amount
      equal to such U.S. LC Obligations multipliedby such Lender’s
      Revolving Loan Percentage, and until so paid, such amount shall be secured
      by
      the U.S. Collateral  and shall bear interest and be payable at the
      same rate and in the same manner as Base Rate Portions for Revolving Credit
      Loans to U.S. Borrower.  Immediately upon the issuance of a U.S.
      Letter of Credit or a U.S. LC Guaranty under this Agreement, each Lender shall
      be deemed to have irrevocably and unconditionally purchased and received from
      Agent, without recourse or warranty, an undivided interest and participation
      therein equal to the amount of such U.S. Letter of Credit or U.S. LC Guaranty
      multiplied by such Lender’s Revolving Loan Percentage.  The
      form of any U.S. Letter of Credit, U.K. Letter of Credit or Canadian Letter
      of
      Credit shall be acceptable to Bank, Agent and Borrower
      Representative.  U.S. Letters of Credit, U.K. Letters of Credit and
      Canadian Letters of Credit shall be issued in accordance with the Uniform
      Customs and Practice for Documentary Credits then in effect and adopted by
      Bank.

     

    
      
        
        

      

      
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    (b)  U.K.
      Letters of Credit; U.K. LC Guaranties.  As of the U.K. Effective
      Date, U.K. Agent will cause Bank, and Bank agrees, for so long as no Default
      or
      Event of Default exists and if requested by Borrower Representative on behalf
      of
      any U.K. Loan Party, to issue its, or cause an Affiliate of Bank to issue,
      on
      the date requested by Borrower Representative, U.K. Letters of Credit for the
      account of a U.K. Borrower in support of such U.K. Loan Party’s obligations
      (other than obligations for the repayment of Money Borrowed); provided
      that the U.K. LC Obligations shall not exceed the Dollar Equivalent of $0 at
      any
      time and all U.K. Letters of Credit and U.K. LC Guaranties shall be denominated
      in Sterling or Euros.  Unless otherwise consented to by Agent, no U.K.
      Letter of Credit or U.K. LC Guaranty that is a (i) standby letter of credit
      shall have an expiration date greater than one year from the date of issuance
      (provided that any standby letter of credit with a one-year term may provide
      for
      customary evergreen renewals (which shall in no event extend beyond the date
      referred to in the immediately succeeding sentence, unless cash-collateralized
      to Agent’s satisfaction)) or (ii) documentary letter of credit shall have
      an expiration date greater than 180 days from the date of
      issuance.  Notwithstanding anything else herein to the contrary, no
      U.K. Letter of Credit or U.K. LC Guaranty may have an expiration date after
      the
      last day of the Term, unless cash-collateralized to Agent’s
      satisfaction.  Notwithstanding anything to the contrary contained
      herein, U.K. Borrower and U.K. Lender hereby agree that all U.K. LC Obligations
      and all obligations of U.K. Borrower relating thereto shall be satisfied by
      the
      prompt issuance of one or more Revolving Credit Loans to U.K. Borrower that
      are
      Base Rate Portions, which U.K. Borrower hereby acknowledges are requested and
      U.K. Lender hereby agrees to fund.  If the draw on the underlying U.K.
      Letter of Credit or U.K. LC Guaranty is paid in Sterling, the applicable
      Revolving Credit Loan shall be in Sterling.  If the draw amount on the
      underlying U.K. Letter of Credit or U.K. LC Guaranty is paid in Euros, the
      applicable Revolving Credit Loan shall be in Euros.  In the event that
      Revolving Credit Loans to U.K. Borrower is not, for any reason, promptly made
      to
      satisfy all then existing U.K. LC Obligations, U.K. Lender hereby agrees to
      pay
      to U.K. Agent, on demand, an amount equal to the Dollar Equivalent of such
      U.K.
      LC Obligations (paid in the currency of such U.K. LC Obligations), and until
      so
      paid, such amount shall be secured by the U.S. Collateral and the U.K.
      Collateral and shall bear interest and be payable at the same rate and in the
      same manner as Base Rate Portions for Revolving Credit Loans to U.K.
      Borrower.  Immediately upon the issuance of a U.K. Letter of Credit or
      a U.K. LC Guaranty under this Agreement, each U.K. Participant shall be deemed
      to have irrevocably and unconditionally purchased and received from U.K. Agent,
      without recourse or warranty, an undivided interest and participation therein
      equal to such U.K. LC Amount and the Dollar Equivalent of the U.K. LC
      Guaranty.

     

    (c)  Canadian
      Letters of Credit; Canadian LC Guaranties.  As of the Canadian
      Effective Date, Canadian Agent will cause Bank, and Bank agrees, for so long
      as
      no Default or Event of Default exists and if requested by Borrower
      Representative on behalf of any Canadian Loan Party, to (i) issue its, or
      cause an Affiliate of Bank to issue, on the date requested by Borrower
      Representative, Canadian Letters of Credit for the account of Canadian Borrower
      or (ii) execute Canadian LC Guaranties by which Bank or an Affiliate of
      Bank, on the date requested by Borrower Representative, shall guaranty the
      payment or performance by Canadian Borrower of its reimbursement obligations
      with respect to letters of credit and letters of credit issued for Canadian
      Loan
      Parties’ account by other Persons in support of a Canadian Loan Party’s
      obligations (other than obligations for the repayment of Money Borrowed);
provided that the Canadian LC Obligations shall not exceed the Dollar
      Equivalent of $3,000,000 at any time and all Canadian
      Letters of Credit and Canadian LC Guaranties shall be denominated in Canadian
      Dollars.  

     

    
      
        
        

      

      
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      Unless
        otherwise consented to by Agent, no Canadian Letter of Credit or Canadian
        LC
        Guaranty that is a (i) standby letter of credit shall have an expiration
        date greater than one year from the date of issuance (provided that any
        standby letter of credit with a one-year term may provide for customary
        evergreen renewals (which shall in no event extend beyond the date referred
        to
        in the immediately succeeding sentence, unless cash-collateralized to Agent’s
        satisfaction)) or (ii) documentary letter of credit shall have an
        expiration date greater than 180 days from the date of
        issuance.  Notwithstanding anything else herein to the contrary, no
        Canadian Letter of Credit or Canadian LC Guaranty may have an expiration
        date
        after the last day of the Term, unless cash-collateralized to Agent’s
        satisfaction.  Notwithstanding anything to the contrary contained
        herein, Canadian Borrower and Canadian Lender hereby agree that all Canadian
        LC
        Obligations and all obligations of Canadian Loan Parties relating thereto
        shall
        be satisfied by the prompt issuance of one or more Revolving Credit Loans
        to
        Canadian Borrower that are Base Rate Portions, which Canadian Borrower hereby
        acknowledges are requested and Canadian Lender hereby agrees to
        fund.  In the event that Revolving Credit Loans to Canadian Borrower
        are not, for any reason, promptly made to satisfy all then existing Canadian
        LC
        Obligations, Canadian Lender hereby agrees to pay to Canadian Agent, on demand,
        an amount equal to the Dollar Equivalent of such Canadian LC Obligations
        (paid
        in the currency of such Canadian LC Obligations), and until so paid, such
        amount
        shall be secured by the Canadian and the U.S. Collateral and shall bear interest
        and be payable at the same rate and in the same manner as Base Rate Portions
        for
        Revolving Credit Loans to Canadian Borrower.  Immediately upon the
        issuance of a Canadian Letter of Credit or a Canadian LC Guaranty under this
        Agreement, each Canadian Participant shall be deemed to have irrevocably
        and
        unconditionally purchased and received from Canadian Agent, without recourse
        or
        warranty, an undivided interest and participation therein equal to such Canadian
        LC Amount and the Dollar Equivalent of the Canadian LC
        Guaranty.

    

     

    (d)  LC
      Amount.  Notwithstanding anything herein to the contrary, the
      Dollar Equivalent of the LC Obligations shall not exceed the lesser of
      (i) Aggregate Availability or (ii) $10,000,000 at any
      time.

     

    (e)  Sight
      Draft Letters of Credit.  All Letters of Credit to be issued
      pursuant to the terms hereof shall only be able to be drawn upon by presentation
      of appropriate sight drafts.

     

    1.3  Guarantees;
      Limitations on U.K. Borrower’s and Canadian Borrower’s
      Liability.

     

    (a)  U.S.
      Borrower hereby absolutely and unconditionally guarantees to Agents and each
      Lender and their respective successors and assigns, the full and prompt payment
      (whether at stated maturity, by acceleration or otherwise) and performance
      of
      the Obligations of U.K. Borrower and Canadian Borrower hereunder and under
      all
      Loan Documents.  U.K. Borrower hereby absolutely and unconditionally
      guarantees to Agents and Lenders and their respective assigns, the full and
      prompt payment (whether at stated maturity, or otherwise) and performance of
      the
      Obligations of U.S. Borrower hereunder and under all Loan
      Documents.  Notwithstanding any provision herein to the contrary,
      Canadian Borrower shall have no liability, direct or indirect, for the
      Obligations of any U.S. Loan Party or U.K. Loan Party hereunder or under any
      Loan Documents and U.K. Borrower shall have no liability, direct or indirect,
      for the Obligations of any Canadian Loan Party hereunder or under any Loan
      Documents.

     

    
      
        
        

      

      
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    (b)  Each
      of
      U.S. Borrower and U.K. Borrower agrees that its guaranty obligation under
      Section 1.3(a) hereof is a continuing guaranty of payment and performance
      and not of collection, that its obligations under this Section 1.3 shall
      not be discharged until payment and performance, in full, of the Obligations
      has
      occurred, and that its obligations under this Section 1.3 shall be absolute
      and unconditional, irrespective of, and unaffected by,

     

    (i)  the
      genuineness, validity, regularity, enforceability or any future amendment of,
      or
      change in, this Agreement, or any other Loan Document (including any provision
      hereof or thereof) or any other agreement, document or instrument to which
      any
      other Borrower of the Obligations is or may become a party;

     

    (ii)  the
      absence of any action to enforce this Agreement or any other Loan Document
      or
      the waiver or consent by Agents and any Lender with respect to any of the
      provisions thereof;

     

    (iii)  the
      existence, value or condition of, or failure to perfect its Lien against, any
      security for the Obligations or any action, or the absence of any action, by
      Agents and Lenders in respect thereof (including the release of any such
      security);

     

    (iv)  the
      insolvency of any Borrower of the Obligations; or

     

    (v)  any
      other
      action or circumstances that might otherwise constitute a legal or equitable
      discharge or defense of a surety or guarantor.

     

    Subject
      to the last sentence of Section 1.3(a), each of U.K. Borrower and U.S.
      Borrower shall be regarded, and shall be in the same position, as principal
      debtor with respect to the Obligations of the other Borrowers guaranteed
      hereunder.

     

    (c)  Each
      of
      U.K. Borrower and U.S. Borrower expressly waives all rights it may have now
      or
      in the future under any statute, or at common law, or at law or in equity,
      or
      otherwise, to compel Agents or Lenders to marshal assets or to proceed in
      respect of the Obligations guaranteed hereunder against any other Borrower,
      any
      other party or against any security for the payment and performance of the
      Obligations before proceeding against, or as a condition to proceeding against,
      any of the other Borrowers.  U.S. Borrower also expressly waives the
      benefits of division and discussion under the Civil Code of
      Quebec.  It is agreed among U.K. Borrower and U.S. Borrower, Agents
      and Lenders that the foregoing waivers are of the essence of the transaction
      contemplated by this Agreement and the other Loan Documents and that, but for
      the provisions of this Section 1.3 and such waivers, Agents and Lenders
      would decline to enter into this Agreement.

     

    
      
        
        

      

      
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    (d)  Subject
      to the last sentence of Section 1.3(a) and notwithstanding anything to the
      contrary in this Agreement or in any other Loan Document, each of U.K. Borrower
      and U.S. Borrower agrees that the provisions of this Section 1.3 are for
      the benefit of Agents and Lenders and their respective successors, transferees,
      endorsees and assigns, and nothing herein contained shall impair, as among
      U.K.
      Borrower and U.S. Borrower and Agents or Lenders, the obligations of the other
      Borrowers under the Loan Documents.

     

    (e)  Subject
      to the last sentence of Section 1.3(a) and notwithstanding anything to the
      contrary in this Agreement or in any other Loan Document, each of U.K. Borrower
      and U.S. Borrower hereby expressly and irrevocably subordinates all rights
      at
      law or in equity to subrogation, reimbursement, exoneration, contribution,
      indemnification or set off and any and all defenses available to a surety,
      guarantor or accommodation co-obligor until the payment in full of all
      Obligations and the termination of the Revolving Loan
      Commitments.  Each of U.K. Borrower and U.S. Borrower acknowledges and
      agrees that this subordination is intended to benefit Agents and Lenders, and
      their respective successors and assigns, and shall not limit or otherwise affect
      their liability hereunder or the enforceability of this Section 1.3, and
      that Agents, Lenders and their respective successors and assigns are intended
      third party beneficiaries of the subordinations and agreements set forth in
      this
      Section 1.3.

     

    (f)  If
      Agents
      or any Lender may, under applicable law, proceed to realize their benefits
      under
      any of the Loan Documents giving Agents or such Lender a Lien upon any
      Collateral, whether owned by any Borrower or by any other Person, either by
      judicial foreclosure or sale or by non-judicial sale or enforcement, Agents
      or
      any Lender may, at their sole option, determine which of its remedies or rights
      it may pursue without affecting any of its rights and remedies under this
      Section 1.3.  If, in the exercise of any of its rights and
      remedies, Agents or any Lender shall forfeit any of its rights or remedies,
      including its right to enter a deficiency judgment against any Borrower or
      any
      other Person, whether because of any applicable laws pertaining to “election of
      remedies” or the like, each of U.K. Borrower and U.S. Borrower hereby consents
      to such action by such of the Agents or such Lender and waives any claim based
      upon such action, even if such action by Agents or such Lender shall result
      in a
      full or partial loss of any rights of subrogation that either U.K. Borrower
      or
      U.S. Borrower might otherwise have had but for such action by such of the Agents
      or such Lender.  Any election of remedies that results in the denial
      or impairment of the right of Agents or any Lender to seek a deficiency judgment
      against any Borrower shall not, subject to the last sentence of
      Section 1.3(a), impair any other Borrower’s obligation to pay the full
      amount of the Obligations.  In the event Agents or any Lender shall
      bid at any foreclosure or trustee’s or receiver’s sale or at any private sale
      permitted by law or the Loan Documents, Agents or such Lender may bid all or
      less than the amount of the Obligations and the amount of such bid need not
      be
      paid by Agents or such Lender but shall be credited against the
      Obligations.  The amount of the successful bid at any such sale,
      whether Agent or any Lender or other party is the successful bidder, shall
      be
      conclusively deemed to be the fair market value of the Collateral and the
      difference between such bid amount and the remaining balance of the Obligations
      shall be conclusively deemed to be the amount of the Obligations guaranteed
      under this Section 1.3, notwithstanding that any present or future law or
      court decision or ruling may have the effect of reducing the amount of any
      deficiency claim to which Agents or any Lender might otherwise be entitled
      but
      for such bidding at any such sale.

     

    
      
        
        

      

      
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    (g)  Subject
      to the last sentence of Section 1.3(a), the liability of each of U.K.
      Borrower and U.S. Borrower under this Section 1.3 is in addition to and
      shall be cumulative with all liabilities of each Borrower to Agents and Lenders
      under this Agreement and the other Loan Documents to which such Borrower is
      a
      party, without any limitation as to amount, unless the instrument or agreement
      evidencing or creating such other liability specifically provides to the
      contrary.

     

    1.4  Conversion
      to Dollars.

     

    (a)  All
      valuations or computations of monetary amounts set forth in this Agreement
      shall
      include the Dollar Equivalent of amounts in Canadian Dollars, Sterling and
      Euros.  In connection with all Dollar amounts set forth in this
      Agreement, and the Aggregate Borrowing Base, U.S. Borrowing Base, U.K. Borrowing
      Base and Canadian Borrowing Base calculations, all Canadian Dollars, Euros
      and
      Sterling shall be converted to Dollars in accordance with the following
      procedure:

     

    (i)  Conversions
      to Dollars shall occur in accordance with prevailing exchange rates, as
      determined by Agent in its reasonable discretion, on the applicable date;
      and

     

    (ii)  Outstanding
      Loans denominated in Canadian Dollars, Sterling and Euros shall be marked to
      market on the date on which Borrower Representative is required to deliver
      to
      Agent Borrowing Base Certificates as provided in Section 7.1.4 hereof (or
      more often as determined by Agent in its commercially reasonable discretion),
      taking into account in each case the Dollar Equivalent of all Revolving Credit
      Loans outstanding in Canadian Dollars, Sterling and Euros.

     

    (b)  Unless
      otherwise specifically set forth in this Agreement, monetary amounts shall
      be in
      Dollars.

     

    1.5  Judgment
      Currency; Contractual Currency.

     

    (a)  If,
      for
      the purpose of obtaining or enforcing judgment against any Borrower in any
      court
      in any jurisdiction, it becomes necessary to convert into any other currency
      (such other currency being hereinafter in this Section 1.5 referred to as
      the “Judgment Currency”) an amount due under any Loan Document in any
      currency (the “Obligation Currency”) other than the Judgment Currency,
      the conversion shall be made at the rate of exchange prevailing on the Business
      Day immediately preceding (i) the date of actual payment of the amount due,
      in the case of any proceeding in the courts of any jurisdiction that will give
      effect to such conversion being made on such date, or (ii) the date on
      which the judgment is given, in the case of any proceeding in the courts of
      any
      other jurisdiction (the applicable date as of which such conversion is made
      pursuant to this Section 1.5 being hereinafter in this Section 1.5
      referred to as the “Judgment Conversion Date”).

     

    
      
        
        

      

      
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    (b)  If,
      in
      the case of any proceeding in the court of any jurisdiction referred to in
      Section 1.5(a), there is a change in the rate of exchange prevailing
      between the Judgment Conversion Date and the date of actual receipt for value
      of
      the amount due, the applicable Borrower shall pay such additional amount (if
      any, but in any event not a lesser amount) as may be necessary to ensure that
      the amount actually received in the Judgment Currency, when converted at the
      rate of exchange prevailing on the date of payment, will produce the amount
      of
      the Obligation Currency which could have been purchased with the amount of
      the
      Judgment Currency stipulated in the judgment or judicial order at the rate
      of
      exchange prevailing on the Judgment Conversion Date.  Any amount due
      from a Borrower under this Section 1.5(b) shall be due as a separate debt
      and shall not be affected by judgment being obtained for any other amounts
      due
      under or in respect of any of the Loan Documents.

     

    (c)  The
      term
“rate of exchange” in this Section 1.5 means the rate of exchange at which
      Agent would, on the relevant date at or about 12:00 noon (Chicago time), be
      prepared to sell the Obligation Currency against the Judgment
      Currency.

     

    (d)  Any
      amount received or recovered by Agents in respect of any sum expressed to be
      due
      to them (whether for itself or as trustee for any other person) from any
      Borrower under this Agreement or under any of the other Loan Documents in a
      currency other than the currency (the “contractual currency”) in which
      such sum is so expressed to be due (whether as a result of, or from the
      enforcement of, any judgment or order of a court or tribunal of any
      jurisdiction, the winding-up of a Borrower or otherwise) shall only constitute
      a
      discharge of such Borrower to the extent of the amount of the contractual
      currency that the relevant Agent is able, in accordance with its usual practice,
      to purchase with the amount of the currency so received or recovered on the
      date
      of receipt or recovery (or, if later, the first date on which such purchase
      is
      practicable).  If the amount of the contractual currency so purchased
      is less than the amount of the contractual currency so expressed to be due,
      such
      Borrower shall indemnify the relevant Agent against any loss sustained by it
      as
      a result, including the cost of making any such purchase.

     

    1.6  Term
      Loan.  Pursuant to Section 1.6 of the 2004 Loan Agreement, the
      Existing Lenders made a term loan (the “Existing Term Loan”) to Katy in the
      amount of Twenty Million Dollars ($20,000,000).  As of the Closing
      Date, the outstanding principal balance of the Existing Term Loan owed to
      Lenders who are Existing Lenders is Ten Million Twenty-Six Thousand Six Hundred
      Eighty and 04/100 Dollars ($10,026,680.04).  Subject to the
      fulfillment or waiver of all the conditions precedent to the effectiveness
      of
      this Agreement, each U.S. Lender shall make additional term loans (collectively,
      the “2007 Term Loan”) to Katy in the aggregate principal amount equal to the
      amount set forth below such Lender’s name on the signature pages to this
      Agreement (such Lender’s “2007 Term Loan Commitment”).  The aggregate
      amount of the New Term Loan Commitment is Five Hundred Seventy-Three Thousand
      Three Hundred Nineteen and 96/100 Dollars
      ($573,319.96).  

     

    
      
        
        

      

      
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      On
        the
        Closing Date, the Existing Term Loan and the 2007 Term Loan shall be combined
        into one term loan (the “Term Loan”) in the aggregate principal amount of Ten
        Million Six Hundred Thousand Dollars ($10,600,000) and the Term Loan shall
        be
        evidenced by amended and restated promissory notes executed and delivered
        by
        Katy to each U.S. Lender, the form of which is attached hereto and made a
        part
        hereof as Exhibit 1.2.1 to this Agreement (the “Term Note(s)”), shall bear
        interest as specified in Section 2.1 and shall be repayable in accordance
        with
        the terms of the Term Notes.  The proceeds of the Term Loan were or
        shall be used by Katy solely for the purposes for which the proceeds of the
        Revolving Credit Loans are authorized to be used.  Upon the closing of
        the transactions contemplated by this Agreement, the promissory notes evidencing
        the Existing Term Loan shall be returned to Katy marked “Amended and Superceded”
or, with respect to promissory notes issued to Existing Lenders who are not
        Lenders hereunder, “Paid-In-Full.”

    

     

    SECTION 2.                                INTEREST,
      FEES AND CHARGES

     

    2.1  Interest.

     

    (a)  U.S.
      Rates of Interest.  Interest on Revolving Credit Loans and the
      Term Loan to U.S. Borrower shall accrue on the principal amount of the Base
      Rate
      Revolving Portions and Term Loan Portions outstanding at the end of each day
      at
      a fluctuating rate per annum equal to the Applicable Margin then in effect
      plus the Base Rate.  Said rate of interest shall increase or
      decrease by an amount equal to any increase or decrease in the Base Rate,
      effective as of the opening of business on the day that any such change in
      the
      Base Rate occurs.  If Borrower Representative, on behalf of U.S.
      Borrower, exercises its LIBOR Option as provided in Section 3.1, interest
      on the Revolving Credit Loans and the Term Loan to U.S. Borrower shall accrue
      on
      the principal amount of the LIBOR Revolving Portions and LIBOR Term Portions
      outstanding at the end of each day at a rate per annum equal to the Applicable
      Margin then in effect plus the LIBOR applicable to each LIBOR Portion for
      the corresponding Interest Period.

     

    (b)  U.K.
      Rates of Interest.  Interest on Revolving Credit Loans in Sterling
      or Euros to U.K. Borrower shall accrue on the principal amount of the Base
      Rate
      Revolving Portions outstanding at the end of each day at a fluctuating rate
      per
      annum equal to the Applicable Margin then in effect plus the Base
      Rate.  Said rate of interest shall increase or decrease by an amount
      equal to any increase or decrease in the Base Rate, effective as of the opening
      of business on the day that any such change in the Base Rate
      occurs.  If Borrower Representative, on behalf of U.K. Borrower,
      exercises its LIBOR Option as provided in Section 3.1, interest on the
      Revolving Credit Loans in Sterling or Euros to U.K. Borrower shall accrue on
      the
      principal amount of the LIBOR Revolving Portions outstanding at the end of
      each
      day at a rate per annum equal to the Applicable Margin then in effect
plus the LIBOR applicable to each LIBOR Portion for the corresponding
      Interest Period plus Mandatory Costs.

     

    
      
        
        

      

      
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    (c)  Canadian
      Rates of Interest.  Interest on Canadian Revolving Credit Loans in
      Canadian Dollars to Canadian Borrower shall accrue on the principal amount
      of
      the Base Rate Revolving Portions outstanding at the end of each day at a
      fluctuating rate per annum equal to the Applicable Margin then in effect
plus the Base Rate.  Said rate of interest shall increase or
      decrease by an amount equal to any increase or decrease in the Base Rate,
      effective as of the opening of business on the day that any such change in
      the
      Base Rate occurs.  If Borrower Representative, on behalf of Canadian
      Borrower, exercises its option to obtain a Canadian BA Rate Loan as provided
      in
      Section 3.1, interest on Canadian Revolving Credit Loans to Canadian
      Borrower shall accrue on the principal amount of Canadian BA Rate Loans
      outstanding at the end of each day at a rate per annum equal to the Applicable
      Margin then in effect plus the Canadian BA Rate applicable to each
      Canadian BA Rate Loan for the corresponding Interest Period.

     

    (d)  Unless
      Borrower Representative is otherwise advised by Agent, interest and Letter
      of
      Credit and LC Guaranty fees shall be payable solely in the currency in which
      the
      underlying Revolving Credit Loan is made or Letter or Credit or LC Guaranty
      is
      issued.

     

    2.1.2  Default
      Rate of Interest.  At the option of Agent or the Majority Lenders,
      upon and after the occurrence of an Event of Default, and during the
      continuation thereof, the principal amount of all Loans shall bear interest
      (or,
      with respect to LC Obligations, incur fees) at a rate per annum equal to 2.0%
      plus the interest or other per annum rate otherwise applicable thereto (the
      “Default Rate”).  Provided that in accordance with Section 8(1)
      of the Interest Act (Canada), it is agreed amongst all of the parties to this
      Agreement that the Default Rate as stipulated in this Section 2.1.2. shall
      not apply to any security interest securing the Canadian Obligations of the
      Canadian Borrower where the security interest constitutes a charge, mortgage,
      encumbrance, hypothec or notice on or against any real Property situate in
      Canada.

     

    2.1.3  Maximum
      Interest.

     

    (a)  In
      no
      event whatsoever shall the aggregate of all amounts deemed interest hereunder
      or
      under the Notes and charged or collected pursuant to the terms of this Agreement
      or pursuant to the Notes exceed the highest rate permissible under any law
      which
      a court of competent jurisdiction shall, in a final determination, deem
      applicable hereto (the “Maximum Rate”).  If any provisions of this
      Agreement or the Notes are in contravention of any such law, such provisions
      shall be deemed amended to conform thereto.  If at any time, the
      amount of interest paid hereunder is limited by the Maximum Rate, and the amount
      at which interest accrues hereunder is subsequently below the Maximum Rate,
      the
      rate at which interest accrues hereunder shall remain at the Maximum Rate,
      until
      such time as the aggregate interest paid hereunder equals the amount of interest
      that would have been paid had the Maximum Rate not applied.

     

    (b)  Without
      limiting subsection 2.1.3(a), if any provision of this Agreement or any of
      the
      other Loan Documents would obligate Canadian Borrower to make any payment of
      interest under the Canadian Obligations or other amount in an amount or
      calculated at a rate which would be prohibited by law or would result in a
      receipt by the applicable recipient of interest under the Canadian Obligations
      at a criminal rate (as such terms are construed under the Criminal Code
      (Canada)) then, notwithstanding such provision, such amount or rates shall
      be
      deemed to have been adjusted with retroactive effect to the maximum amount
      or
      rate of interest, as the case may be, as would not be so prohibited by law
      or so
      result in a receipt by the applicable recipient of interest under the Canadian
      Obligations at a criminal rate, such adjustment to be effected, to the extent
      necessary, as follows:  (1) firstly, by reducing the amount or
      rates of interest required to be paid to the applicable recipient under this
      subsection 2.1.3(b); and (2) thereafter, by reducing any fees, commissions,
      premiums and other amounts required to be paid to the applicable recipient
      which
      would constitute interest under the Canadian Obligations for purposes of
      Section 347 of the Criminal Code (Canada).  

     

    
      
        
        

      

      
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      Notwithstanding
        the foregoing, and after giving effect to all adjustments contemplated thereby,
        if the applicable recipient shall have received an amount in excess of the
        maximum permitted by that section of the Criminal Code (Canada), then the
        applicable recipient shall be entitled, by notice in writing to Canadian
        Agent
        at the Appropriate Notice Office, to obtain reimbursement from the applicable
        recipient in an amount equal to such excess, and pending such reimbursement,
        such amount shall be deemed to be an amount payable by the applicable recipient
        to Canadian Borrower.  Any amount or rate of interest under the
        Canadian Obligations referred to in this subsection 2.1.3 shall be determined
        in
        accordance with generally accepted actuarial practices and principles as
        an
        effective annual rate of interest over the term that any Canadian Revolving
        Credit Loan to Canadian Borrower remains outstanding on the assumption that
        any
        charges, fees or expenses that fall within the meaning of “interest” (as
        defined in the Criminal Code (Canada)) shall, if they relate to a specific
        period of time, be prorated over that period of time and otherwise
        be prorated over the period from the Closing Date to the date all
        Obligations have been indefeasibly paid in full and all Canadian Lender’s
        Revolving Loan Commitments have been terminated and, in the event of a dispute,
        a certificate of a Fellow of the Canadian Institute of Actuaries appointed
        by
        Canadian Agent shall be conclusive for the purposes of such
        determination.

    

     

    (c)  For
      purposes of disclosure pursuant to the Interest Act (Canada), the annual rates
      of interest or fees to which the rates of interest or fees provided in this
      Agreement and the other Loan Documents for the Canadian Obligations (and stated
      herein or therein, as applicable, to be computed on the basis of a 360-day
      year
      or any other period of time less than a calendar year) are equivalent to the
      rates so determined multiplied by the actual number of days in the applicable
      calendar year and divided by 360 or such other period of time,
      respectively.

     

    2.2  Computation
      of Interest and Fees.  Interest, Letter of Credit and LC Guaranty
      fees and Unused Line Fees hereunder shall be calculated daily and shall be
      computed on the actual number of days elapsed over a year of 360 days (except
      for the U.K. Obligations denominated in Sterling, which shall be based on a
      365-day year).  Unless otherwise set forth herein, all fees and
      interest shall be paid in the same currency as the Revolving Credit Loan is
      made
      or Letter of Credit or LC Guaranty is issued for which such fee or interest
      is
      associated.

     

    2.3  Fee
      Letter.  U.S. Borrower shall pay to Agent certain fees and other
      amounts in accordance with the terms of the fee letter between Borrower and
      Agent (the “Fee Letter”).

     

    2.4  Letter
      of Credit and LC Guaranty Fees.  Each applicable Borrower shall
      pay to Agent, Canadian Agent or U.K. Agent, as applicable, for standby and
      documentary Letters of Credit and LC Guaranties of standby and documentary
      letters of credit issued without duplication, for the ratable benefit of the
      applicable Lenders, a per annum fee equal to the Applicable Margin then in
      effect of the aggregate available amount of such U.S. Letters of Credit and
      U.S.
      LC Guaranties, Canadian Letters of Credit and Canadian LC Guaranties and U.K.
      Letters of Credit and U.K. LC Guaranties, issued for the account of that
      Borrower and outstanding from time to time during the term of this Agreement,
      

     

    
      
        
        

      

      
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      plus
        a fronting fee (for the account of Bank, Agent, Canadian Agent or U.K. Agent,
        as
        applicable) equal to 0.125% per annum of the aggregate available amount of
        such
        U.S. Letters of Credit, U.S. LC Guaranties, U.K. Letters of Credit, U.K.
        LC
        Guaranties, Canadian Letters of Credit and Canadian LC Guaranties, plus
        all normal and customary charges of the Agent, Bank, Canadian Agent or U.K.
        Agent, as applicable, associated with the issuance and administration thereof,
        which fees and charges shall be deemed fully earned upon issuance of each
        such
        Letter of Credit or LC Guaranty or as advised by Agent, Bank or U.K. Agent,
        as
        applicable, and shall be due and payable on the first Business Day of each
        month
        in arrears or as advised by Agent or U.K. Agent, as applicable, and shall
        not be
        subject to rebate or proration upon the termination of this Agreement for
        any
        reason.

    

     

    2.5  Unused
      Line Fee.  U.S. Borrower shall pay to Agent, for the benefit of
      each Lender (except the U.K. Lender and the Canadian Lender) in accordance
      with
      its Revolving Loan Percentage, a fee (the “Unused Line Fee”) equal to the
      three eighths of one percent (0.375%) per annum multiplied by the average daily
      amount by which the aggregate Revolving Loan Commitments exceed the sum of
      (i) the Dollar Equivalent of the outstanding principal balance of the sum
      of the U.S. Revolving Credit Loans, U.K. Revolving Credit Loans and Canadian
      Revolving Credit Loans, plus (ii) the LC Amount; provided
      that for purposes of allocating the Unused Line Fee among Lenders, outstanding
      Swingline Loans shall not be included as part of the outstanding balance of
      the
      U.S. Revolving Credit Loans for the purposes of calculating such fees owed
      to
      U.S. Lenders other than Agent.  The Unused Line Fee shall be paid in
      Dollars.  The Unused Line Fee shall be payable monthly in arrears on
      the first day of each month hereafter.

     

    2.6  Fronting
      Fees and Participation Fees.  When and as interest is collected on
      Canadian Revolving Credit Loans and U.K. Revolving Credit Loans and until the
      Canadian Revolving Credit Loans and U.K. Revolving Credit Loans are refunded
      in
      accordance with Sections 3.13 and 3.14, Canadian Agent and U.K. Agent,
      respectively, shall pay to Canadian Lender and U.K. Lender, respectively, a
      fee
      (with respect to Canadian Lender, the “Canadian Fronting Fee,” with
      respect to the U.K. Lender, the “U.K. Fronting Fee” and collectively, the
“Fronting Fee”) equal to 1/8th of one percent (0.125%) per annum of the
      outstanding principal balances of the Canadian Revolving Credit Loans and U.K.
      Revolving Credit Loans, respectively, at such time, and Canadian Agent and
      U.K.
      Agent shall pay to each Canadian Participant and U.K. Participant, respectively,
      a participation fee (a “Participation Fee”) equal to the product of such
      Canadian Participant’s or U.K. Participant’s, as applicable, corresponding
      Lender’s Revolving Loan Percentage and that portion of interest collected equal
      to the sum of Applicable Margins then in effect with respect to each of the
      Canadian Revolving Credit Loans and the U.K. Revolving Credit Loans,
      respectively, for the relevant interest payment period plus any Default
      Rate then in effect, less the product of such Canadian Participant’s or U.K.
      Participant’s Revolving Loan Percentage and the Fronting Fee.  If any
      Borrower pays less than all of the interest then due and owing by it for any
      period, that portion of the interest equating to the Participation Fee shall
      be
      deemed to be the last portion of interest paid or to be paid.

     

    
      
        
        

      

      
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    2.7  Examination
      Fees.  Borrowers shall pay to Agent, Canadian Agent and/or U.K.
      Agent, as applicable, examination fees in accordance with Agent’s current
      schedule of fees in effect from time to time generally applicable to
      examinations and verifications of books and records of borrowers of such party,
      in connection with examinations and verifications of the books and records
      and
      Properties of Borrowers and their Subsidiaries and such other matters as Agents
      shall deem appropriate in their reasonable credit judgment, plus all reasonable
      out-of-pocket expenses incurred by any Agent in connection with such
      examinations and verifications, whether such examinations and verifications
      are
      conducted by employees of an Agent or by third parties hired by such Agent;
      provided that Canadian Borrower shall not be responsible for such fees
      and expenses incurred with respect to U.S. Borrower or U.K. Borrower and U.K.
      Borrower shall not be responsible for such fees and expenses incurred with
      respect to Canadian Borrower; and provided, further, that
      Borrowers shall not be required to pay or reimburse Agents for examination
      and
      verification fees and related expenses for more than two such examinations
      and
      verifications per annum unless an Event of Default exists and is
      continuing.  Such examination and verification fees and out-of-pocket
      expenses shall be payable on the first day of the month following the date
      of
      issuance by Agent of a request for payment thereof to
      Borrowers.  Agents may, in their discretion, provide for the payment
      of such amounts by making appropriate Revolving Credit Loans to the applicable
      Borrower and charging such Borrower’s Loan Account therefor.

     

    2.8  Reimbursement
      of Expenses.  If, at any time or times regardless of whether or
      not an Event of Default then exists:  (i) Agents incur legal or
      accounting expenses or any other out-of-pocket expenses or costs in connection
      with (1) the negotiation and preparation of this Agreement or any of the
      other Loan Documents, any amendment of or modification of this Agreement or
      any
      of the other Loan Documents, or (2) the administration of this Agreement or
      any of the other Loan Documents and the transactions contemplated hereby and
      thereby; or (ii) Agents or any Lender incurs reasonable legal or accounting
      expenses or any other out-of-pocket expenses or costs in connection with
      (1) any litigation, contest, dispute, suit, proceeding or action (whether
      instituted by Agents, any Lender, any Borrower or any other Person) relating
      to
      the Collateral, this Agreement or any of the other Loan Documents or any
      Borrower’s affairs, (2) any attempt to enforce any rights of Agents or any
      Lender against Borrowers or any other Person which may be obligated to Agents
      or
      any Lender by virtue of this Agreement or any of the other Loan Documents,
      including, without limitation, the Account Debtors, or (3) any attempt by
      Agent to inspect, verify, protect, preserve, restore, collect, sell, liquidate
      or otherwise dispose of or realize upon the Collateral; then all such legal
      and
      accounting expenses and other out-of-pocket expenses and costs of Agents or
      any
      Lender, as applicable, shall be charged to the applicable Borrower;
provided, that such Borrower shall not be responsible for such
      out-of-pocket expenses and costs to the extent incurred because of the gross
      negligence or willful misconduct of Agents or any Lender; and provided,
further, that Canadian Borrower shall not be responsible for such
      out-of-pocket costs and expenses, incurred with respect to U.S. Borrower or
      U.K.
      Borrower and the U.K. Borrower shall not be responsible for such out-of-pocket
      costs and expenses incurred with respect to Canadian Borrower.  All
      amounts chargeable to Borrowers under this Section 2.8 shall be Obligations
      secured by all of the Collateral (provided that amounts chargeable to U.S.
      Borrower or U.K. Borrower shall not be secured by Canadian Collateral and that
      amounts chargeable to Canadian Borrower shall not be secured by the U.K.
      Collateral), shall be payable on demand to Agents or such Lender, as the case
      may be, and shall bear interest from the date such demand is made until paid
      in
      full at the rate applicable to Base Rate Revolving Portions (or, in the case
      of
      Canadian Agent or Canadian Lender, Canadian Prime Rate Loans) from time to
      time.  The applicable Borrower shall also reimburse Agents for
      expenses incurred by Agents in their administration of the Collateral to the
      extent and in the manner provided in Sections 2.9 and 2.10
      hereof.

     

    
      
        
        

      

      
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    2.9  Bank
      Charges.  Each Borrower shall pay to Agents, on demand, any and
      all fees, costs or expenses which Agents or any Lender pays to a bank or other
      similar institution arising out of or in connection with (i) the forwarding
      to such Borrower or any other Person on behalf of such Borrower, by Agents
      or
      any Lender, of proceeds of Loans made to such Borrower pursuant to this
      Agreement, (ii) the depositing for collection by Agents or any Lender of
      any check or item of payment received or delivered to Agents or any Lender
      on
      account of the Obligations of such Borrower and (iii) the costs and
      expenses incurred in opening and maintaining blocked accounts; provided,
      that Canadian Borrower shall not be responsible for such fees and expenses
      incurred with respect to U.S. Borrower or U.K. Borrower and U.K. Borrower shall
      not be responsible for such fees and expenses incurred with respect to Canadian
      Borrower.

     

    2.10  Collateral
      Protection Expenses.  All out-of-pocket expenses incurred in
      protecting, storing, warehousing, insuring, handling, maintaining and shipping
      the Collateral, and any and all excise, property, sales, and use taxes imposed
      by any United States, Canadian or United Kingdom state, provincial, federal,
      or
      local authority on any of the Collateral or in respect of the sale thereof
      shall
      be borne and paid by Borrowers; provided, that Canadian Borrower shall
      not be liable for any such expenses incurred with respect to U.S. Borrower
      or
      U.K. Borrower and U.K. Borrower shall not be liable for any such expenses
      incurred with respect to Canadian Borrower.  If Borrowers fail to
      promptly pay any portion thereof when due, Agents may, at their option, but
      shall not be required to, pay the same and charge the applicable Borrower
      therefor.  Additionally, from time to time Agent, Canadian Agent
      and/or U.K. Agent may, at U.S. Borrower’s, U.K. Borrower’s or Canadian
      Borrower’s expense, as applicable, obtain appraisals from appraisers (who may be
      personnel of an Agent), stating the then current fair market value of all or
      any
      portion of the real or personal Property of any Borrower, any of its
      Subsidiaries or any other Loan Party, including, without limitation, any
      Inventory of any Borrower, any of its Subsidiaries or any other Loan Party;
      provided that unless an Event of Default exists and is continuing,
      Borrowers shall not be required to reimburse Agents for the costs of more than
      one appraisal of Equipment, real Property and/or Inventory per
      annum.

     

    2.11  Payment
      of Charges.  All amounts chargeable to Borrowers under this
      Agreement shall be Obligations secured by all of the Collateral (provided that
      amounts chargeable to U.S. Borrower shall not be payable by Canadian Borrower
      and shall not be secured by Canadian Collateral and that amounts chargeable
      to
      U.K. Borrower shall not be secured by Canadian Collateral).  All such
      Obligations shall be, unless specifically otherwise provided, payable on demand
      and shall bear interest from the date demand was made or such amount is due,
      as
      applicable, until paid in full at the rate applicable to Base Rate Revolving
      Portions (or, in the case of Canadian Obligations, Canadian Prime Rate Loans)
      from time to time.

     

    2.12  No
      Deductions.  Except as otherwise provided in Sections 2.12(b), (c)
      or (d) and in subsection 10.9.4 and as otherwise provided by law, any and all
      payments or reimbursements made hereunder or under the other Loan Documents
      in
      respect of Canadian Obligations, U.K. Obligations or U.S. Obligations shall
      be
      made in Dollars, Euros, Canadian Dollars or Sterling, as applicable, free and
      clear of and without deduction for any and all taxes, levies, imposts,
      deductions, charges or withholdings, and all liabilities with respect thereto,
      imposed by 

     

    
      
        
        

      

      
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      (i)
        the
        United States of America or any political subdivision thereof or therein,
        in the
        case of U.S. Obligations, (ii) Canada or any political subdivision thereof
        or
        therein, in the case of the Canadian Obligations, or (iii) the United Kingdom
        or
        any political subdivision thereof or therein, in the case of the U.K.
        Obligations, excluding, however, the following:  (i) franchise or
        capital taxes, gross receipt taxes and taxes imposed on the net income of
        Agents, or any Lender, Participant or Canadian Participant or U.K. Participant
        by the jurisdiction under the laws of which Agents or any Lender, Participant
        or
        Canadian Participant or U.K. Participant is organized or doing business or
        any
        political subdivision thereof, (ii) franchise or capital taxes, gross receipt
        taxes and taxes imposed on its net income by the jurisdiction of Agents’ or such
        Lender’s or Participant’s or Canadian Participant’s or U.K. Participant’s
        applicable lending office or any political subdivision thereof and (iii)
        any and
        all taxes, levies, imposts, deductions, charges or withholdings, and all
        liabilities with respect thereto, imposed by a jurisdiction as a result of
        the
        Agent, any Lender, any Participant, any Canadian Participant, or any United
        Kingdom Participant being organized under the laws of such jurisdiction,
        being
        engaged in a trade or business in such jurisdiction, or having a permanent
        establishment in such jurisdiction (all such non-excluded taxes, levies,
        imposts, deductions, charges or withholdings and all liabilities with respect
        thereto, herein “Tax Liabilities”).  If any Borrower, any Guarantor,
        any Lender or any Agent shall be required by law or the administration thereof
        to deduct any such Tax Liabilities from or in respect of any sum payable
        hereunder to any Agent or any Lender or Participant or Canadian Participant
        or
        U.K. Participant, then the sum payable by the relevant Borrower hereunder
        or
        under the relevant other Loan Document shall be increased as may be necessary
        so
        that, after all required deductions on account of Tax Liabilities are made,
        the
        applicable Agent, any such Lender, Participant, Canadian Participant and
        U.K.
        Participant, as applicable, receives an amount equal to the sum it would
        have
        received had no such deductions been made.  Whenever any Tax
        Liabilities are deducted by any Borrower, as soon as practicable thereafter,
        the
        Borrower Representative shall send to Agent (or in the case of Canadian
        Borrower, Canadian Agent, or in the case of U.K. Borrower, U.K. Agent) for
        its
        own account or for the account of the applicable Lender or Canadian Participant
        or U.K. Participant a certified copy of any original official receipt received
        by any such Borrower showing payment thereof or other evidence of such payment
        reasonably satisfactory to the Agent (or Canadian Agent or U.K. Agent, as
        the
        case may be). If any Borrower fails to pay any Tax Liabilities when due to
        the
        appropriate taxing authority or fails to remit to Agent (or in the case of
        Canadian Borrower, Canadian Agent, or in the case of U.K. Borrower, U.K.
        Agent)
        the required receipts or other required documentary evidence, each Borrower
        shall indemnify Agents and the Lenders and Canadian Participants and U.K.
        Participants for any incremental taxes, interest or penalties that may become
        payable by Agents and the Lenders and Canadian Participants and U.K.
        Participants as a result of any such failure.  Without limiting the
        foregoing, (x) U.K. Borrower shall also indemnify and hold harmless
        (without duplication) U.K. Agent, U.K. Lender and U.K. Participants against
        any
        and all Tax Liabilities imposed by the United Kingdom as a result of
        arrangements relating to the refunding pursuant to Section 3.14 of this
        Agreement of U.K. Revolving Credit Loans and (y) Canadian Borrower shall
        also indemnify and hold harmless (without duplication) Canadian Agent, Canadian
        Lender and Canadian Participants against any and all Tax Liabilities imposed
        by
        Canada as a result of arrangements relating to the refunding pursuant to
        Section 3.13 of this Agreement of Canadian Revolving Credit
        Loans.  The covenants in this Section 2.12 shall survive the
        termination of this Agreement and payment of the Obligations.

    

     

    
      
        
        

      

      
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    (a)  If
      Agents
      or a Lender or Canadian Participant or U.K. Participant during the Term of
      this
      Agreement shall become aware that it is entitled to claim a refund, credit
      or
      reduction of tax from the jurisdiction to which the tax was paid or the
      jurisdiction in which such Agent or Lender, as the case may be, is subject
      to
      tax, which refund, credit or reduction in the bonafide discretion
      of Agents or such Lender or Canadian Participant or U.K. Participant, is
      allocable to the payment of any Tax Liabilities which Borrowers have paid,
      or
      indemnified Agents or such Lender or Canadian Participant or U.K. Participant
      pursuant to this Section 2.12, Agents or such Lender or Canadian
      Participant or U.K. Participant shall promptly notify Borrowers in writing
      of
      the availability of such refund, credit or reduction claim and shall, within
      30
      days of receipt of a written request by Borrowers, make a claim to such
      jurisdiction for such refund, credit or reduction at Borrowers’ sole
      expense.  If Agents or a Lender or Canadian Participant or U.K.
      Participant receives a refund, credit or reduction of any such Tax Liabilities,
      it shall within 30 days from the date of such receipt pay over such amount
      of
      such refund, credit or reduction to Borrowers plus any interest that is properly
      attributable to such refund, credit or reduction as will leave Agents or such
      Lender or Canadian Participant or U.K. Participant (after that payment) in
      the
      same after-tax position as it would have been in if the Tax Liabilities had
      not
      been paid by, or indemnification had not been made by, Borrowers.

     

    (b)  To
      the
      extent that any portion of the Participation Fee is payable to a Canadian
      Participant that is non-resident of Canada for purposes of the tax imposed
      pursuant to Part XIII of the ITA or any successor provision thereto (a
“Nonresident Canadian Participant”), Canadian Agent shall deduct and remit such
      tax to the Receiver General for Canada within the time payable by law, and
      shall
      increase (to the extent reimbursed by Canadian Borrower) such portion of the
      Participation Fee as may be necessary so that after all required deductions
      of
      such tax are made, the Nonresident Canadian Participant receives an amount
      equal
      to the sum it would have received had no such deductions been
      made.  The Canadian Borrower shall forthwith on demand remit to
      Canadian Agent the full amount of the aforesaid increase; provided,
however, that no Borrower will make such payment with respect to any
      taxes that are not Tax Liabilities and no such payment shall be required except
      as contemplated by Section 2.12(d).  Each of Canadian Agent and
      Canadian Lender represents and warrants to Canadian Borrower and to Canadian
      Agent that it is not a non-resident of Canada within the meaning of the
      ITA.  Provided that no Default or Event of Default has occurred and is
      continuing, Canadian Lender covenants and agrees with Canadian Borrower that
      (i)
      it is the only Person that will extend credit to Canadian Borrower hereunder
      and
      (ii) it will not assign, sell or grant participations in its extensions of
      credit under this Agreement to any Person who is a non-resident of Canada within
      the meaning of the ITA.  Notwithstanding any other provision of this
      Agreement, Canadian Borrower shall not be required to make any payment or
      indemnify any Person in respect of any Tax Liabilities of any Person incurred
      as
      a result of such Person being a non-resident of Canada unless an Event of
      Default has occurred and is continuing in which case Canadian Borrower shall
      only be required to make payments in respect of Tax Liabilities accruing after
      the date on which the Obligations are declared immediately due and payable
      pursuant to Section 9.2 of the Agreement.  In the event that any of
      Canadian Agent, Canadian Lender or any Canadian Participant is or becomes a
      non-resident of Canada within the meaning of the ITA, such party shall
      immediately notify Canadian Borrower and notwithstanding anything to the
      contrary herein, Canadian Borrower shall have the option to prepay that portion
      of the Canadian Obligations attributable to such party without the payment
      of
      any prepayment penalty, fee or other amounts.

     

    
      
        
        

      

      
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    (c)  Limitations
      on U.K. Tax gross up.

     

    (i)  Definitions.

     

    In
      this
      Section 2.12(c):

     

    “Qualifying
      U.K. Lender” means a U.K. Lender which is beneficially entitled to interest
      payable to that U.K. Lender in respect of an advance that it made under a Loan
      Document and which is:

     

    (1)  a
      bank
      (as defined for the purpose of section 349 of the United Kingdom Income and
      Corporation Taxes Act 1988) making an advance under a Loan Document and which
      U.K. Lender is within the charge to United Kingdom corporation tax as respects
      any payments of interest made in respect of that advance; or

     

    (2)  a
      Treaty
      Lender.

     

    “Treaty
      Lender” means a U.K. Lender (including any assignee from such a U.K. Lender)
      which:

     

    (1)  is
      treated for the purposes of an applicable double taxation agreement or
      convention as resident in a jurisdiction having a double taxation agreement
      or
      convention with the United Kingdom which makes provision for full exemption
      from
      tax imposed by the United Kingdom on interest; and

     

    (2)  does
      not
      carry on a business in the United Kingdom through a permanent establishment
      with
      which that U.K. Lender’s participation in a U.K. Loan Document is effectively
      connected.

     

    (ii)  Tax
      gross up exclusion.

     

    a.  U.K.
      Borrower is not required to pay any additional amount to a U.K. Lender or U.K.
      Participant under this clause 2.12 on account of any Tax Liability imposed
      by
      the United Kingdom if, on the date on which the payment is made:

     

    
      
        
        

      

      
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    i.  the
      payment could have been made to the relevant U.K. Lender or U.K. Participant
      without a deduction or withholding for or on account of any Tax Liability
      imposed by the United Kingdom if the U.K. Lender or U.K. Participant was a
      Qualifying U.K. Lender, but on that date that U.K. Lender or U.K. Participant
      is
      not or has ceased to be a Qualifying U.K. Lender other than as a result of
      any
      change after the date it became a U.K. Lender or U.K. Participant under this
      Agreement in (or in the interpretation, administration, or application of)
      any
      law or treaty, or any published practice or concession of any relevant taxing
      authority; or

     

    ii.  the
      relevant U.K. Lender or U.K. Participant is a Treaty Lender and U.K. Borrower
      can demonstrate the payment could have been made to the U.K. Lender or U.K.
      Participant without the deduction or withholding for or on account of any Tax
      Liability had that U.K. Lender or U.K. Participant complied with its obligations
      under paragraph b. below.

     

    b.  A
      Treaty
      Lender and U.K. Borrower shall cooperate in completing any procedural
      formalities on a timely basis necessary for U.K. Borrower to obtain
      authorization to make payments to that Treaty Lender without withholding or
      deduction for or on account of any Tax Liability imposed by the United
      Kingdom.

     

    (iii)  Tax
      Credit.

     

    If
      U.K.
      Borrower makes an additional payment under this Section 2.12 and the relevant
      U.K. Lender or U.K. Participant determines (in its absolute discretion but
      acting in good faith) that:

     

    (1)  a
      credit
      against, relief or remission for, or repayment of any tax is attributable either
      to an increased payment of which that additional payment forms part, or to
      that
      additional payment; and

     

    (2)  that
      U.K.
      Lender has obtained, utilized and retained that credit, relief, remission or
      repayment,

     

    the
      U.K.
      Lender or U.K. Participant shall pay an amount to U.K. Borrower which that
      U.K.
      Lender or U.K. Participant determines (in its absolute discretion but acting
      in
      good faith) will leave it (after that payment) in the same after-Tax position
      as
      it would have been in had the additional payment not been required under this
      Section 2.12.

     

    (iv)  U.K.
      Lender and U.K. Participant Cooperation.  Each U.K. Lender and
      U.K. Participant and U.K. Borrower shall cooperate (and U.K. Agent shall
      cooperate with the relevant parties) in completing any procedural formalities
      on
      a timely basis necessary for U.K. Borrower to obtain authorization to make
      payments to that U.K. Lender or U.K. Participant without withholding or
      deduction for or on account of any Tax Liability or at any applicable reduced
      rate of withholding or deduction under the terms of any applicable double
      taxation agreement or convention.

     

    
      
        
        

      

      
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    (v)  U.K.
      Lenders’ Warranty.  Provided that no Default or Event of Default
      has occurred and is continuing, each U.K. Lender covenants and agrees with
      U.K.
      Borrower that it will not assign, sell or grant participations in its extensions
      of credit under this Agreement to any Person who is not a Qualifying U.K.
      Lender.  U.K. Borrower shall not be required to pay any Tax
      Liabilities of any Person incurred as a result of such Person not being a
      Qualifying U.K. Lender on contravention of the previous
      sentence.  U.K. Lender further warrants that it is a Qualifying U.K.
      Lender at the date of this Agreement (or, if later, when it becomes a party
      to
      this Agreement) and that it will remain, until it notifies U.K. Lender to the
      contrary, a Qualifying U.K. Lender.  U.K. Lender undertakes to notify
      U.K. Borrower as soon as reasonably practical after it becomes aware that it
      is
      not or will cease to be a Qualify U.K. Lender.

     

    (d)  The
      foregoing notwithstanding, Borrowers shall only be required to pay additional
      amounts for Tax Liabilities resulting from any Canadian Participant being a
      non-resident of Canada within the meaning of the ITA or any U.K. Participant
      not
      being a Qualifying U.K. Lender or a Treaty Lender for interest accruing after
      the date on which the Obligations are declared immediately due and payable
      pursuant to Section 9.2 of the Agreement.

     

    2.13  Allocation
      of Fees and Expenses.  Unless expressly allocated to a specific
      Borrower, all fees and expenses paid pursuant to this Agreement shall be
      allocated to the Borrower which pays such fees and expenses.

     

    SECTION 3.                                LOAN
      ADMINISTRATION

     

    3.1  Manner
      of Borrowing Revolving Credit Loans/LIBOR Option.  Borrowings
      under the credit facility established pursuant to Section 1 hereof shall be
      as follows:

     

    3.1.1  Loan
      Requests.  A request for a Revolving Credit Loan shall be made, or
      shall be deemed to be made, in the following
      manner:  (a) Borrower Representative, on behalf of the applicable
      Borrower, or, in the case of any request to the Canadian Agent or the U.K.
      Agent, the Canadian Borrower or the U.K. Borrower, as applicable, may give
      Agent, or Canadian Agent or U.K. Agent, as applicable, with a copy to Agent
      at
      the Appropriate Notice Office notice in a form reasonably acceptable to Agent
      of
      such Borrower’s intention to borrow, in which notice Borrower Representative or
      Canadian Borrower or U.K. Borrower (if applicable and as the case may be) shall
      specify the amount of the proposed borrowing of a Revolving Credit Loan, the
      currency in which the borrowing is requested (which shall be Dollars in the
      case
      of a U.S. Revolving Credit Loan to U.S. Borrower, Canadian Dollars in the case
      of a Canadian Revolving Credit Loan to Canadian Borrower and Sterling or Euros
      in the case of a U.K. Revolving Credit Loan to U.K. Borrower) and the proposed
      borrowing date, which shall be a Business Day, no later than 11:00 a.m.
      (prevailing time in the location of the Appropriate Notice Office) on the
      proposed borrowing date (or in accordance with subsection 3.1.7, 3.1.8 or 3.1.9,
      as applicable, in the case of a request for a LIBOR Revolving Portion or
      Canadian BA Rate Loan), provided, however, that no request for a
      LIBOR Loan or Canadian BA Rate Loan may be made at a time when there exists
      a
      Default or an Event of Default; and (b) the becoming due of any amount
      required to be paid under this Agreement, or the Notes, whether as interest
      or
      for any other Obligation, shall be deemed irrevocably to be a request for a
      Revolving Credit Loan by the applicable Borrower on the due date in the amount
      required to pay such interest or other Obligation.  With respect to
      borrowings under the overdraft forming part of the U.K. Revolving Credit Loans,
      the prior notice requirements and minimum borrowing amounts may be waived by
      U.K. Agent.

     

    
      
        
        

      

      
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    3.1.2  Disbursement.  Each
      Borrower hereby irrevocably authorizes Agent, Canadian Agent or U.K. Agent,
      as
      applicable, to disburse the proceeds of each Loan requested, or deemed to be
      requested, pursuant to subsection 3.1.1 as follows:  (i) the
      proceeds of each Revolving Credit Loan requested under subsection 3.1.1(a)
      shall
      be disbursed by Agent in Dollars, as requested by Borrower Representative (in
      the case of U.S. Borrower), by Canadian Agent in Canadian Dollars, as requested
      by Borrower Representative or Canadian Borrower (in the case of Canadian
      Borrower) and by U.K. Agent in Sterling or Euros, as requested by Borrower
      Representative or U.K. Borrower (in the case of U.K. Borrower), as applicable,
      in immediately available funds, in the case of the initial borrowing, in
      accordance with the terms of the written disbursement letter from Borrower
      Representative, and in the case of each subsequent borrowing, by wire transfer
      to such bank account as may be agreed upon by Borrower Representative, Canadian
      Borrower or U.K. Borrower (as the case may be) and Agent, Canadian Agent or
      U.K.
      Agent, as applicable, from time to time or elsewhere if pursuant to a written
      direction from Borrower Representative, Canadian Borrower or U.K. Borrower,
      as
      the case may be; and (ii) the proceeds of each Revolving Credit Loan deemed
      requested under subsection 3.1.1(b) shall be disbursed by Agent, Canadian Agent
      or U.K. Agent, as applicable, by way of direct payment of the relevant interest
      or other Obligation.  If at any time any Loan is funded in excess of
      the amount requested or deemed requested by Borrower Representative, Canadian
      Borrower or U.K. Borrower (as the case may be), such Borrower agrees to repay
      the excess to Agent, Canadian Agent or U.K. Agent, as applicable, immediately
      upon the earlier to occur of (a) such Borrower’s discovery of the error and
      (b) notice thereof to Borrower Representative, Canadian Borrower or U.K.
      Borrower, as the case may be, from Agent, Canadian Agent or U.K. Agent, as
      applicable, or any Lender.

     

    3.1.3  Payment
      by Lenders.  Agent, Canadian Agent or U.K. Agent, as applicable,
      shall give to each applicable Lender prompt written notice by facsimile, telex
      or cable of the receipt from Borrower Representative, Canadian Borrower or
      U.K.
      Borrower of any request for a Revolving Credit Loan.  Each such notice
      shall specify the requested date and amount of such Revolving Credit Loan,
      whether such Revolving Credit Loan shall be subject to the LIBOR Option or
      shall
      be a Canadian BA Rate Loan, the currency of such Revolving Credit Loan, and
      the
      amount of each such Lender’s advance thereunder (in accordance with its
      applicable Revolving Loan Percentage).  Each such Lender shall, not
      later than 12:00 noon (prevailing time in the location of the Appropriate Notice
      Office) on such requested date, wire to a bank designated by Agent, Canadian
      Agent or U.K. Agent, as applicable, the amount of that Lender’s Revolving Loan
      Percentage of the requested Revolving Credit Loan.  The failure of any
      Lender to make the Revolving Credit Loans to be made by it shall not release
      any
      other Lender of its obligations hereunder to make its Revolving Credit
      Loan.  Neither Agent, Canadian Agent or U.K. Agent nor any Lender
      shall be responsible for the failure of any other Lender to make the Revolving
      Credit Loan to be made by such other Lender.  

     

    
      
        
        

      

      
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      The
        foregoing notwithstanding, Agent, and following a refunding of the Canadian
        Revolving Credit Loan and U.K. Revolving Credit Loan in accordance with
        Sections 3.13 and 3.14, Canadian Agent or U.K. Agent, as applicable, in its
        sole discretion, may from its own funds make a Revolving Credit Loan on behalf
        of the applicable Lenders.  In such event, the Lender on behalf of
        whom Agent, Canadian Agent or U.K. Agent made the Revolving Credit Loan shall
        reimburse Agent, Canadian Agent or U.K. Agent, as applicable, for the amount
        of
        such Revolving Credit Loan made on its behalf, weekly (or more frequently,
        as
        determined by Agents, in their sole discretion).  On each such
        settlement date, Agent, Canadian Agent or U.K. Agent, as applicable, will
        pay to
        each Lender the net amount owing to such Lender in connection with such
        settlement, including without limitation amounts relating to Loans, fees,
        interest and other amounts payable hereunder.  The entire amount of
        interest attributable to such Revolving Credit Loan for the period from the
        date
        on which such Revolving Credit Loan was made on such Lender’s behalf until so
        reimbursed by such Lender, shall be paid to Agent, Canadian Agent or U.K.
        Agent,
        as applicable, for its own account.

    

     

    3.1.4  Authorization.  U.S.
      Borrower hereby irrevocably authorizes Agent, in Agent’s sole discretion, to
      advance to U.S. Borrower, and to charge to U.S. Borrower’s Loan Account
      hereunder as a U.S. Revolving Credit Loan in Dollars (which shall be a Base
      Rate
      Revolving Portion), a sum sufficient to pay all interest accrued on the U.S.
      Obligations when due and to pay all fees, costs and expenses and other U.S.
      Obligations at any time owed by such Borrower to Agent or Lenders
      hereunder.  U.K. Borrower hereby irrevocably authorizes U.K. Agent, in
      U.K. Agent’s discretion, to advance to U.K. Borrower, and to charge to such U.K.
      Borrower’s Loan Account hereunder as a U.K. Revolving Credit Loan in Sterling or
      Euros, if chosen by U.K. Agent in its discretion, (which shall be a Base Rate
      Revolving Portion), a sum sufficient to pay all interest accrued on the U.K.
      Obligations when due and to pay all fees, costs and expenses and other U.K.
      Obligations at any time owed by U.K. Borrower to U.K. Agent or Lenders
      hereunder. Canadian Borrower hereby irrevocably authorizes Canadian Agent,
      in
      Canadian Agent’s sole discretion, to advance to Canadian Borrower, and to charge
      to Canadian Borrower’s Loan Account hereunder as a Canadian Revolving Credit
      Loan in Canadian Dollars (which shall be a Base Rate Loan), a sum sufficient
      to
      pay all interest accrued on the Canadian Obligations when due and to pay all
      fees, costs and expenses and other Canadian Obligations at any time owed by
      Canadian Borrower to Canadian Agent or Canadian Lender
      hereunder.  Agents shall notify Borrower Representative of all such
      advances and charges to a Borrower’s Loan Account on a monthly basis as provided
      in Section 3.7 of the Agreement.

     

    3.1.5  Letter
      of Credit and LC Guaranty Requests.  A request for a Letter of
      Credit or LC Guaranty shall be made in the following manner:  Borrower
      Representative or, in the case of notice to U.K. Agent, U.K. Borrower, may
      give
      Bank, Agent or U.K. Agent, as applicable, a written notice of its request for
      the issuance of a Letter of Credit or LC Guaranty, not later than
      11:00 a.m. (prevailing time in the location of the Appropriate Notice
      Office), three Business Days before the proposed issuance date thereof, in
      which
      notice Borrower Representative or U.K. Borrower shall specify whether the Letter
      of Credit or LC Guaranty is to be issued on behalf of a U.S. Loan Party, a
      Canadian Loan Party or a U.K. Loan Party, the issuance date and format and
      wording for the Letter of Credit or LC Guaranty being requested (which shall
      be
      satisfactory to Agent and Bank or U.K. Agent, as applicable, and the Person
      being asked to issue such Letter of Credit or LC Guaranty); and shall include
      the Letter of Credit application of the proposed issuer of the Letter of Credit,
      duly completed, provided that no such request may be made at a time when
      there exists a Default or Event of Default.  Such request shall be
      accompanied by an executed application and reimbursement agreement in form
      and
      substance satisfactory to Agents and the Person being asked to issue the Letter
      of Credit or LC Guaranty (which shall be Bank or an Affiliate thereof or such
      other Person as approved by Agent in its sole discretion), as well as any
      required resolutions.

     

    
      
        
        

      

      
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    3.1.6  Method
      of Making Requests. As an accommodation to Borrowers, unless a Default or an
      Event of Default is then in existence, (i) solely in the case of U.S.
      Revolving Credit Loans to U.S. Borrower, Agent shall permit telephonic or
      electronic requests for U.S. Revolving Credit Loans to Agent, (ii) solely
      in the case of U.S. Letters of Credit and U.S. LC Guaranties, Agent and Bank
      may, in their discretion, permit electronic transmittal of requests for U.S.
      Letters of Credit and U.S. LC Guaranties to them, and (iii) Agent may, in
      Agent’s discretion, permit electronic transmittal of instructions,
      authorizations, agreements or reports to Agent.  All other
      instructions, authorizations, agreements or reports must be in written hard
      copy
      form (including by facsimile).  Unless Borrower Representative
      specifically directs Agent or Bank in writing not to accept or act upon
      telephonic or electronic communications from Borrower Representative, neither
      Agent nor Bank shall have any liability to the applicable Borrower for any
      loss
      or damage suffered by such Borrower as a result of Agent’s or Bank’s honoring of
      any requests, execution of any instructions, authorizations or agreements or
      reliance on any reports communicated to it telephonically or electronically
      and
      purporting to have been sent to Agent or Bank by Borrower, and neither Agent
      nor
      Bank shall have any duty to verify the origin of any such communication or
      the
      authority of the Person sending it.  Each telephonic request for a
      Revolving Credit Loan, Letter of Credit or LC Guaranty accepted by Agent and
      Bank, if applicable, hereunder shall be promptly followed by a written
      confirmation of such request from Borrower Representative to Agent and Bank,
      if
      applicable.

     

    3.1.7  LIBOR
      Portions and Canadian BA Rate Loans.

     

    (a)  Provided
      that as of both the date of the LIBOR Request and the first day of the Interest
      Period, no Default or Event of Default exists, in the event any Borrower desires
      to obtain a LIBOR Portion, Borrower Representative or U.K. Borrower, as
      applicable, shall give Agent or U.K. Agent, as applicable, a LIBOR Request
      no
      later than 11:00 a.m. (prevailing time in the location of the Appropriate
      Notice Office) on the third Business Day prior to the requested borrowing
      date.  Each LIBOR Request shall be irrevocable and binding on the
      applicable Borrower.  In no event shall Borrowers, in the aggregate,
      be permitted to have outstanding at any one time LIBOR Portions with more than
      seven (7) different Interest Periods with respect to U.S. Revolving Credit
      Loans, U.K. Revolving Credit Loans and Canadian BA Rate Loans.  The
      LIBOR Rate shall be available only (i) in the case of U.K. Borrower, for
      borrowings in Sterling and Euros and (ii) in the case of U.S. Borrower, for
      borrowings in Dollars.

     

    (b)  Provided
      that as of both the date of the Canadian BA Request and the first day of the
      relevant Interest Period, no Default or Event of Default exists, in the event
      Canadian Borrower desires to obtain a Canadian BA Rate Loan, Borrower
      Representative or Canadian Borrower shall give Canadian Agent a Canadian BA
      Request no later than 11:00 a.m. (prevailing time in the location of the
      Appropriate Notice Office) on the third Business Day prior to the requested
      borrowing date.  Each Canadian BA Request shall be irrevocable and
      binding on Canadian Borrower.  The Canadian BA Rate shall be available
      only for borrowings in Canadian Dollars.

     

    
      
        
        

      

      
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    3.1.8  Conversion
      of Base Rate Portions and Canadian Prime Rate Loan Conversion.

     

    (a)  Provided
      that as of both the date of the LIBOR Request and the first day of the relevant
      Interest Period, no Default or Event of Default exists, Borrower Representative
      or U.K. Borrower may, on any Business Day and on behalf of the applicable
      Borrower, convert any Base Rate Portion (except with respect to Revolving Credit
      Loans to Canadian Borrower) into a LIBOR Portion.  If the applicable
      Borrower desires to convert a Base Rate Portion, Borrower Representative shall
      give Agent a LIBOR Request no later than 11:00 a.m. (prevailing time in the
      location of the Appropriate Notice Office) on the third Business Day prior
      to
      the requested conversion date.

     

    (b)  Provided
      that, as of both the date of the Canadian BA Request and the first day of the
      relevant Interest Period, no Default or Event of Default exists, Borrower
      Representative may, on any Business Day and on behalf of Canadian Borrower,
      convert any Canadian Prime Rate Loan (that constitutes a Base Rate Loan under
      clause (ii)(b) of the definition of Base Rate) into a Canadian BA Rate
      Loan.  If Canadian Borrower desires to convert a Canadian Prime Rate
      Loan, Borrower Representative shall give Canadian Agent a Canadian BA Request
      no
      later than 11:00 a.m. (prevailing time in the location of the Appropriate
      Notice Office) on the third Business Day prior to the requested conversion
      date.

     

    3.1.9  Continuation
      of LIBOR Portions and Canadian BA Rate Loans.

     

    (a)  Provided
      that as of both the date of the LIBOR Request and the first day of the relevant
      Interest Period, no Default or Event of Default exists, Borrower Representative
      or U.K. Borrower may, on any Business Day and on behalf of the applicable
      Borrower, continue any LIBOR Portions into a subsequent Interest Period of
      the
      same or a different permitted duration.  If any Borrower desires to
      continue a LIBOR Portion, Borrower Representative shall give Agent and U.K.
      Agent, as applicable, a LIBOR Request no later than 11:00 a.m. (prevailing
      time in the location of the Appropriate Notice Office) on the third Business
      Day
      prior to the requested continuation date.  If Borrower Representative
      shall fail to give timely notice of its election to continue any LIBOR Portion
      or portion thereof as provided above, or if such continuation shall not be
      permitted, such LIBOR Portion or portion thereof, unless such LIBOR Portion
      shall be repaid, shall automatically be converted into a Base Rate Portion
      at
      the end of the Interest Period then in effect with respect to such LIBOR
      Portion.

     

    
      
        
        

      

      
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    (b)  Provided
      that as of both the date of the Canadian BA Request and the first day of the
      relevant Interest Period, no Default or Event of Default exists, Borrower
      Representative may, on any Business Day and on behalf of Canadian Borrower,
      continue any Canadian BA Rate Loan into another Canadian BA Rate Loan with
      an
      Interest Period of the same or a different permitted duration.  If
      Canadian Borrower desires to continue a Canadian BA Rate Loan, Borrower
      Representative or Canadian Borrower shall give Canadian Agent a Canadian BA
      Request no later than 11:00 a.m. (prevailing time in the location of the
      Appropriate Notice Office) on the third Business Day prior to the requested
      continuation date.  If Borrower Representative shall fail to give
      timely notice of its election to continue any Canadian BA Rate Loan or portion
      thereof as provided above, or if such continuation shall not be permitted,
      such
      Canadian BA Rate Loan or portion thereof, unless such Canadian BA Rate Loan
      shall be repaid, shall automatically be converted into a Canadian Prime Rate
      Loan at the end of the Interest Period then in effect with respect to such
      Canadian BA Rate Loan.

     

    3.1.10  Inability
      to Make LIBOR Portions and Canadian BA Rate
      Loans.  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 subsection 3.1.10, the term “Lender” shall include the
      office or branch where such Lender or any corporation or bank then controlling
      such Lender makes or maintains any LIBOR Portions where no other office or
      branch is reasonably available) to make or maintain its LIBOR Portions or
      Canadian BA Rate Loans, or if with respect to any Interest Period, Agent, U.K.
      Agent or Canadian Agent is unable to determine the LIBOR or Canadian BA Rate
      relating thereto, or adverse or unusual conditions in, or changes in applicable
      law relating to, the London interbank market or the Canadian BA market, as
      applicable, make it, in the reasonable judgment of Agent, U.K. Agent or Canadian
      Agent, impracticable to fund therein any of the LIBOR Portions or Canadian
      BA
      Rate Loans, or make the projected LIBOR or Canadian BA Rate unreflective of
      the
      actual costs of funds therefor to any Lender, the obligation of Agent, U.K.
      Agent, Canadian Agent and Lenders (in the case of unlawfulness, only the
      affected Lender(s)) to make or continue LIBOR Portions or Canadian BA Rate
      Loans
      or convert Base Rate Portions or Canadian Prime Rate Loans to LIBOR Portions
      or
      Canadian BA Rate Loans, as applicable, hereunder shall forthwith be suspended
      during the pendency of such circumstances and the applicable Borrower shall,
      if
      any affected LIBOR Portions or Canadian BA Rate Loans are then outstanding,
      promptly upon request from Agent or U.K. Agent, convert such affected LIBOR
      Portions into Base Rate Portions, or promptly upon request from Canadian Agent,
      convert such affected Canadian BA Rate Loans into Canadian Prime Rate
      Loans.

     

    3.2  Payments.  Except
      where evidenced by notes or other instruments issued or made by Borrowers to
      any
      Lender and accepted by such Lender specifically containing payment instructions
      that are in conflict with this Section 3.2 (in which case the conflicting
      provisions of said notes or other instruments shall govern and control), the
      Obligations shall be payable as follows:

     

    3.2.1  Principal.

     

    (i)  Revolving
      Credit Loans.  Principal on account of Revolving Credit Loans
      shall be payable by the applicable Borrower to the applicable Agent for the
      ratable benefit of the applicable Lenders at the Appropriate Payment Office
      immediately upon the earliest of 

     

    
      
        
        

      

      
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      (i) the
        receipt by the applicable Agent, U.K. Borrower, U.S. Borrower or Canadian
        Borrower, of any proceeds of any of the Collateral (except as otherwise provided
        herein), including without limitation pursuant to subsections 3.3.1 and 5.2.4,
        to the extent of said proceeds, subject to such Borrower’s rights to reborrow
        such amounts in compliance with subsection 1.1.1 hereof; (ii) the
        occurrence of an Event of Default in consequence of which Agent or Majority
        Lenders elect to accelerate the maturity and payment of the Obligations in
        accordance with Sections 9.2 and/or 9.3 of this Agreement, or
        (iii) termination of this Agreement pursuant to Section 4 hereof;
provided, however, that, if an Overadvance or an Agent Loan shall
        exist at any time, the applicable Borrower shall, on demand, repay the
        Overadvance or Agent Loan.  Each payment (including principal
        prepayment) by Borrowers on account of principal of the Revolving Credit
        Loans
        shall be applied first to Base Rate Revolving Portions and thereafter, subject
        to subsection 3.3.4 of the Agreement, to LIBOR Revolving Portions and Canadian
        BA Rate Loans, as applicable.

    

     

    (ii)  Term
      Loan.  The aggregate principal amount of the Term Loan shall be
      payable in quarterly installments, together with accrued and unpaid interest
      thereon, commencing on March 1, 2008 and continuing on each June 1, September
      1,
      December 1 and March 1 thereafter to and including September 1, 2010 in
      installments of Three Hundred Seventy-Five Thousand Dollars ($375,000)
      each.  The entire remaining principal amount of the Term Loan shall be
      due and payable on November 30, 2010.

     

    3.2.2  Interest.

     

    (i)  Base
      Rate Portion.  Interest accrued on Base Rate Portions shall be due
      and payable by the applicable Borrower to the applicable Agent for the ratable
      benefit of the applicable Lenders on the earliest of (1) the first calendar
      day of each month (for the immediately preceding month), computed through the
      last calendar day of the preceding month, (2) the occurrence of an Event of
      Default in consequence of which Agent or Majority Lenders elect to accelerate
      the maturity and payment of the Obligations in accordance with Sections 9.2
      and/or 9.3 of this Agreement or (3) termination of this Agreement pursuant
      to Section 4 hereof.

     

    (ii)  LIBOR
      Portion and Canadian BA Rate.  Interest accrued on each LIBOR
      Portion and on Canadian BA Rate Loans shall be due and payable by the applicable
      Borrower to the applicable Agent for the ratable benefit of the applicable
      Lenders on each LIBOR Interest Payment Date and on the earlier of (1) the
      occurrence of an Event of Default in consequence of which Agent or Majority
      Lenders elect to accelerate the maturity and payment of the Obligations in
      accordance with Sections 9.2 and/or 9.3 of this Agreement or
      (2) termination of this Agreement pursuant to Section 4
      hereof.

     

    3.2.3  Costs,
      Fees and Charges.  Costs, fees and charges payable pursuant to
      this Agreement shall be payable by Borrowers to Agent, Canadian Agent or U.K.
      Agent, as applicable, at the Appropriate Payment Office, as and when provided
      in
      Section 2 or Section 3 hereof, as applicable, to Agent, Canadian
      Agent, U.K. Agent or a Lender, as applicable, or to any other Person designated
      by Agent, Canadian Agent, U.K. Agent or such Lender in writing.

     

    
      
        
        

      

      
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    3.2.4  Other
      Obligations.  The balance of the Obligations requiring the payment
      of money, if any, shall be payable by Borrowers to Agents for distribution
      to
      Lenders, as appropriate, as and when provided in this Agreement, the Other
      Agreements or the Security Documents, or on demand, whichever is later, in
      each
      case at the Appropriate Payment Office.

     

    3.2.5  Prepayment
      of/Failure to Borrow LIBOR Portions.  Borrowers may prepay a LIBOR
      Portion and Canadian BA Rate Loans at the Appropriate Payment Office only upon
      at least three (3) Business Days prior written notice to Agent, U.K. Agent
      or Canadian Agent, as applicable (which notice shall be
      irrevocable).  Each applicable Borrower shall pay to each applicable
      Lender, upon request of such Lender, at the Appropriate Payment Office such
      amount or amounts as shall be sufficient (as determined by Agent in a manner
      consistent with its customs and practices) to compensate such Lender for any
      loss, cost, or expense (other than any taxes that are not Tax Liabilities)
      incurred as a result of:  (i) any payment of a LIBOR Portion or
      Canadian BA Rate Loan on a date other than the last day of the Interest Period
      for such LIBOR Portion or Canadian BA Rate Loan; (ii) any failure by the
      applicable Borrower to borrow a LIBOR Portion or Canadian BA Rate Loan on the
      date specified by the Borrower Representative’s LIBOR Request or Canadian BA
      Request; or (iii) any failure by the applicable Borrower to pay a LIBOR
      Portion or Canadian BA Rate Loan on the date for payment specified in Borrower
      Representative’s written notice.  If by reason of an Event of Default,
      Agent or Majority Lenders elect to declare the Obligations to be immediately
      due
      and payable, then any amount payable pursuant to this Section 3.2.5 with respect
      to a LIBOR Portion or Canadian BA Rate Loan shall become due and payable in
      the
      same manner as though Borrowers had exercised such right of
      prepayment.

     

    3.3  Mandatory
      and Optional Prepayments.

     

    3.3.1  Proceeds
      of Sale, Loss, Destruction or Condemnation of
      Collateral.  (a) Except as provided in
      subsections 5.4.2, 7.2.9 and 3.3.1 (b) below, if any Borrower or any
      of its Subsidiaries sells any of the Collateral or if any of the Collateral
      is
      lost or destroyed or taken by condemnation, the applicable Borrower shall,
      unless otherwise agreed by Majority Lenders, pay to the applicable Agent for
      the
      ratable benefit of the applicable Lenders as and when received by the applicable
      Borrower or such Subsidiary and as a mandatory prepayment of the Loans, as
      herein provided, a sum equal to the proceeds (including insurance payments
      but
      net of costs and taxes incurred in connection with such sale or event and
      amounts required to remove Permitted Liens that are prior to the Liens of
      Agents) received by the applicable Borrower or such Subsidiary from such sale,
      loss, destruction or condemnation.  To the extent that the Collateral
      sold, lost, destroyed or condemned consists of Equipment, real Property, or
      other Property of a U.S. Loan Party other than Accounts or Inventory, then,
      except as otherwise provided in subsection 7.2.9(vii), the applicable prepayment
      shall be applied first to the installments of principal due under the Term
      Notes
      ratably, to be applied to future installment payments in inverse order of
      maturity until paid in full, and second to repay outstanding principal of U.S.,
      Canadian or U.K. Revolving Credit Loans, as applicable, on a ratable
      basis.  To the extent that the Collateral sold, lost, destroyed or
      condemned consists of Accounts or Inventory or any other asset of a Canadian
      Loan Party, the applicable prepayment shall be applied to reduce the outstanding
      principal balance of the Canadian Revolving Credit Loans but shall not
      permanently reduce the Canadian Revolving Loan
      Commitments.  

     

    
      
        
        

      

      
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      To
        the
        extent that the Collateral sold, lost, destroyed or condemned consists of
        Accounts or Inventory or any other asset of a U.K. Loan Party, the applicable
        prepayment shall be applied to reduce the outstanding principal balance of
        the
        U.K. Revolving Credit Loans (or if the principal balance of such U.K. Revolving
        Credit Loans has been reduced to the Dollar Equivalent of $0, U.S. Revolving
        Loans), but shall not permanently reduce the U.K. (or U.S., if applicable)
        Revolving Loan Commitments.  Notwithstanding the foregoing, if the
        proceeds of any such condemnation or insurance (in each case net of costs
        and
        taxes incurred) with respect to any condemnation, loss or destruction of
        Equipment, Inventory, real Property or other Collateral (i) are less than
        $750,000, unless an Event of Default is then in existence, Agent shall remit
        such proceeds to the applicable Borrower for use in, reinvestment or, as
        appropriate, replacing or repairing the damaged Collateral or (ii) are
        equal to or greater than $750,000 and the applicable Borrower has requested
        that
        Agent agree to permit such Borrower or the applicable Subsidiary to apply
        such
        proceeds toward reinvestment or, as appropriate, to repair or replace the
        damaged Collateral, such amounts shall be provisionally applied to reduce
        the
        outstanding principal balance of the U.S., Canadian or U.K. Revolving Credit
        Loans, as applicable.  Such amount shall, unless an Event of Default
        is in existence, be remitted to the applicable Borrower for use in such
        reinvestment or, as appropriate, in replacing or repairing the damaged
        Collateral; provided that such reinvestment, repairs or replacements (as
        appropriate) are commenced within 180 days of the date of receipt of such
        insurance proceeds and diligently completed thereafter.  If such
        reinvestment, repairs or replacements (as appropriate) are not commenced
        within
        any such 180-day period, then such amount shall be applied to the Loans in
        the
        manner specified in the second or third sentence, as applicable, of this
        subsection 3.3.1 until payment thereof in full.  For the
        avoidance of doubt, in no case will the proceeds from any sale, loss,
        destruction or condemnation of the Accounts, Inventory or any other asset
        of any
        Canadian Loan Party be applied to reduce the outstanding balance of the U.S.
        Obligations and in no case will the proceeds from any sale, loss, destruction
        or
        condemnation of the Accounts, Inventory or other asset of any Canadian Loan
        Party be applied to reduce the outstanding balance of the U.K. Obligations,
        and
        in no case will the proceeds from any sale, loss, destruction or condemnation
        of
        the Accounts, Inventory or other asset of any U.K. Loan Party be applied
        to
        reduce the outstanding balance of the Canadian Obligations.

    

     

    (b) The
      foregoing notwithstanding, so long as no Event of Default exists and is
      continuing, except as otherwise provided in subsections 5.4.2 and 7.2.9, if
      any
      U.S. Loan Party effects an Asset Sale of a complete (or substantially complete)
      business or product line, operating division, or Subsidiary or operating
      facility, then the applicable U.S. Loan Party shall, unless otherwise agreed
      to
      by Majority Lenders, pay to Agent for the ratable benefit of U.S. Lenders as
      and
      when received by the applicable Loan Party and as a mandatory prepayment of
      the
      Loans, as herein provided, a sum equal to the proceeds (net of costs and taxes
      incurred in connection with such sale and amounts required to remove Permitted
      Liens that are prior to the Lien of Agent) received by the applicable Loan
      Party
      from such Asset Sale.  Such mandatory prepayment shall be applied to
      the Loans as follows:  first to installments of principal due under
      the Term Notes ratably to be applied to future installments in inverse order
      of
      maturity in an aggregate amount equal to the lesser of (x) the outstanding
      principal balance of the Term Notes and (y) the sum of seventy percent (70%)
      of
      the Appraised Value of the real Property included within said Asset Sales
plus eighty percent (80%) of the Appraisal Value of the Equipment
      included within said Asset Sale, second to repay outstanding principal of U.S.
      Revolving Loans in an amount equal to the lesser of (x) the outstanding
      principal balance of the U.S. Revolving Credit Loans and (y) the sum of the
      then
      applicable advance rate for Eligible Accounts used in determining the U.S.
      Borrowing Base multiplied by the amount of Eligible Accounts included
      within said Asset Sale plus the then applicable advance rate for Eligible
      Inventory used in determining the U.S. Borrowing Base multiplied by the
      amount of Eligible Inventory included within said Asset Sale, third to the
      installments of principal due under the Term Notes ratably to be applied to
      future installment payments in inverse order of maturity, until paid in full
      and
      fourth to repay outstanding principal of U.S. Revolving Credit Loans, until
      paid
      in full.

     

    
      
        
        

      

      
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    3.3.2  Proceeds
      from Issuance of Additional Indebtedness or Equity.  If any
      Borrower or any other Loan Party, issues any additional Money Borrowed (other
      than Money Borrowed permitted by subsection 7.2.3 of the Agreement) or obtains
      any additional equity (except from Kohlberg & Company or any of the
      investment funds advised thereby, any employee, director or consultant, or
      pursuant to inter-company transactions permitted by this Agreement or in
      connection with equity issued pursuant to a Permitted Acquisition), in a manner
      permitted under this Agreement, such Borrower shall pay, or cause the applicable
      Loan Party to pay, to the applicable Agent for the ratable benefit of the
      applicable Lenders, when and as received by such Borrower or such Loan Party
      and
      as a mandatory prepayment of the Obligations, a sum equal to 100% of the net
      proceeds to such Borrower or such Loan Party of the issuance of such
      Indebtedness or equity.  Any such prepayment shall be applied to the
      Loans in the manner specified (x) in the second sentence of
      subsection 3.3.1 until payment thereof in full, if such proceeds are
      received by a U.S. Loan Party or (y) in the third sentence of subsection 3.3.1
      until payment thereof in full, if such proceeds are received by a Canadian
      or
      U.K. Loan Party.

     

    3.3.3  Intentionally
      Omitted.

     

    3.3.4  LIBOR
      Portions and Canadian BA Rate Loans.  If the application of any
      payment made in accordance with the provisions of this Section 3.3 at a
      time when no Event of Default has occurred and is continuing would result in
      termination of a LIBOR Portion or Canadian BA Rate Loans prior to the last
      day
      of the Interest Period for such LIBOR Portion or Canadian BA Rate Loans, the
      amount of such prepayment shall not be applied to such LIBOR Portion or Canadian
      BA Rate Loans, but will, at the applicable Borrower’s option, (x) be held by
      Agent or U.K. Agent, as applicable, in the case of LIBOR Portions, and Canadian
      Agent, in the case of Canadian BA Rate Loans, in a non-interest bearing account
      at Bank or another bank satisfactory to Agent or U.K. Agent, as applicable,
      in
      the case of LIBOR Portions, and Canadian Agent, in the case of Canadian BA
      Rate
      Loans, in its discretion, which account is in the name of Agent, U.K. Agent
      or
      Canadian Agent, as the case may be, and from which account only Agent, U.K.
      Agent or Canadian Agent, as the case may be, can make any withdrawal, or (y)
      shall be provisionally applied to outstanding Base Rate Portions or Canadian
      Prime Rate Loans, as applicable, in any case to be applied as such amount would
      otherwise have been applied under this Section 3.3 at the earlier to occur
      of (i) the last day of the relevant Interest Period or (ii) the
      occurrence of a Default or an Event of Default.

     

    3.3.5  Optional
      Prepayments.  U.S. Borrower may, at its option from time to time
      upon not less than 3 days prior written notice to Agent, prepay installments
      of
      the Term Notes, provided that the amount of any such prepayment is at
      least $500,000 and in integral multiples of $100,000 above $500,000, and that
      such prepayments are made ratably with respect to all Term
      Notes.  Each such prepayment shall be applied to the installments of
      principal due under the Term Notes in inverse order of
      maturity.  Except for charges under subsection 3.2.5 applicable
      to prepayments of LIBOR Term Portions, such prepayments shall be without premium
      or penalty.

     

    
      
        
        

      

      
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    3.3.6  Optional
      Reductions of Revolving Loan Commitments.  Borrowers may, at their
      option from time to time upon not less than 3 Business Days’ prior written
      notice to Agent, terminate in whole or permanently reduce ratably in part,
      the
      unused portion of the Revolving Loan Commitments or the U.K. Sublimit or the
      Canadian Sublimit; provided, however, that (i) each such
      partial reduction shall be in the amount of the Dollar Equivalent of $5,000,000
      or integral multiples of the Dollar Equivalent of $1,000,000 in excess thereof
      and (ii) the aggregate of all optional reductions to the Revolving Credit
      Commitments may not exceed the Dollar Equivalent of $10,000,000 during any
      12-month period during the Term or the Dollar Equivalent of
      $15,000,000 during the Term (it being understood that the
      entire credit facility may be paid in full and terminated at any time) as
      provided in Section 4 hereof.  Except for charges under
      subsection 3.2.5 applicable to prepayments of LIBOR Revolving Portions or
      Canadian BA Rate Loans, there shall be no prepayment penalty or termination
      charge payable in connection with any such reduction in Revolving Loan
      Commitments, U.K. Sublimit or Canadian Sublimit.

     

    3.4  Application
      of Payments and Collections.

     

    3.4.1  Collections.  All
      items of payment received at the Appropriate Payment Office by Agent, Canadian
      Agent or U.K. Agent by 12:00 noon (prevailing time at the location of the
      Appropriate Notice Office), on any Business Day shall be deemed received on
      that
      Business Day.  All items of payment received after 12:00 noon
      (prevailing time at the location of the Appropriate Notice Office), on any
      Business Day shall be deemed received on the following Business
      Day.  If, as the result of collections of Accounts as authorized by
      subsection 5.2.4 hereof or otherwise, a credit balance exists in the Loan
      Accounts, to the extent permitted by the Loan Documents such credit balance
      shall not accrue interest in favor of Borrowers, but shall be disbursed to
      the
      applicable Borrower or otherwise at Borrower Representative’s direction in the
      manner set forth in subsection 3.1.2, upon Borrower Representative’s request (at
      the Appropriate Notice Office) at any time, so long as no Default or Event
      of
      Default then exists.  Agents may, at their option, offset such credit
      balance against any of the Obligations upon and during the continuance of an
      Event of Default.

     

    3.4.2  Apportionment,
      Application and Reversal of Payments.  Principal and interest
      payments (i) by U.S. Borrower shall be apportioned ratably among all
      Lenders (according to the unpaid principal balance of the Loans to which such
      payments relate held by each Lender), (ii) by U.K. Borrower shall be
      distributed to U.K. Lender subject to Section 2.6 or, following a refunding
      in accordance with Section 3.14, apportioned among all U.K. Participants
      (according to the unpaid principal balance of the Loans to which such payments
      relate held by each U.K. Participant) and (iii) by Canadian Borrower shall
      be distributed to Canadian Lender subject to Section 2.6 or, following a
      refunding in accordance with Section 3.13, apportioned among all Canadian
      Participants (according to the unpaid principal balance of the Loans to which
      such payments relate held by each Canadian
      Participant).  

     

    
      
        
        

      

      
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      All
        payments of principal and interest on Revolving Credit Loans shall be remitted
        to Agent, Canadian Agent or U.K. Agent, as applicable, at the Appropriate
        Payment Office and all such payments not relating to principal or interest
        of
        specific Loans, or not constituting payment of specific fees, and, except
        as
        provided in subsection 3.3.1, all proceeds of Accounts or other Collateral
        received by Agent, U.K. Agent or Canadian Agent, as applicable, shall be
        applied, ratably, subject to the provisions of this Agreement, first, to
        pay any fees, indemnities, or expense reimbursements (other than amounts
        related
        to Product Obligations) then due hereunder or under any of the Loan Documents
        to
        Agents or Lenders from the applicable Borrower; second, to pay interest
        due from the applicable Borrower in respect of all Loans made to such Borrower,
        including Swingline Loans, and Agent Loans; third, to pay or prepay
        principal of Swingline Loans and Agent Loans made to such Borrower;
fourth, to pay or prepay principal of the Revolving Credit Loans (other
        than Swingline Loans and Agent Loans) and unpaid reimbursement obligations
        in
        respect of LC Obligations of the applicable Borrower; fifth, if an Event
        of Default exists and is continuing, to cash-collateralize the U.S. LC
        Obligations, Canadian LC Obligations and U.K. LC Obligations of such Borrower
        by
        depositing in a cash collateral account established with the Agent on terms
        and
        conditions satisfactory to the Agent an amount in cash equal to 103% of the
        aggregate amount of such Obligations; sixth, to pay or prepay principal
        of the Term Loan made to such Borrower; seventh, to the payment of any
        other Obligation (other than amounts related to Product Obligations) due
        to
        Agents by such Borrower; eighth, to pay any fees, indemnities or expense
        reimbursements related to, or any other amounts owing any Lender or any Agent
        by
        the applicable Borrower with respect to, Product Obligations of such Borrower;
        and ninth, in the case of (x) payments by U.K. Borrower, to the
        payment of any other Obligations due to any Agent or any Lender by U.S. Borrower
        and (y) payments by U.S. Borrower, to the payment of any other Obligations
        due to Agents or any Lender by U.S. Borrower, U.K. Borrower or Canadian
        Borrower, ratably.  Except as expressly set forth to the contrary,
        payments received (i) from U.S. Borrower shall be applied only to the U.S.
        Obligations, (ii) from the U.K. Borrower shall be applied only to the U.K.
        Obligations, and (iii) from Canadian Borrower shall be applied only to the
        Canadian Obligations; provided that after the U.S. Obligations, U.K.
        Obligations or Canadian Obligations are paid in full by U.S. Borrower, U.K.
        Borrower or Canadian Borrower, respectively, any such excess payments shall
        be
        applied pro rata to the other Obligations (except that (i) any payments received
        from Canadian Borrower shall not be applied to the U.S. Obligations, (ii)
        any
        payments received from U.K. Borrower shall not be applied to the Canadian
        Obligations and (iii) any payments received from Canadian Borrower shall
        not be
        applied to the U.K. Obligations).  After the occurrence and during the
        continuance of an Event of Default, as between Agents and Borrowers, Agents
        shall have the continuing exclusive right to apply and reapply any and all
        such
        payments and collections received at any time or times hereafter by Agents
        against the Obligations, in such manner as Agents may deem advisable,
        notwithstanding any entry by Agents or any Lender upon any of its books and
        records.  Notwithstanding the preceding sentence, as between Agents
        and other Lenders, all such payments shall be applied in the order set forth
        above.

    

     

    3.5  All
      Loans to Constitute One Obligation.  Except as set forth in
      Section 1.3 to the contrary, for the purpose of being ratably secured by
      Agents’ Liens upon all of the Collateral, the Loans and LC Obligations shall
      constitute one general Obligation of Borrowers; provided, however,
      that (i) the Canadian Collateral shall not secure the U.S. Obligations, (ii)
      the
      U.K. Collateral shall not secure the Canadian Obligations and (iii) the Canadian
      Collateral shall not secure the U.K. Obligations.

     

    
      
        
        

      

      
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    3.6  Loan
      Accounts; Registration.

     

    (a)  Agent
      shall enter all Loans and the LC Amount as debits to a loan account established
      for each Borrower (each, a “Loan Account” and, collectively, the “Loan
      Accounts”) and shall also record in the Loan Accounts all payments made by
      Borrowers on any Obligations and all proceeds of Collateral which are finally
      paid to Agents and may record therein, in accordance with customary accounting
      practice, other debits and credits, including interest and all charges and
      expenses properly chargeable to Borrowers.

     

    (b)  Agent
      shall, on behalf of each Borrower, maintain at its address a copy of each
      Assignment and Acceptance Agreement delivered to it and a register (the
“Register”) for the recordation of the names and addresses of the Lenders and
      the Revolving Loan Commitment of, and the principal amount of the Loans owing
      to, each Lender from time to time.  The entries in the Register shall
      be conclusive, in the absence of manifest error, and Borrowers, the Agent and
      the Lenders shall treat each Person whose name is recorded in the Register
      as
      the owner of a Loan and any Notes evidencing the Loan recorded therein for
      all
      purposes of this Agreement.  Any assignment or transfer of all or part
      of a Loan evidenced by a Note shall be registered on the Register and be
      effective only upon surrender for registration of assignment or transfer of
      the
      Note evidencing such Loan, accompanied by a duly executed Assignment and
      Acceptance Agreement and thereupon one or more new Notes shall be issued to
      the
      designated assignee.  The Register shall be available for inspection
      by Borrowers or any Lender at any reasonable time and from time to time upon
      reasonable prior notice.

     

    3.7  Statements
      of Account.  Agent will account to Borrower Representative, on
      behalf of Borrowers, monthly with a statement of Loans, charges and payments
      made pursuant to this Agreement during the immediately preceding month, and
      such
      account rendered by Agent shall be deemed final, binding and conclusive upon
      Borrowers absent demonstrable error unless Agent is notified by Borrower
      Representative at the Appropriate Notice Office in writing to the contrary
      within 30 days of the date each accounting is received by Borrower
      Representative.  Such notice shall be deemed an objection only to
      those items specifically objected to therein.

     

    3.8  Increased
      Costs.  If any law or any governmental or quasi-governmental rule,
      regulation, policy, guideline or directive (whether or not having the force
      of
      law) adopted or implemented after the date of this Agreement and having general
      applicability to all banks or finance companies within the jurisdiction in
      which
      any Lender operates (excluding, for the avoidance of doubt, the effect of and
      phasing in of capital requirements or other regulations or guidelines passed
      prior to the date of this Agreement), or any interpretation or application
      thereof by any governmental authority charged with the interpretation or
      application thereof, or the compliance of such Lender therewith,
      shall:

     

    
      
        
        

      

      
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    (i)  (1) subject
      such Lender to any tax with respect to this Agreement (other than (a) any
      tax based on or measured by net income or otherwise in the nature of a net
      income tax, including, without limitation, any franchise tax or any similar
      tax
      based on capital, net worth or comparable basis for measurement and
      (b) subject to the provisions of Section 2.12, any tax collected by a
      withholding on payments and which neither is computed by reference to the net
      income of the payee nor is in the nature of an advance collection of a tax
      based
      on or measured by the net income of the payee) or (2) change the basis of
      taxation of payments to such Lender of principal, fees, interest or any other
      amount payable hereunder or under any Loan Documents (other than in respect
      of
      (a) any tax based on or measured by net income or otherwise in the nature
      of a net income tax, including, without limitation, any franchise tax or any
      similar tax based on capital, net worth or comparable basis for measurement
      and
      (b) subject to the provisions of Section 2.12, any tax collected by a
      withholding on payments and which neither is computed by reference to the net
      income of the payee nor is in the nature of an advance collection of a tax
      based
      on or measured by the net income of the payee);

     

    (ii)  impose,
      modify or hold applicable any reserve (except any reserve taken into account
      in
      the determination of the applicable LIBOR), 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 such
      Lender, including (without limitation) pursuant to Regulation D of the Board
      of
      Governors of the Federal Reserve System; or

     

    (iii)  impose
      on
      such Lender or the London interbank market or the Canadian BA market any other
      condition with respect to any Loan Document;

     

    and
      the
      result of any of the foregoing is to increase the cost to such Lender of making,
      renewing or maintaining Loans hereunder or the result of any of the foregoing
      is
      to reduce the rate of return on such Lender’s capital as a consequence of its
      obligations hereunder, or the result of any of the foregoing is to reduce the
      amount of any payment (whether of principal, interest or otherwise) in respect
      of any of the Loans, then, in any such case, the applicable Borrower shall
      pay
      such Lender, upon demand and certification not later than sixty (60) days
      following its receipt of notice of the imposition of such increased costs,
      such
      additional amount as will compensate such Lender for such additional cost or
      such reduction (other than any additional cost or reduction that results from
      taxes that are not Tax Liabilities), as the case may be, to the extent such
      Lender has not otherwise been compensated, with respect to a particular Loan,
      for such increased cost as a result of an increase in the Base Rate, Canadian
      Prime Rate, the LIBOR or Canadian BA Rate.  An officer of the
      applicable Lender shall determine the amount of such additional cost or reduced
      amount using reasonable averaging and attribution methods and shall certify
      the
      amount of such additional cost or reduced amount to Borrower Representative,
      which certification shall include a written explanation of such additional
      cost
      or reduction to such Borrower.  Such certification shall be conclusive
      absent manifest error.  If a Lender claims any additional cost or
      reduced amount pursuant to this Section 3.8, then such Lender shall use
      reasonable efforts (consistent with legal and regulatory restrictions) to
      designate a different lending office or to file any certificate or document
      reasonably requested by Borrower Representative at the Appropriate Notice
      Office, if the making of such designation or filing would avoid the need for,
      or
      reduce the amount of, any such additional cost or reduced amount and would
      not,
      in the sole discretion of such Lender, be otherwise disadvantageous to such
      Lender.  The foregoing notwithstanding, Borrowers shall not be liable
      for any additional cost or reduced amount otherwise due pursuant to this
      Section 3.8, if the applicable Lender does not notify Borrowers of any such
      additional cost or reduced amount within 90 days after the date the applicable
      Lender becomes aware of any such additional cost or reduced amount.

     

    
      
        
        

      

      
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    3.9  Basis
      for Determining Interest Rate Inadequate.  In the event that
      Agent, Canadian Agent or U.K. Agent or any Lender shall have determined
      that:

     

    (i)  reasonable
      means do not exist for ascertaining the LIBOR for any Interest Period or the
      Canadian BA Rate for any term; or

     

    (ii)  Sterling,
      Euro or Dollar deposits in the relevant amount and for the relevant maturity
      are
      not available in the London interbank market with respect to a proposed LIBOR
      Portion, or that a market does not exist for Canadian BA Rate Loans, or a
      proposed conversion of a Base Rate Portion into a LIBOR Portion or a Canadian
      Prime Rate Loan into a Canadian BA Rate Loan; then

     

    Agent,
      Canadian Agent, U.K. Agent or such Lender, as applicable, shall give Borrower
      Representative prompt written, telephonic or electronic notice of the
      determination of such effect.  If such notice is given, (i) any
      such requested LIBOR Portion (in the affected currency, if not all applicable
      currencies are affected) shall be made as a Base Rate Portion, unless Borrower
      Representative shall notify Agent at the Appropriate Notice Office no later
      than
      10:00 a.m. (prevailing time in the location of the Appropriate Notice
      Office) two (2) Business Days prior to the date of such proposed borrowing
      that the request for such borrowing shall be canceled or made as an unaffected
      type of LIBOR Portion, (ii) any Base Rate Portion which was to have been
      converted to an affected type of LIBOR Portion shall be continued as or
      converted into a Base Rate Portion, or, if Borrower Representative shall notify
      Agent at the Appropriate Notice Office, no later than 10:00 a.m.
      (prevailing time in the location of the Appropriate Notice Office) two
      (2) Business Days prior to the proposed conversion, shall be maintained as
      an unaffected type of LIBOR Portion, (iii) any such requested Canadian BA
      Rate Loan shall be made as a Canadian Prime Rate Loan, unless Borrower
      Representative shall notify Canadian Agent at the Appropriate Notice Office
      no
      later than 10:00 a.m. (prevailing time in the location of the Appropriate
      Notice Office), two (2) Business Days prior to the date of such proposed
      borrowing that the request for such borrowing shall be canceled and
      (iv) any Canadian Prime Rate Loan which was to have been converted to an
      affected type of Canadian BA Rate Loan shall be continued as or converted into
      a
      Canadian Prime Rate Loans, or, if Borrower Representative shall notify Canadian
      Agent at the Appropriate Notice Office, no later than 10:00 a.m.
      (prevailing time in the location of the Appropriate Notice Office) two
      (2) Business Days prior to the proposed conversion, shall be maintained as
      an unaffected type of Canadian BA Rate Loan.

     

    3.10  Sharing
      of Payments, Etc.  If (i) any Lender shall obtain any payment
      (whether voluntary, involuntary, through the exercise of any right of set-off,
      or otherwise) on account of its U.S. Obligations made by it in excess of its
      ratable share of payments on account of all U.S. Obligations of all Lenders,
      such Lender shall forthwith purchase from each other Lender of such Loan such
      participation in such Loan as shall be necessary to cause such purchasing Lender
      to share the excess payment ratably with each other Lender; provided,
      that, if all or any portion of such excess payment is thereafter recovered
      from
      such applicable purchasing Lender, such purchase from each Lender shall be
      rescinded and such Lender shall repay to the purchasing Lenders the purchase
      price to the extent of such recovery, together with an amount equal to such
      Lender’s ratable share (according to the proportion of (i) the amount of
      such Lender’s required repayment to (ii) the total amount so recovered from
      the purchasing Lender) of any interest or other amount paid or payable by the
      purchasing Lender in respect of the total amount so
      recovered.  

     

    
      
        
        

      

      
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      Subject
        to Section 2.12, Borrowers agree that any Lender so purchasing a participation
        from another Lender pursuant to this Section 3.10 may, to the fullest
        extent permitted by law, exercise all its rights of payment (including the
        right
        of set-off) with respect to such participation as fully as if such Lender
        were
        the direct creditor of the applicable Borrower in the amount of such
        participation.  Notwithstanding anything to the contrary contained
        herein, all purchases and repayments to be made under this Section 3.10
        shall be made through Agent.

    

     

    3.11  Location
      of Payments and Notices.  Notwithstanding anything else herein to
      the contrary, all payments made by Borrowers or Borrower Representative on
      behalf of Borrowers under this Agreement, whether principal or interest
      payments, fees, expenses or other charges hereunder, shall be made at the
      Appropriate Payment Office and all notices made by Borrowers or Borrower
      Representative on behalf of Borrowers under this Agreement shall be made at
      the
      Appropriate Notice Office.

     

    3.12  Appointment
      of Borrower Representative.  Each Borrower hereby designates Katy
      Industries, Inc. as its representative (“Borrower Representative”) and agent on
      its behalf for the purposes of issuing all notices (including, without
      limitation, notices of borrowing), giving instructions with respect to the
      disbursement of the proceeds of the Loans, selecting interest rate options,
      requesting Letters of Credit or LC Guaranties, giving and receiving all other
      notices and consents hereunder or under any of the other Loan Documents and
      taking all other actions (including in respect of compliance with covenants)
      on
      behalf of any Borrower or Borrowers under the Loan Documents.  Katy
      Industries, Inc. hereby accepts such appointment.  Agents may regard
      any notice or other communications pursuant to any Loan Document from Katy
      Industries, Inc. as a notice or communication from all Borrowers, and may give
      any notice or communication required or permitted to be given to any Borrower
      or
      Borrowers hereby to Katy Industries, Inc. on behalf of such Borrower or
      Borrowers.  Each Borrower agrees that each notice, election,
      representation and warranty, covenant, agreement and undertaking made on its
      behalf by Katy Industries, Inc. shall be deemed for all purposes to have been
      made by such Borrower and shall be binding upon and enforceable against such
      Borrower or Borrowers, as applicable, to the same extent as if the same had
      been
      made directly by such Borrower or Borrowers, as applicable.  Borrowers
      shall have the right to designate a replacement Borrower Representative from
      time to time upon written notice to the Agents.  Borrower
      Representative hereby authorizes and appoints (x) CEH (who hereby accepts such
      appointment) as its agent solely for purposes of giving notices of borrowings
      or
      letter of credit requests to the U.K. Agent with respect to U.K. Revolving
      Credit Loans and (y) Glit (who hereby accepts such appointment) as its agent
      solely for the purposes of giving notices of borrowings or letter of credit
      requests to the Canadian Agent with respect to Canadian Revolving Credit
      Loans.

     

    3.13  Canadian
      Revolving Credit Loans Refunding.

     

    (a)  If
      any
      Default or Event of Default shall occur and be continuing or upon 30 days’
written notice, Canadian Lender may, in its sole and absolute discretion, direct
      that the Canadian Revolving Credit Loans owing to it be refunded by delivering
      a
      notice (with such detail as Agent shall request, a “Notice of Canadian Revolving
      Loan Refunding”) to Agent. Upon receipt of such notice, Agent shall promptly
      give notice of the contents thereof to the Canadian Participants at their
      respective Facility Offices and, unless an Event of Default described in
      subsection 9.1.8 shall have occurred, to each Borrower. 

     

    
      
        
        

      

      
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      Each
        such
        Notice of Canadian Revolving Credit Loan Refunding shall be deemed to constitute
        delivery of a notice to Agent requesting each Canadian Participant to fund
        its
        undivided Participating Interest in the outstanding Canadian Revolving Credit
        Loans whereupon each Canadian Participant, through its Facility Office, shall
        fund a prorata portion of the outstanding Canadian Revolving
        Credit Loans and related Obligations in an amount equal to the Canadian
        Participant’s Revolving Loan Percentage of the aggregate principal amount of
        such Canadian Revolving Credit Loans held by each corresponding Lender to
        which
        the Canadian Participant is affiliated; provided that, with respect to
        the Canadian LC Obligations, the Canadian Participant is not required to
        fund
        the Revolving Loan Percentage attributable to the Canadian LC Obligations
        until
        such time as the underlying Canadian Letter of Credit or Canadian Letter
        of
        Credit supported by a Canadian LC Guaranty has been drawn.  Subject to
        the proviso in the immediately preceding sentence, each Canadian Participant
        shall immediately (or at the option of Canadian Lender, on a weekly or other
        basis) transfer (or, if applicable, shall cause its Canadian Affiliate to
        transfer) to Canadian Lender, in immediately available funds, the amount
        of its
        Participating Interest in the same currency as the underlying Revolving Credit
        Loan that was made by Canadian Lender.

    

     

    (b)  Whenever,
      at any time after a Canadian Participant has funded a prorata
      portion of the outstanding Canadian Revolving Credit Loans and related
      Obligations in accordance with Section 3.13(c), Canadian Lender receives any
      payment on account thereof, Canadian Lender will distribute to Agent for
      delivery to each Canadian Participant its Participating Interest in such amount
      (appropriately adjusted, in the case of interest payments, to reflect the period
      of time during which such Canadian Participant’s Participating Interest was
      outstanding and funded); provided, however, that in the event that
      such payment received by Canadian Lender is required to be returned, such
      Canadian Participant will return to Agent for delivery to Canadian Lender any
      portion thereof previously delivered by Agent or Canadian Lender to
      it.  For purposes of Section 2.12, any interest distributed by
      Canadian Lender to a Canadian Participant shall be deemed to have been paid
      by
      the Canadian Borrower.

     

    (c)  Each
      Canadian Participant’s obligation to fund the prorata portion of
      the outstanding Canadian Revolving Credit Loans and related Obligations referred
      to in this Section 3.13 shall be absolute and unconditional and shall not
      be affected by any circumstances, including, without limitation, (i) any
      set-off, counterclaim, recoupment, defense or other right which such Canadian
      Participant or any Borrower may have against Canadian Lender, any Canadian
      Participant, any Borrower or any other Person for any reason whatsoever,
      (ii) the occurrence or continuance of a Default or Event of Default,
      (iii) any adverse change in the condition (financial or otherwise) of any
      Borrower, (iv) any breach of this Agreement or any other Loan Document by
      any Borrower or any other Lender or Canadian Participant, or (v) any other
      circumstances, happening or event whatsoever, whether or not similar to any
      of
      the foregoing.

     

    
      
        
        

      

      
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    3.14  U.K.
      Revolving Credit Loans Refunding.

     

    (a)  If
      any
      Default or Event of Default shall occur and be continuing or upon 30 days’
written notice, U.K. Lender may, in its sole and absolute discretion, direct
      that the U.K. Revolving Credit Loans owing to it be refunded by delivering
      a
      notice (with such detail as Agent shall request, a “Notice of U.K. Revolving
      Loan Refunding”) to Agent. Upon receipt of such notice, Agent shall promptly
      give notice of the contents thereof to the U.K. Participants at their respective
      Facility Office and, unless an Event of Default described in subsection 9.1.8
      shall have occurred, to each Borrower.  Each such Notice of U.K.
      Revolving Credit Loan Refunding shall be deemed to constitute delivery of a
      notice to Agent requesting each U.K. Participant fund its undivided U.K.
      Participating Interest in the outstanding U.K. Revolving Credit Loans whereupon
      each U.K. Participant, through its Facility Office, shall fund (or, if such
      Lender has a U.K. Affiliate, shall cause its U.K. Affiliate to fund) a
prorata portion of the outstanding U.K. Revolving Credit Loans and
      related Obligations in an amount equal to the U.K. Participant’s Revolving Loan
      Percentage of the aggregate principal amount of such U.K. Revolving Credit
      Loans
      held by each corresponding Lender to which the U.K. Participant is affiliated;
      provided that, with respect to the U.K. LC Obligations, the U.K.
      Participant is not required to fund the Revolving Loan Percentage attributable
      to the U.K. LC Obligations until such time as the underlying U.K. Letter of
      Credit or U.K. Letter of Credit supported by a U.K. LC Guaranty has been
      drawn.  Subject to the proviso in the immediately preceding sentence,
      each U.K. Participant shall immediately (or at the option of U.K. Lender, on
      a
      weekly or other basis) transfer to (or, if applicable, shall cause its U.K.
      Affiliate to transfer) U.K. Lender, in immediately available funds, the amount
      of its U.K. Participating Interest in the same currency as the underlying
      Revolving Credit Loan or U.K. Letter of Credit or U.K. LC Guaranty was made
      or
      issued by U.K. Lender, unless otherwise advised by Agent.

     

    (b)  Whenever,
      at any time after a U.K. Participant has funded a prorata portion
      of the outstanding U.K. Revolving Credit Loans and related Obligations, U.K.
      Lender receives any payment on account thereof, U.K. Lender will distribute
      to
      Agent for delivery to each U.K. Participant its Participating Interest in such
      amount (appropriately adjusted, in the case of interest payments, to reflect
      the
      period of time during which such U.K. Participant’s Participating Interest was
      outstanding and funded); provided, however, that in the event that
      such payment received by U.K. Lender is required to be returned, such U.K.
      Participant will return to Agent for delivery to U.K. Lender any portion thereof
      previously delivered by Agent or U.K. Lender to it.

     

    (c)  Each
      U.K.
      Participant’s obligation to fund the prorata portion of the
      outstanding U.K. Revolving Credit Loans and related Obligations referred to
      in
      this Section 3.14 shall be absolute and unconditional and shall not be
      affected by any circumstances, including, without limitation, (i) any
      set-off, counterclaim, recoupment, defense or other right which such U.K.
      Participant or any Borrower may have against U.K. Lender, any U.K. Participant,
      any Borrower or any other Person for any reason whatsoever, (ii) the
      occurrence or continuance of a Default or Event of Default, (iii) any
      adverse change in the condition (financial or otherwise) of any Borrower,
      (iv) any breach of this Agreement or any other Loan Document by any
      Borrower or any other Lender or U.K. Participant, or (v) any other
      circumstances, happening or event whatsoever, whether or not similar to any
      of
      the foregoing.

     

    
      
        
        

      

      
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    3.15  Mitigation
      Obligations.  If a Lender claims any additional cost or reduced
      amount pursuant to Section 3.8, or any Borrower is required to pay any
      additional amount or indemnity to any Lender, Participant or Canadian
      Participant or U.K. Participant or any governmental authority for the account
      of
      any Lender or Canadian Participant or U.K. Participant pursuant to
      Section 2.12 of the Agreement, then such Lender, Participant or Canadian
      Participant or U.K. Participant shall use reasonable efforts (consistent with
      legal and regulatory restrictions) to designate a different lending office
      or to
      file any certificate or document reasonably requested by Borrower Representative
      at the Appropriate Notice Office or to assign its rights and obligations
      hereunder to another of its offices, branches or affiliates, if the making
      of
      such designation, filing or assignment would avoid the need for, or reduce
      the
      amount of, any such additional cost or reduced amount or additional amount
      as
      would not, in the bona fide discretion of such Lender, be otherwise
      disadvantageous to such Lender, Participant or Canadian Participant or U.K.
      Participant; provided, however, that nothing herein shall obligate
      a U.S. Lender to transfer the Canadian Participation or Canadian Revolving
      Credit Loans or the U.K. Participation or U.K. Revolving Credit Loans (following
      a funding under Section 3.13) to its Canadian or United Kingdom office or
      Affiliate.  In the event that the provisions of Sections 2.12 or
      3.8 of the Agreement result in the effective interest  rates being
      charged by or with respect to any Lender to Borrowers being increased, on a
      per
      annum basis, by more than one quarter percent (1/4%), or if any Lender defaults
      on its obligations to make Revolving Credit Loans hereunder, Borrowers may
      require any such Lender (an “Affected Lender”) to sell and transfer all of its
      interest in this Agreement and its Notes to a substitute Lender (who shall
      be
      reasonably acceptable to Agent) for a price in cash equal to the principal
      balance of such Affected Lender’s outstanding Loans plus all accrued but unpaid
      interest thereon plus all accrued but unpaid fees due any such Affected Lender
      under the terms hereof.  Any such sale and transfer shall be made
      pursuant to the terms of Section 10.9 hereof.  Canadian Borrower
      shall not be required to indemnify any Person or pay any additional amounts
      in
      respect of Tax Liabilities to the extent that such Tax Liabilities result from
      a
      failure by any Person to comply (to the extent such Person is able to comply)
      with any certification, identification, information, documentation or other
      reporting requirement if compliance is required by law, regulation,
      administrative practice or any applicable tax treaty as a precondition to
      exemption or reduction in the rate of deduction or withholding of Tax
      Liabilities.

     

    SECTION 4.                                TERM
      AND TERMINATION

     

    4.1  Term
      of Agreement.  Subject to the right of Lenders to cease making
      Loans to Borrower during the continuance of any Default or Event of Default,
      this Agreement shall be in effect for a period of three (3) years from the
      date hereof, through and including November 30, 2010 (the “Term”), unless
      terminated as provided in Section 4.2 hereof.

     

    4.2  Termination.

     

    4.2.1  Termination
      by Lenders.  Agent may, and at the direction of Majority Lenders
      shall, terminate this Agreement without notice upon or after the occurrence
      and
      during the continuance of an Event of Default or a Change in
      Control.

     

    
      
        
        

      

      
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    4.2.2  Termination
      by Borrower Representative.  Upon at least three (3) days
      prior written notice to Agent and Lenders, Borrower Representative may, at
      its
      option, terminate this Agreement; provided, however, that no such
      termination shall be effective until Borrowers have paid or collateralized
      to
      Agent’s reasonable satisfaction all of the Obligations in immediately available
      funds, all Letters of Credit and LC Guaranties have expired, terminated or
      have
      been cash collateralized to Agent’s reasonable satisfaction and Borrowers have
      complied with Section 2.6 and subsection 3.2.5.  Any notice
      of termination given by Borrower Representative shall be irrevocable unless
      all
      Lenders otherwise agree in writing and no Lender shall have any obligation
      to
      make any Loans or issue or procure any Letters of Credit or LC Guaranties on
      or
      after the termination date stated in such notice.  Borrowers may elect
      to terminate this Agreement in its entirety only.  No section of this
      Agreement or type of Loan available hereunder may be terminated
      singly.

     

    4.2.3  Effect
      of Termination.  All of the Obligations shall be immediately due
      and payable upon the termination date stated in any notice of termination of
      this Agreement.  All undertakings, agreements, covenants, warranties
      and representations of Borrowers contained in the Loan Documents shall survive
      any such termination and Agent shall retain its Liens in the Collateral and
      Agents and each Lender shall retain all of its rights and remedies under the
      Loan Documents notwithstanding such termination until all Obligations have
      been
      discharged or paid or cash collateralized to Agent’s satisfaction, in full, in
      immediately available funds, including, without limitation, all Obligations
      under Section 2.6 and subsection 3.2.5 resulting from such
      termination; provided, that (x) the Lien on the Canadian Collateral shall
      be released once all Canadian Obligations have been discharged and paid in
      full
      and (y) the Lien on the U.K. Collateral shall be released once all U.S.
      Obligations and U.K. Obligations have been discharged and paid in
      full.  Notwithstanding the foregoing or the payment in full of the
      Obligations, Agents shall not be required to terminate their Liens in the
      Collateral unless, with respect to any loss or damage Agents may incur as a
      result of dishonored checks or other items of payment received by Agents from
      any Borrower or any Account Debtor and applied to the Obligations, Agent shall,
      at its option, (i) have received a written agreement satisfactory to Agent,
      executed by Borrowers and by any Person whose loans or other advances to
      Borrowers are used in whole or in part to satisfy the Obligations, indemnifying
      Agent and each Lender from any such loss or damage or (ii) have retained
      cash Collateral or other Collateral for such period of time as Agent, in its
      reasonable discretion, may deem necessary to protect Agent, Canadian Agent,
      U.K.
      Agent and each Lender from any such loss or damage.

     

    SECTION 5.                                COLLATERAL
      ADMINISTRATION

     

    5.1  General.

     

    5.1.1  Location
      of Collateral.  All Collateral, other than Inventory in transit
      and motor vehicles, will at all times be kept by each Borrower and its
      Subsidiaries at one or more of the business locations set forth in
Exhibit 5.1.1 hereto, as updated by Borrowers providing prior
      written notice to Agent of any new location.

     

    
      
        
        

      

      
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    5.1.2  Insurance
      of Collateral.  Each Borrower shall maintain and pay for insurance
      upon all Collateral wherever located and with respect to the business of each
      Borrower and each of its Subsidiaries, covering casualty, hazard, public
      liability, workers’ compensation and such other risks in such amounts and with
      such insurance companies as are reasonably satisfactory to
      Agent.  Borrower Representative shall deliver certificates of
      insurance or certified copies of such policies to Agent as promptly as
      practicable, with satisfactory lender’s loss payable endorsements, naming Agent,
      Canadian Agent or U.K. Agent, as applicable, as a loss payee, assignee or
      additional insured, as appropriate, as its interest may appear, and showing
      only
      such other loss payees, assignees and additional insureds as are satisfactory
      to
      Agent.  Each policy of insurance or endorsement shall contain a clause
      requiring the insurer to give not less than 10 days’ prior written notice to
      Agent in the event of cancellation of the policy for nonpayment of premium
      and
      not less than 30 days’ prior written notice to Agent in the event of
      cancellation of the policy for any other reason whatsoever and a clause
      specifying that the interest of Agent shall not be impaired or invalidated
      by
      any act or neglect of any Borrower, any Subsidiary of any Borrower or the owner
      of the Property or by the occupation of the premises for purposes more hazardous
      than are permitted by said policy.  Borrower Representative agrees to
      deliver to Agent, promptly upon request of Agent, true copies of all reports
      made in any reporting forms to insurance companies.  All proceeds of
      business interruption insurance (if any) of any Borrower or its Subsidiaries
      shall be remitted to the applicable Agent for application to the outstanding
      balance of the Revolving Credit Loans.

     

    Unless
      Borrowers provide Agent with evidence of the insurance coverage required by
      this
      Agreement, Agent may purchase insurance at the applicable Borrower’s expense to
      protect Agents’ interests in the Properties of Borrowers and their
      Subsidiaries.  This insurance may, but need not, protect the interests
      of Borrowers and their Subsidiaries.  The coverage that Agent
      purchases may not pay any claim that any Borrower or any Subsidiary makes or
      any
      claim that is made against any Borrower or any such Subsidiary in connection
      with said Property.  Borrowers may later cancel any insurance
      purchased by Agent, but only after providing Agent with evidence that Borrowers
      and their Subsidiaries have obtained insurance as required by this
      Agreement.  If Agent purchases insurance, the applicable Borrower will
      be responsible for the costs of that insurance, including interest and any
      other
      charges Agents may impose in connection with the placement of insurance, until
      the effective date of the cancellation or expiration of the
      insurance.  The costs of the insurance may be added to the
      Obligations.  The costs of the insurance may be more than the cost of
      insurance that Borrowers and their Subsidiaries may be able to obtain on their
      own.

     

    5.1.3  Protection
      of Collateral.  Neither Agent nor any Lender shall be liable or
      responsible in any way for the safekeeping of any of the Collateral or for
      any
      loss or damage thereto (except for reasonable care in the custody thereof while
      any Collateral is in any Agent’s or any Lender’s actual possession) or for any
      diminution in the value thereof, or for any act or default of any warehouseman,
      carrier, forwarding agency or other person whomsoever, but the same shall be
      at
      the applicable Borrower’s or the applicable Loan Party’s sole risk.

     

    5.2  Administration
      of Accounts.

     

    5.2.1  Records,
      Schedules and Assignments of Accounts.  Borrowers shall, and shall
      cause each other Loan Party to,  keep accurate and complete records of
      its Accounts and all payments and collections
      thereon. Concurrently with the delivery of each Borrowing
      Base Certificate described in subsection 7.1.4, or more frequently as
      reasonably requested by Agent, from and after the date hereof, Borrowers shall
      deliver to Agent a summary aged trial balance of all Accounts of Borrowers
      and
      each other Loan Party.  

     

    
      
        
        

      

      
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      Annually,
        or more frequently as requested by Agent if an Event of Default has occurred
        and
        is continuing, Borrowers shall deliver to Agent a report specifying the names,
        addresses, face values, dates of invoices and due dates for each Account
        Debtor
        obligated on an Account so listed (“Schedule of Accounts”), and upon
        Agent’s request therefor, copies of proof of delivery and the original copy of
        all documents, including, without limitation, repayment histories and present
        status reports relating to the Accounts so scheduled and such other matters
        and
        information relating to the status of then existing Accounts as Agent shall
        reasonably request.  If requested by Agent, Borrowers shall, and shall
        cause each other Loan Party to, execute and deliver to Agent formal written
        assignments of all of its Accounts monthly, weekly or daily, which shall
        include
        all Accounts that have been created since the date of the last assignment,
        together with copies of invoices or invoice registers related
        thereto.

    

     

    5.2.2  Discounts,
      Allowances, Disputes.  If any Borrower or any other Loan Party
      grants any discounts, allowances or credits that are not shown on the face
      of
      the invoice for the Account involved, Borrowers shall report such discounts,
      allowances or credits, as the case may be, to Agent as part of the next required
      Borrowing Base Certificate.

     

    5.2.3  Account
      Verification.  Any of Agent’s officers, employees or agents shall
      have the right, at any time or times hereafter, in the name of Agent, any
      designee of Agent, any Borrower or any other Loan Party, to verify the validity,
      amount or any other matter relating to any Accounts by mail, telephone,
      electronic communication or otherwise.  Borrowers shall, and shall
      cause each other Loan Party to, cooperate fully with Agent in an effort to
      facilitate and promptly conclude any such verification process.

     

    5.2.4  Maintenance
      of Dominion Account.  Each Borrower shall, and shall cause each
      other Loan Party to, maintain a Dominion Account or Accounts pursuant to lockbox
      and blocked account arrangements acceptable to the Agent, the Canadian Agent
      or
      the U.K. Agent, as applicable, with such banks as may be selected by Borrower
      Representative and be acceptable to the applicable Agent; provided that,
      to the extent not already effected, in the case of each U.K. Loan Party, at
      the
      request of U.K. Agent, within ninety (90) days after the Closing Date, such
      Dominion Accounts shall be moved to and maintained at U.K.
      Agent.  Such blocked account and lockbox arrangements shall provide
      for full dominion and control of each Borrower’s and each other Loan Party’s
      cash deposited into all deposit accounts, except that with respect to U.K.
      Loan
      Parties (to the extent such Dominion Account is maintained at a bank other
      than
      U.K. Agent) and Canadian Loan Parties such blocked account arrangements shall
      provide for springing dominion over Canadian Loan Parties’ and U.K. Loan
      Parties’ cash until the occurrence of an Event of Default at which time the U.K.
      Agent or Canadian Agent, as applicable, shall have the right to obtain full
      dominion over such cash.  Each Borrower shall issue, and shall cause
      each other Loan Party to issue, to any such banks an irrevocable letter of
      instruction directing such banks (in the case of Canadian Loan Parties, upon
      notice from Canadian Agent that an Event of Default has occurred) to deposit
      all
      payments or other remittances received in the lockbox and blocked accounts
      to
      the Dominion Account for application on account of the Obligations as provided
      in subsection 3.2.1.  All funds deposited in any Dominion Account
      shall immediately become the property of the applicable Agent, for the ratable
      benefit of the applicable Lenders, and the applicable Borrower shall obtain,
      or
      shall cause the applicable Loan Party to obtain, the agreement by such banks
      in
      favor of the applicable Agent to waive any recoupment, setoff rights, and any
      security interest in, or against, the funds so deposited.  No Agent
      assumes any responsibility for such lockbox and blocked account arrangements,
      including, without limitation, any claim of accord and satisfaction or release
      with respect to deposits accepted by any bank thereunder.

     

    
      
        
        

      

      
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    5.2.5  Collection
      of Accounts, Proceeds of Collateral.  Each Borrower agrees that
      all invoices rendered and other requests made by any Borrower or any other
      Loan
      Party for payment in respect of Accounts shall contain a written statement
      directing payment in respect of such Accounts to be paid to a lockbox
      established pursuant to subsection 5.2.4.  To expedite
      collection, Borrowers shall endeavor, and shall cause each other Loan Party
      to
      endeavor, in the first instance to make collection of its Accounts for
      Agents.  All remittances received by any Borrower or any Loan Party on
      account of Accounts, together with the proceeds of any other Collateral, shall
      be held as Agent’s, Canadian Agent’s or U.K. Agent’s, as the case may be,
      property, for its benefit and the benefit of the applicable Lenders, by the
      applicable Borrower or such Loan Party as trustee of an express trust for
      Agent’s, Canadian Agent’s or U.K. Agent’s benefit, as applicable, and the
      applicable Borrower shall, or shall cause the applicable Loan Party to,
      immediately deposit same in kind in the Dominion Account.  Agents
      retain the right at all times after the occurrence and during the continuance
      of
      a Default or an Event of Default to notify Account Debtors that Borrowers’ and
      each other Loan Party’s Accounts have been assigned to Agents and to collect
      Borrowers’ or any Loan Party’s Accounts directly in its own name, or in the name
      of any Agent’s agent, and to charge the collection costs and expenses, including
      attorneys’ fees, to the applicable Borrower.

     

    5.2.6  Taxes.  If
      an Account includes a charge for any tax payable to any governmental taxing
      authority, Agents are authorized, in their sole discretion, to pay the amount
      thereof to the proper taxing authority for the account of the applicable
      Borrower and to charge such Borrower therefor, except for taxes that
      (i) are being actively contested in good faith and by appropriate
      proceedings and with respect to which the applicable Borrower or the applicable
      Loan Party maintains reasonable reserves on its books therefor and
      (ii) would not reasonably be expected to result in any Lien other than a
      Permitted Lien.  In no event shall any Agent or any Lender be liable
      for any taxes to any governmental taxing authority that may be due by any
      Borrower or any other Loan Party.

     

    5.3  Administration
      of Inventory.  Each Borrower shall keep, and shall cause each
      other Loan Party to keep, records of its Inventory which records shall be
      complete and accurate in all material respects.  Borrowers shall
      furnish to Agent Inventory reports concurrently with the delivery of each
      Borrowing Base Certificate described in subsection 7.1.4 or more frequently
      as reasonably requested by Agent, which reports will be in such other format
      and
      detail as Agent shall reasonably request and shall include a current list of
      all
      locations of Borrowers’ and each other Loan Party’s Inventory, together with
      such supporting information as Agent shall reasonably
      request.  Borrowers shall conduct a physical inventory no less
      frequently than annually or, in lieu of a physical inventory, shall conduct
      cycle counts of Inventory.

     

    5.4  Administration
      of Equipment.

     

    5.4.1  Records
      and Schedules of Equipment.  Each Borrower shall keep, and shall
      cause each other Loan Party to keep, records of its Equipment which shall be
      complete and accurate in all material respects itemizing and describing the
      kind, type, quality, quantity and book value of its Equipment and all
      dispositions made in accordance with subsection 5.4.2 hereof, and each
      Borrower shall, and shall cause each other Loan Party to, furnish Agent with
      a
      current schedule containing the foregoing information on at least an annual
      basis and more often if reasonably requested by Agent.  Promptly after
      the request therefor by Agent, each Borrower shall deliver, or cause each other
      Loan Party to deliver, to Agent any and all evidence of ownership, if any,
      of
      any Equipment of any Borrower or any other Loan Party.

     

    
      
        
        

      

      
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    5.4.2  Dispositions
      of Equipment.  Borrowers shall not, and shall not permit any other
      Loan Party to, sell, lease or otherwise dispose of or transfer any of their
      or
      its respective Equipment or other fixed assets or any part thereof without
      the
      prior written consent of Agent, except as otherwise expressly permitted by
      the
      terms of this Agreement, including without limitation, subsection 7.2.9 of
      the Agreement.

     

    5.5  Payment
      of Charges.  All amounts chargeable to Borrowers under Section 5
      hereof shall be Obligations secured by all of the Collateral (except that
      amounts chargeable to U.S. Borrower shall not be secured by Canadian Collateral
      and amounts chargeable to Canadian Borrower shall not be secured by the U.K.
      Collateral and amounts chargeable to the U.K. Borrower shall not be secured
      by
      the Canadian Collateral), shall be payable on demand by the applicable Borrower
      and shall bear interest from the date such advance was made until paid in full
      at the rate applicable to the Base Rate Revolving Portions (or in the case
      of
      Canadian Borrower, Canadian Prime Rate Loans) from time to time.

     

    5.6  Lien
      on Realty.  The due and punctual performance of the Canadian
      Obligations, the U.K. Obligations and/or the U.S. Obligations shall also be
      secured by the Lien created by the Mortgages upon the real Property of the
      Borrowers and other Loan Parties described therein; provided that (i) the
      Liens created by any Mortgage upon the real Property of any Canadian Loan Party
      shall not secure the U.S. Obligations, (ii) the Liens created by any Mortgage
      upon the real Property of any U.K. Loan Party shall not secure the Canadian
      Obligations and (iii) the Liens created by any Mortgage upon the real Property
      of any Canadian Loan Party shall not secure the U.K. Loan
      Obligations.  If any Borrower or any other Loan Party shall acquire at
      any time or times hereafter any fee simple interest in other real Property
      (other than leasehold interests in sales offices or warehouses or other
      leasehold interests which Agent in Permitted Discretion, determines to have
      no
      material value), the applicable Borrower agrees promptly to execute and deliver
      to the applicable Agent, or to cause the applicable Loan Party to execute and
      deliver to the applicable Agent, for its benefit and the ratable benefit of
      the
      applicable Lenders, as additional security and Collateral for the Obligations,
      deeds of trust, security deeds, mortgages or other collateral assignments
      reasonably satisfactory in form and substance to Agent and its counsel (herein
      collectively referred to as “New Mortgages”) covering such real Property;
provided that (i) the Liens created by any New Mortgages on the real
      Property of any Canadian Loan Party or U.K. Loan Party shall not secure the
      U.S.
      Obligations, (ii) the Liens created by any New Mortgage upon the real Property
      of any U.K. Loan Party shall not secure the Canadian Obligations and (iii)
      the
      Liens created by any New Mortgage upon the real Property of any Canadian Loan
      Party shall not secure the U.K. Obligations.  The Mortgages and each
      New Mortgage shall be duly recorded (at the applicable Borrower’s expense) in
      each office where such recording is required to constitute a valid Lien on
      the
      real Property covered thereby.  

     

    
      
        
        

      

      
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      In
        respect to any Mortgage or any New Mortgage, the applicable Borrower shall
        deliver to Agent, or shall cause the applicable Loan Party to deliver to
        Agent,
        at the applicable Borrower’s expense, mortgagee title insurance policies issued
        by a title insurance company reasonably satisfactory to Agent, which policies
        shall be in form and substance reasonably satisfactory to Agent and shall
        insure
        a valid Lien in favor of the applicable Agent for the benefit of itself and
        each
        applicable Lender on the Property covered thereby, subject only to Permitted
        Liens and those other exceptions reasonably acceptable to Agent and its
        counsel.  Such Borrower shall also deliver, or shall cause the
        applicable Loan Party to deliver, to Agent such other usual and customary
        documents, including, without limitation, ALTA Surveys of the real Property
        described in the Mortgages or any New Mortgage, as Agent and its counsel
        may
        reasonably request relating to the real Property subject to the Mortgages
        or the
        New Mortgages.

    

     

    SECTION 6.                                REPRESENTATIONS
      AND WARRANTIES

     

    6.1  General
      Representations and Warranties.  To induce Agents and each Lender
      to enter into this Agreement and to make advances hereunder, Borrowers warrant,
      represent and covenant to Agents and each Lender that:

     

    6.1.1  Qualification.  Each
      Borrower and each of its Subsidiaries (other than Inactive Subsidiaries) is
      a
      corporation, limited partnership or limited liability company duly organized,
      validly existing and in good standing under the laws of the jurisdiction of
      its
      incorporation or organization.  Each Borrower and each of its
      Subsidiaries (other than an Inactive Subsidiary) is duly qualified and is
      authorized to do business and is in good standing as a foreign limited liability
      company, limited partnership or corporation, as applicable, in each state or
      jurisdiction listed on Exhibit 6.1.1 hereto and in all other states
      and jurisdictions in which the failure of such Borrower or any of its
      Subsidiaries (other than an Inactive Subsidiary) to be so qualified could
      reasonably be expected to have a Material Adverse Effect.

     

    6.1.2  Power
      and Authority.  Each Borrower and each of its Subsidiaries is duly
      authorized and empowered to enter into, execute, deliver and perform this
      Agreement and each of the other Loan Documents to which it is a
      party.  The execution, delivery and performance of this Agreement and
      each of the other Loan Documents have been duly authorized by all necessary
      corporate or other relevant action and do not and will
      not:  (i) require any consent or approval of the shareholders of
      any Borrower or any of the shareholders, partners or members, as the case may
      be, of any Subsidiary of such Borrower; (ii) contravene any Borrower’s or
      any of its Subsidiaries’ charter, articles or certificate of incorporation,
      partnership agreement, certificate of formation, by-laws, limited liability
      agreement, operating agreement or other organizational documents (as the case
      may be); (iii) violate, or cause any Borrower or any of its Subsidiaries to
      be in default under, any provision of any law, rule, regulation, order, writ,
      judgment, injunction, decree, determination or award in effect having
      applicability to any Borrower or any of its Subsidiaries, the violation of
      which
      could reasonably be expected to have a Material Adverse Effect; (iv) result
      in a breach of or constitute a default under any indenture or loan or credit
      agreement or any other agreement, lease or instrument to which any Borrower
      or
      any of its Subsidiaries is a party or by which it or its Properties may be
      bound
      or affected, the breach of or default under which could reasonably be expected
      to have a Material Adverse Effect; or (v) result in, or require, the
      creation or imposition of any Lien (other than Permitted Liens) upon or with
      respect to any of the Properties now owned or hereafter acquired by any Borrower
      or any of its Subsidiaries.

     

    
      
        
        

      

      
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    6.1.3  Legally
      Enforceable Agreement.  This Agreement is, and each of the other
      Loan Documents when delivered under this Agreement will be, a legal, valid
      and
      binding obligation of each Borrower and each of its Subsidiaries party thereto,
      enforceable against it in accordance with its respective terms, except as
      enforceability may be limited by applicable bankruptcy, insolvency,
      reorganization, moratorium or similar laws affecting the enforcement of
      creditors’ rights generally and by general equitable principles (whether
      enforcement is sought by proceedings in equity or at law) and, with respect
      to
      the obligations of the Canadian Borrower under Section 2.1.2, by the provisions
      of Section 8(1) of the Interest Act (Canada).

     

    6.1.4  Capital
      Structure.  Exhibit 6.1.4 hereto states, as of the
      date hereof, (i) the correct name of each of the Subsidiaries (other than
      Inactive Subsidiaries) of each Borrower, its jurisdiction of incorporation
      or
      organization and the percentage of its Voting Stock owned by each Borrower,
      (ii) the name of each Borrower’s and each of its Subsidiaries’ corporate or
      joint venture relationships and the nature of the relationship, (iii) the
      number, nature and holder of all outstanding Securities of Borrower and the
      holder of Securities of each Subsidiary (other than Inactive Subsidiaries)
      of
      each Borrower and (iv) the number of authorized, issued and treasury
      Securities of each Borrower.  Each Borrower has good title to all of
      the Securities it purports to own of each of such Subsidiaries, free and clear
      in each case of any Lien other than Permitted Liens.  All such
      Securities have been duly issued and are fully paid and
      non-assessable.  As of the date hereof, except as set forth in
Exhibit 6.1.4, there are no outstanding options to purchase, or any
      rights or warrants to subscribe for, or any commitments or agreements to issue
      or sell any Securities or obligations convertible into, or any powers of
      attorney relating to any Securities of any Borrower or any of its
      Subsidiaries.  Except as set forth on Exhibit 6.1.4, as of
      the date hereof, there are no outstanding agreements or instruments binding
      upon
      any of any Borrower’s or any of its Subsidiaries’ partners, members or
      shareholders, as the case may be, relating to the ownership of its
      Securities.

     

    6.1.5  Names;
      Organization.  Neither any Borrower nor any of its Subsidiaries
      (other than Inactive Subsidiaries) has been known as or has used any legal,
      fictitious or trade names, during the 5 years prior to the Closing Date, except
      those listed on Exhibit 6.1.5 hereto.  Except as set forth
      on Exhibit 6.1.5, neither any Borrower nor any of its Subsidiaries
      (other than Inactive Subsidiaries) has been, during the 5 years prior to the
      Closing Date, the surviving entity of a merger or consolidation or has acquired
      all or substantially all of the assets of any Person.  Each of each
      Borrower’s and each of its Subsidiaries’ (other than Inactive Subsidiaries)
      state(s) of incorporation or organization, Type of Organization, Organizational
      I.D. Number and in the case of U.K. Borrower, the number with which it is
      registered at Companies House for England and Wales, and any Canadian equivalent
      thereof, is set forth on Exhibit 6.1.5.  The exact legal
      name of each Borrower and each of its Subsidiaries is set forth on
Exhibit 6.1.5.

     

    6.1.6  Business
      Locations; Agent for Process.  Each of each Borrower’s and each of
      its Subsidiaries’ (other than Inactive Subsidiaries) chief executive office,
      location of books and records and other places of business are as listed on
      Exhibit 5.1.1 hereto, as updated from time to time by Borrowers in
      accordance with the provisions of subsection 5.1.1.  During the
      preceding one-year period, neither any Borrower nor any of its Subsidiaries
      (other than Inactive Subsidiaries) has had an office, place of business or
      agent
      for service of process, other than as listed on
Exhibit 5.1.1.  All tangible Collateral is and will at all
      times be kept by Borrowers and their Subsidiaries (other than Inactive
      Subsidiaries) in accordance with subsection 5.1.1.  Except as
      shown on Exhibit 5.1.1, as of the date hereof, no Inventory is
      stored with a bailee, distributor, warehouseman or similar party, nor is any
      Inventory consigned to any Person.

     

    
      
        
        

      

      
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    6.1.7  Title
      to Properties; Priority of Liens.  Each Borrower and each of its
      Subsidiaries (other than Inactive Subsidiaries) has good, indefeasible and
      marketable title to and fee simple ownership of, or valid and subsisting
      leasehold interests in, all of its real Property, and good title to all of
      the
      Collateral and all of its other Property, in each case, free and clear of all
      Liens except Permitted Liens.  Each Borrower and each of its
      Subsidiaries (other than Inactive Subsidiaries) has paid or discharged all
      lawful claims which, if unpaid, might become a Lien against any of any
      Borrower’s or such Subsidiary’s Properties that is not a Permitted
      Lien.  The Liens granted to Agents under the Security Documents are
      First Priority Liens, subject only to Permitted Liens.

     

    6.1.8  Accounts.  Agent
      may rely, in determining which Accounts are Eligible Accounts, on all statements
      and representations made by Borrowers and each other Loan Party with respect
      to
      any Account or Accounts.  With respect to each of each Borrower’s and
      each other Loan Party’s Accounts, whether or not such Account is an Eligible
      Account, unless otherwise disclosed to Agent in the appropriate Borrowing Base
      Certificate or schedule:

     

    (i)  It
      is
      genuine and in all respects what it purports to be, and it is not evidenced
      by a
      judgment;

     

    (ii)  It
      arises
      out of a completed, bonafide sale and delivery of goods or
      rendition of services by a Borrower or a Loan Party, in the ordinary course
      of
      its business and in accordance with the terms and conditions of all purchase
      orders, contracts or other documents relating thereto and forming a part of
      the
      contract between the applicable Borrower or Loan Party and the Account
      Debtor;

     

    (iii)  It
      is for
      a liquidated amount maturing as stated in the duplicate invoice covering such
      sale or rendition of services, a copy of which has been furnished or is
      available to Agent;

     

    (iv)  There
      are
      no facts, events or occurrences which in any way impair the validity or
      enforceability of any Accounts or could reasonably be expected to reduce the
      amount payable thereunder from the face amount of the invoice and statements
      delivered or made available to Agent with respect thereto;

     

    (v)  To
      the
      best of Borrowers’ knowledge, the Account Debtor thereunder (1) had the
      capacity to contract at the time any contract or other document giving rise
      to
      the Account was executed and (2) such Account Debtor is Solvent;
      and

     

    (vi)  To
      the
      best of Borrowers’ knowledge, there are no proceedings or actions which are
      threatened or pending against the Account Debtor thereunder which, in Borrowers’
reasonable judgment, would likely result in any material adverse change in
      such
      Account Debtor’s financial condition or the collectibility of such
      Account.

     

    
      
        
        

      

      
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    6.1.9  Equipment.  The
      Equipment of each Borrower and its Subsidiaries is in good operating condition
      and repair, and all necessary replacements of and repairs thereto shall be
      made
      so that the operating efficiency thereof shall be maintained and preserved,
      reasonable wear and tear excepted.  Neither any Borrower nor any of
      its Subsidiaries will permit any Equipment to become affixed to any real
      Property leased to any Borrower or any of its Subsidiaries so that an interest
      arises therein under the real estate laws of the applicable jurisdiction unless
      the landlord of such real Property has executed a landlord waiver or leasehold
      mortgage in favor of and in form reasonably acceptable to Agent, and no Borrower
      will permit any of the Equipment of any Borrower or any of its Subsidiaries
      to
      become an accession to any personal Property other than Equipment that is
      subject to First Priority (except for Permitted Liens) Liens in favor of
      Agents.

     

    6.1.10  Financial
      Statements; Fiscal Year.  The Consolidated and consolidating
      balance sheets of Katy and its Subsidiaries (including the accounts of all
      Subsidiaries of Katy and their respective Subsidiaries for the respective
      periods during which a Subsidiary relationship existed) as of September 30,
      2007, and the related statements of income and cash flows for
      the periods ended on such dates, have been prepared in accordance with GAAP
      (except for the absence of footnotes and normal year-end adjustments), and
      present fairly in all material respects the financial positions of Katy and
      such
      Persons, taken as a whole, at such dates and the results of Katy’s and such
      Persons’ operations, taken as a whole, for such periods.  As of the
      date hereof, since September 30, 2007, there has been no material adverse change
      in the financial position of Katy and such other Persons, taken as a whole,
      as
      reflected in the Consolidated balance sheet as of such date.  As of
      the date hereof, the fiscal year of Katy and each of its Subsidiaries ends
      on
      December 31 of each year.

     

    6.1.11  Full
      Disclosure.  The financial statements referred to in
      subsection 6.1.10 hereof do not, nor does this Agreement or any other
      written statement of any Borrower or any other Loan Party to Agent or any Lender
      (when taken together with any supplements or amendments thereto) contain any
      untrue statement of a material fact or omit a material fact necessary to make
      the statements contained therein or herein not misleading in light of the
      circumstances existing when such statement was made.  There is no fact
      which any Borrower has failed to disclose to Agent or any Lender in writing
      which could reasonably be expected to have a Material Adverse
      Effect.

     

    6.1.12  Solvent
      Financial Condition.  Each Borrower and each other Loan Party
      (other than Inactive Subsidiaries and other Subsidiaries that conduct no
      operations) is now and, after giving effect to the initial Loans to be made
      and
      the initial Letters of Credit and LC Guaranties to be issued hereunder and
      all
      related transactions, will be, Solvent.

     

    6.1.13  Surety
      Obligations.  Except as set forth on Exhibit 6.1.13,
      as of the date hereof, neither any Borrower nor any of its Subsidiaries is
      obligated as surety or indemnitor under any surety or similar bond or other
      contract or has issued or entered into any agreement to assure payment,
      performance or completion of performance of any undertaking or obligation of
      any
      Person.

     

    
      
        
        

      

      
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    6.1.14  Taxes.  Katy’s
      federal tax identification number is 75-1277589.  The federal tax
      identification number or Canadian or United Kingdom equivalent thereof, of
      each
      Subsidiary of Katy is shown on Exhibit 6.1.14
      hereto.  Each Borrower and each of its Subsidiaries has filed all
      federal, provincial, state and local tax returns and other reports relating
      to
      taxes (including goods and services and value added taxes) it is required by
      law
      to file or obtained appropriate extensions for such filings, and has paid,
      or
      made provision for the payment of, all taxes, assessments, fees, levies and
      other governmental charges upon it, its income and Properties prior to the
      time
      when such taxes, assessments, fees, levies and charges become delinquent, unless
      and to the extent any thereof are being actively contested in good faith and
      by
      appropriate proceedings and except where the failure to make any such filing
      of
      to pay any such tax could not be reasonably expected to have a Material Adverse
      Effect, and each Borrower and each of its Subsidiaries maintains reasonable
      reserves on its books therefor.  The provision for unpaid taxes on the
      books of each Borrower and its Subsidiaries is adequate for all years not closed
      by applicable statutes, and for the current fiscal year.

     

    6.1.15  Brokers.  Except
      as shown on Exhibit 6.1.15 hereto, there are no claims for brokerage
      commissions, finder’s fees or investment banking fees in connection with the
      transactions contemplated by this Agreement.

     

    6.1.16  Patents,
      Trademarks, Copyrights and Licenses.  Each Borrower and each of
      its Subsidiaries owns, possesses or licenses or has the right to use all the
      patents, trademarks, service marks, trade names, copyrights, licenses and other
      Intellectual Property necessary for the present and planned future conduct
      of
      its business without any known conflict with the rights of others, except for
      such conflicts as could not reasonably be expected to have a Material Adverse
      Effect.  All such patents, trademarks, service marks, trade names,
      copyrights, licenses and other similar rights are listed on
Exhibit 6.1.16 hereto, which shall be updated annually by Borrowers
      or more frequently as requested by Agent, if an Event of Default exists and
      is
      continuing.  To the Knowledge of Borrowers and except as set forth on
Exhibit 6.1.1 hereto, no claim has been asserted to any Borrower or any
      of its Subsidiaries which is currently pending that their use of their
      Intellectual Property or the conduct of their business does or may infringe
      upon
      the Intellectual Property rights of any third party, the effect of which
      infringement could not reasonably be expected to have a Material Adverse
      Effect.  To the knowledge of Borrowers and except as set forth on
Exhibit 6.1.16 hereto, as of the date hereof, no Person is engaging
      in any activity that infringes in any material respect upon Borrower’s or any of
      its Subsidiaries’ material Intellectual Property.  Except as set forth
      on Exhibit 6.1.16, each Borrower’s and each of its Subsidiaries’
(i) material trademarks, service marks and copyrights are registered with
      the U.S. Patent and Trademark Office or in the U.S. Copyright Office, as
      applicable and (ii) material license agreements and similar arrangements
      relating to its Inventory (1) permit, and do not restrict, the assignment
      by any Borrower or any of its Subsidiaries to Agent, or any other Person
      designated by Agent, of all of any Borrower’s or such Subsidiary’s, as
      applicable, rights, title and interest pertaining to such license agreement
      or
      such similar arrangement to the extent consistent with customary business terms
      and (2) would permit the continued use by any Borrower or such Subsidiary,
      or Agent or its assignee, of such license agreement or such similar arrangement
      and the right to sell Inventory subject to such license agreement for a period
      of no less than 6 months after a default or breach of such agreement or
      arrangement.  The consummation and performance of the transactions and
      actions contemplated by this Agreement and the other Loan Documents, including,
      without limitation, the exercise by Agent of any of its rights or remedies
      under
Section 9, will not result in the termination or impairment of any
      of any Borrower’s or any of its Subsidiaries’ ownership or rights relating to
      its Intellectual Property, except for such Intellectual Property rights the
      loss
      or impairment of which could not reasonably be expected to have a Material
      Adverse Effect.  Except as listed on Exhibit 6.1.16 and
      except as could not reasonably be expected to have a Material Adverse Effect,
      (i) neither any Borrower nor any of its Subsidiaries is in breach of, or
      default under, any term of any license or sublicense with respect to any of
      its
      Intellectual Property and (ii) to the knowledge of Borrowers, no other
      party to such license or sublicense is in breach thereof or default thereunder,
      and such license is valid and enforceable.

     

    
      
        
        

      

      
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    6.1.17  Governmental
      Consents.  Each Borrower and each of its Subsidiaries has, and is
      in good standing with respect to, all governmental consents, approvals,
      licenses, authorizations, permits, certificates, inspections and franchises
      necessary to continue to conduct its business as heretofore or proposed to
      be
      conducted by it and to own or lease and operate its Properties as now owned
      or
      leased by it, except where the failure to possess or so maintain such rights
      could not reasonably be expected to have a Material Adverse Effect.

     

    6.1.18  Compliance
      with Laws.  Each Borrower and each of its Subsidiaries has duly
      complied, and its Properties, business operations and leaseholds are in
      compliance with, the provisions of all federal, state and local laws, rules
      and
      regulations applicable to such Borrower or such Subsidiary, as applicable,
      its
      Properties or the conduct of its business, except for such non-compliance as
      could not reasonably be expected to have a Material Adverse Effect, and there
      have been no citations, notices or orders of noncompliance issued to any
      Borrower or any of its Subsidiaries under any such law, rule or regulation,
      except where such noncompliance could not reasonably be expected to have a
      Material Adverse Effect.  Each Borrower and each of its Subsidiaries
      has established and maintains an adequate monitoring system to insure that
      it
      remains in compliance in all material respects with all federal, state and
      local
      rules, laws and regulations applicable to it.  No Inventory has been
      produced in violation of the Fair Labor Standards Act (29 U.S.C. §201
etseq.), as amended.

     

    6.1.19  Restrictions.  Neither
      any Borrower nor any other Loan Party is a party or subject to any contract
      or
      agreement which restricts its right or ability to incur Indebtedness, other
      than
      as set forth on Exhibit 6.1.19 hereto, none of which prohibit the
      execution of or compliance with this Agreement or the other Loan Documents
      by
      any Borrower or any of its Subsidiaries, as applicable.

     

    6.1.20  Litigation.  Except
      as set forth on Exhibit 6.1.20 hereto, there are no actions, suits,
      proceedings or investigations pending, or to the knowledge of any Borrower,
      threatened, against or affecting any Borrower or any of its Subsidiaries, or
      the
      business, operations, Properties, prospects, profits or condition of any
      Borrower or any of its Subsidiaries which, singly or in the aggregate, could
      reasonably be expected to have a Material Adverse Effect.  Neither any
      Borrower nor any of its Subsidiaries is in default with respect to any order,
      writ, injunction, judgment, decree or rule of any court, governmental authority
      or arbitration board or tribunal, which, singly or in the aggregate, could
      reasonably be expected to have a Material Adverse Effect.

     

    6.1.21  No
      Defaults.  No event has occurred and no condition exists which
      would, upon or after the execution and delivery of this Agreement or any
      Borrower’s performance hereunder, constitute a Default or an Event of
      Default.  Neither any Borrower nor any of its Subsidiaries is in
      default in (and no event has occurred and no condition exists which constitutes,
      or which the passage of time or the giving of notice or both would constitute,
      a
      default in) the payment of any Indebtedness to any Person for Money Borrowed
      in
      excess of $1,000,000.

     

    
      
        
        

      

      
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    6.1.22  Leases.  Exhibit 6.1.22
      hereto is a complete listing of all capitalized and operating personal property
      leases of each Borrower and its Subsidiaries and all real property leases of
      each Borrower and its Subsidiaries with future non-cancelable payments of
      $25,000 or more.  Each Borrower and each of its Subsidiaries is in
      full compliance with all of the terms of each of its respective capitalized
      and
      operating leases, except where the failure to so comply could not reasonably
      be
      expected to have a Material Adverse Effect.

     

    6.1.23  Pension
      Plans.

     

    (a)  Except
      as
      disclosed on Exhibit 6.1.23 hereto, neither U.S. Borrower nor any of its
      ERISA Affiliates maintains or contributes to any Plan.  U.S. Borrower
      and each of its ERISA Affiliates have operated in compliance with the
      requirements of ERISA and the regulations promulgated thereunder with respect
      to
      each Plan, except where the failure to so comply could not reasonably be
      expected to have a Material Adverse Effect.  To the best of Borrowers’
knowledge, no fact or situation that could reasonably be expected to result
      in a
      Material Adverse Effect exists in connection with any Plan.  Neither
      U.S. Borrower nor any ERISA Affiliates has incurred any withdrawal liability
      under Title IV of ERISA in connection with a Multiemployer Plan which remains
      unsatisfied or which would reasonably be expected to have a Material Adverse
      Effect.

     

    (b)  The
      Canadian Pension Plans are duly registered under and have been administered
      in
      compliance with the ITA and all other applicable laws which require registration
      except where the failure to so comply could not reasonably be expected to have
      a
      Material Adverse Effect.  All obligations of Canadian Borrower or any
      of its Subsidiaries (including fiduciary, funding, investment and administration
      obligations) required to be performed in connection with the Canadian Pension
      Plans and the funding agreements therefor have been performed in a timely
      fashion, except where the failure to so perform could not reasonably be expected
      to have a Material Adverse Effect.  There are no outstanding disputes,
      actions, suits or claims concerning the assets of the Canadian Pension Plans
      other than claims for benefits in the ordinary course that could reasonably
      be
      expected to result in a Material Adverse Effect.  Neither Canadian
      Borrower nor its Subsidiaries is required to make any contributions to the
      Canadian Pension Plans which contributions, in the aggregate, could reasonably
      be expected to result in a Material Adverse Effect.  Canadian Borrower
      and its Subsidiaries have withheld all employee withholdings and have made
      all
      employer contributions to be withheld and made by it pursuant to federal and
      any
      provincial applicable law on account of Canadian Pension Plans, Canadian Benefit
      Plans, Canadian employment insurance and employee income taxes.  To
      the best of Borrowers’ knowledge, no condition exists or transaction has
      occurred in connection with any Canadian Pension Plan or Canadian Benefit Plan
      which could result in the incurrence by Canadian Borrower or its Subsidiaries
      of
      any liability, fine or penalty that could reasonably be expected to result
      in a
      Material Adverse Effect.

     

    
      
        
        

      

      
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    (c)  All
      pension schemes of U.K. Borrower and any Subsidiaries of any Borrower that
      are
      organized under the laws of the United Kingdom are operated in substantial
      compliance with applicable law and fully funded to the extent required by law
      based on reasonable actuarial assumptions applicable in the United
      Kingdom.

     

    6.1.24  Trade
      Relations.  There exists no actual or, to any Borrower’s
      knowledge, threatened termination, cancellation or limitation of, or any
      modification or change in, the business relationship between any Borrower or
      any
      of its Subsidiaries and any customer or any group of customers whose purchases
      individually or in the aggregate are material to the business of Borrowers
      and
      their Subsidiaries, or with any material supplier, except in each case, where
      the same could not reasonably be expected to have a Material Adverse Effect,
      and
      there exists no present condition or state of facts or circumstances which
      would
      prevent any Borrower or any of its Subsidiaries from conducting such business
      after the consummation of the transactions contemplated by this Agreement in
      substantially the same manner in which it has heretofore been
      conducted.

     

    6.1.25  Labor
      Relations.  Except as described on Exhibit 6.1.25
      hereto, as of the date hereof, neither any Borrower nor any of its Subsidiaries
      is a party to any collective bargaining agreement.  There are no
      material grievances, disputes or controversies with any union or any other
      organization of any Borrower’s or any of its Subsidiaries’ employees, or threats
      of strikes, work stoppages or any asserted pending demands for collective
      bargaining by any union or organization, except those that could not reasonably
      be expected to have a Material Adverse Effect.

     

    6.1.26  Borrowers
      and Each Other Loan Party.  As of the Closing Date, Borrowers and
      the other Loan Parties are engaged in the businesses of manufacturing and
      distributing industrial and consumer products, including, without limitation,
      sanitary maintenance supplies and coated abrasives, as well as in certain other
      businesses.  These operations require financing on a basis such that
      the credit supplied can be made available from time to time to Borrowers and
      the
      other Loan Parties, as required for the continued successful operation of
      Borrowers and the other Loan Parties taken as a whole.  Borrowers and
      the other Loan Parties have requested the Lenders to make credit available
      hereunder primarily for the purposes of Section 1.1.3 and generally for the
      purposes of financing the operations of Borrowers and the other Loan
      Parties.  Borrowers and other Loan Party expect to derive benefit (and
      the Board of Directors of each Borrower and each other Loan Party has determined
      that each Borrower or such other Loan Party may reasonably be expected to derive
      benefit), directly or indirectly, from a portion of the credit extended by
      Lenders hereunder, both in its separate capacity and as a member of the group
      of
      companies, since the successful operation and condition of Borrowers and each
      other Loan Party is dependent on the continued successful performance of the
      functions of the group as a whole.  Borrowers acknowledge that, but
      for the agreement of each of each Borrower and the other Loan Parties to execute
      and deliver this Agreement and/or the Loan Documents, Agent and Lenders would
      not have made available the credit facilities established hereby on the terms
      set forth herein.

     

    
      
        
        

      

      
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    6.2  Continuous
      Nature of Representations and Warranties.  Each representation and
      warranty contained in this Agreement and the other Loan Documents shall be
      continuous in nature and shall remain accurate, complete and not misleading
      at
      all times during the term of this Agreement, except for changes in the nature
      of
      any Borrower’s or one of Borrower’s Subsidiary’s business or operations that
      would render the information in any exhibit attached hereto or to any other
      Loan
      Document either inaccurate, incomplete or misleading, so long as Majority
      Lenders have consented to such changes or such changes are expressly permitted
      by this Agreement.  Without limiting the generality of the foregoing,
      each Loan request made or deemed made pursuant to subsection 3.1.1 hereof
      shall constitute Borrowers’ reaffirmation, as of the date of each such loan
      request, of each representation, warranty or other statement made or furnished
      to Agent or any Lender by or on behalf of Borrowers, any Subsidiary of any
      Borrower or any other Loan Party in this Agreement, any of the other Loan
      Documents, or any instrument, certificate or financial statement furnished
      in
      compliance with or in reference thereto.

     

    6.3  Survival
      of Representations and Warranties.  All representations and
      warranties of Borrowers contained in this Agreement or any of the other Loan
      Documents shall survive the execution, delivery and acceptance thereof by Agent
      and each Lender and the parties thereto and the closing of the transactions
      described therein or related thereto.

     

    SECTION 7.                                COVENANTS
      AND CONTINUING AGREEMENTS

     

    7.1  Affirmative
      Covenants.  During the Term, and thereafter for so long as there
      are any Obligations outstanding, Borrowers covenant that, unless otherwise
      consented to by Majority Lenders, in writing, they shall:

     

    7.1.1  Visits
      and Inspections; Lender Meeting.  Permit (i) representatives
      of Agent, and during the continuation of any Default or Event of Default any
      Lender, from time to time, as often as may be reasonably requested, but only
      during normal business hours, to visit and inspect the Properties of Borrowers
      and each of their Subsidiaries, inspect, audit and make extracts from their
      books and records, and discuss with their officers, their employees and their
      independent accountants, each Borrower’s and each of its Subsidiaries’ business,
      assets, liabilities, financial condition, business prospects and results of
      operations and (ii) appraisers engaged pursuant to Section 2.10
      (whether or not personnel of Agent), but only during normal business hours,
      to
      visit and inspect the Properties of each Borrower and each of its Subsidiaries,
      for the purpose of completing appraisals pursuant to
      Section 2.10.  Agent, if no Default or Event of Default then
      exists, shall give Borrower Representative reasonable prior notice of any such
      inspection or audit.  Without limiting the foregoing, on the request
      of Agent, Borrowers will participate and will cause its key management personnel
      to participate in a meeting with Agent and Lenders once during each year (except
      that during the continuation of an Event of Default such meetings may be held
      more frequently as requested by Agent or Majority Lenders), which meeting(s)
      shall be held at such times and such places as may be reasonably requested
      by
      Agent.

     

    7.1.2  Notices.  Promptly
      notify Agent in writing, upon obtaining knowledge, of the occurrence of any
      event or the existence of any fact which renders any representation or warranty
      in this Agreement or any of the other Loan Documents inaccurate, incomplete
      or
      misleading in any material respect as of the date made or remade.  In
      addition, except as otherwise set forth herein, (x) Borrowers agree to provide
      Agent with prompt written notice, upon obtaining knowledge, of any change in
      the
      information disclosed in any Exhibit hereto which could reasonably be
      expected to have or to evidence a Material Adverse Effect and (y) on a
      semi-annual basis, Borrowers agree to provide Agent with updated versions of
      the
      factual Exhibits hereto, in each case after giving effect to the materiality
      limits and Material Adverse Effect qualifications contained
      therein.

     

    
      
        
        

      

      
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    7.1.3  Financial
      Statements.  Keep, and cause each of their Subsidiaries to keep,
      adequate records and books of account with respect to their or its business
      activities in which proper entries are made in accordance with customary
      accounting practices reflecting all their or its financial transactions; and
      cause to be prepared and furnished to Agent and each Lender, the following,
      all
      to be prepared in accordance with GAAP applied on a consistent basis, unless
      Katy’s certified public accountants concur in any change therein and such change
      is disclosed to Agent and is consistent with GAAP:

     

    (i)  not
      later
      than 90 days after the close of each fiscal year of Katy, unqualified (except
      for a qualification for a change in accounting principles with which the
      accountant concurs) audited financial statements of Katy and its Subsidiaries
      as
      of the end of such year, on a Consolidated basis, certified by a firm of
      independent certified public accountants of recognized standing selected by
      Katy
      but acceptable to Agent and, within a reasonable time thereafter a copy of
      any
      management letter issued in connection therewith;

     

    (ii)  not
      later
      than 30 days after the end of each month hereafter other than the last month
      of
      Katy’s fiscal year or 45 days after the end of the last month of Katy’s fiscal
      year, unaudited interim financial statements of Katy and its Subsidiaries as
      of
      the end of such month and of the portion of the fiscal year then elapsed, on
      a
      Consolidated and consolidating basis, certified by the principal financial
      officer of Katy as prepared in accordance with GAAP and fairly presenting in
      all
      material respects the financial position and results of operations of Katy
      and
      its Subsidiaries for such month and period subject only to changes from audit
      and year-end adjustments and except that such statements need not contain
      notes;

     

    (iii)  together
      with each delivery of financial statements pursuant to clauses (i) and
      (ii) of this subsection 7.1.3, a management report setting forth in
      comparative form the corresponding figures for the corresponding periods of
      the
      previous fiscal year and the corresponding figures from the most recent
      Projections for the current fiscal year delivered pursuant to
      subsection 7.1.7.  The information above shall be presented in
      reasonable detail and shall be certified by the chief financial officer of
      Katy
      to the effect that such information fairly presents in all material respects
      the
      results of operation and financial condition of Katy and its Subsidiaries as
      at
      the dates and for the periods indicated;

     

    (iv)  promptly
      after the sending or filing thereof, as the case may be, copies of any proxy
      statements, financial statements or reports which Katy has made available to
      its
      Securities holders and copies of any regular, periodic and special reports
      or
      registration statements which Katy or any of its Subsidiaries files with the
      Securities and Exchange Commission or any governmental authority which may
      be
      substituted therefor or any national securities exchange;

     

    
      
        
        

      

      
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    (v)  upon
      request of Agent, copies of any annual report to be filed as required by ERISA
      in connection with each Plan; and

     

    (vi)  such
      other data and information (financial and otherwise) as Agent or any Lender
      (through Agent), from time to time, may reasonably request, bearing upon or
      related to the Collateral or any Borrower’s or any of its Subsidiaries’
financial condition or results of operations.

     

    Concurrently
      with the delivery of the financial statements described in clause (i) of
      this subsection 7.1.3, Katy shall forward to Agent a copy of the
      accountants’ letter to Katy’s management that is prepared in connection with
      such financial statements.  Not later than 45 days after the end of
      any fiscal quarter of Katy or if an Event of Default exists and is continuing,
      more frequently if reasonably requested by Agent, Katy shall cause to be
      prepared and furnished to Agent a Compliance Certificate in the form of
Exhibit 7.1.3 hereto executed by the Chief Financial Officer of
      Borrower (a “Compliance Certificate”).

     

    7.1.4  Borrowing
      Base Certificates.  On or before the 15th day of each month from
      and after the date hereof, Borrowers shall deliver to Agents, in form acceptable
      to Agent, a Borrowing Base Certificate as of the last day of the immediately
      preceding month, with such supporting materials as Agent shall reasonably
      request.  If Borrowers deem it advisable, or Agent shall request,
      Borrowers shall execute and deliver to Agents Borrowing Base Certificates more
      frequently than monthly.

     

    7.1.5  Landlord,
      Processor and Storage Agreements.  Provide Agent with copies of
      all agreements between any Borrower or any of its Subsidiaries and any landlord,
      warehouseman, processor, distributor or consignee which owns or is the lessee
      of
      any premises at which any Collateral may, from time to time, be
      kept.  With respect to any lease (other than leases for sales
      offices), warehousing agreement or any processing agreement in any case entered
      into after the Closing Date, the applicable Borrower shall provide Agent with
      appropriate Collateral Access Agreements with respect to such
      premises.  Such Collateral Access Agreements shall be in a form
      supplied by Agent to Borrowers with such reasonable revisions as are customarily
      accepted by Agent or by similar financial institutions in similar financial
      transactions.

     

    7.1.6  Projections.  No
      later than 30 days after the first day of each fiscal year of Katy, deliver
      to
      Agent Projections of Katy and each of its Subsidiaries for said fiscal year,
      month by month.

     

    7.1.7  Subsidiaries.  Cause
      each Subsidiary of any Borrower (other than Inactive Subsidiaries), whether
      now
      or hereafter in existence, promptly upon Agent’s request therefor, to execute
      and deliver to the applicable Agent a Guaranty Agreement and the Security
      Agreement (or joinder thereto or British or Canadian equivalents thereof)
      pursuant to which such Subsidiary guaranties the payment of all Obligations
      (with respect to Domestic Subsidiaries), all Canadian Obligations (with respect
      to Canadian Subsidiaries) or all U.K. and U.S. Obligations (with respect to
      U.K.
      Subsidiaries) and grants to the applicable Agent a first priority Lien (subject
      only to Permitted Liens) on all of its Properties of the types described in
      the
      Security Agreement.  

     

    
      
        
        

      

      
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      Additionally,
        the applicable Borrower shall execute and deliver to Agent a pledge agreement
        pursuant to which such Borrower grants to Agent a First Priority Lien (subject
        only to Permitted Liens) with respect to all of the issued and outstanding
        Securities of each such Subsidiary or, with respect to Foreign Subsidiaries
        of
        Katy, sixty-five percent (65%) of the issued and outstanding securities of
        each
        top-tier Foreign Subsidiary.

    

     

    7.1.8  Deposit
      and Brokerage Accounts.  For each deposit account or brokerage
      account that any Borrower or another Loan Party at any time opens or maintains,
      the applicable Borrower shall, or shall cause the applicable Loan Party to,
      at
      Agent’s request and option, pursuant to an agreement in form and substance
      reasonably satisfactory to Agent, cause the depository bank or securities
      intermediary, as applicable, to agree to comply at any time with instructions
      from the applicable Agent to such depository bank or securities intermediary,
      as
      applicable, directing the disposition of funds from time to time credited to
      such deposit or brokerage account, without further consent of the applicable
      Borrower or the applicable Loan Party.

     

    7.2  Negative
      Covenants.  During the Term, and thereafter for so long as there
      are any Obligations outstanding, Borrowers covenant that, unless otherwise
      consented to by Majority Lenders, in writing, they shall not:

     

    7.2.1  Mergers;
      Consolidations; Acquisitions; Structural Changes.  Merge or
      consolidate, or permit any Subsidiary of any Borrower to merge or consolidate,
      with any Person; nor change its or any of its Subsidiaries’ state of
      incorporation or organization, Type of Organization or Organizational
      I.D. Number; nor change its or any of any Borrower’s Subsidiaries’ legal
      name without at least 14 days’ prior written notice to Agent; nor acquire, nor
      permit any of any Borrower’s Subsidiaries to acquire, all or any substantial
      part of the Properties of any Person, except for:

     

    (i)  mergers
      of any Subsidiary of a Borrower into a Borrower or another wholly-owned
      Subsidiary of a Borrower;

     

    (ii)  acquisitions
      of assets consisting of fixed assets or real Property that constitute Capital
      Expenditures permitted under subsection 7.2.8;

     

    (iii)  Permitted
      Acquisitions;

     

    (iv)  as
      contemplated by Exhibit 7.2.12;

     

    (v)  sales
      or
      liquidations of Inactive Subsidiaries and liquidations of other wholly-owned
      Subsidiaries if the assets of such Subsidiary are distributed to another Loan
      Party (to the extent the liquidated Subsidiary was a Loan Party);
      and

     

    (vi)  dispositions
      of assets effected through a merger or otherwise permitted pursuant to
      subsection 7.2.9.

     

    
      
        
        

      

      
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    7.2.2  Loans.  Make,
      or permit any Subsidiary of a Borrower to make, any loans or other advances
      of
      money to any Person, other than (i) for salary, travel advances, advances
      against commissions and other similar advances to employees in the ordinary
      course of business, (ii) extensions of trade credit in the ordinary course
      of business, (iii) deposits with financial institutions permitted under
      this Agreement, (iv) prepaid expenses; and (v) loans and advances by a
      Borrower or its Subsidiaries to any of its Subsidiaries and
viceversa; provided that such Subsidiary is a Loan Party,
      that any such loans and advances are evidenced by a promissory note in form
      and
      substance acceptable to Agent and pledged to the applicable Agent pursuant
      to
      the applicable Collateral Document.

     

    7.2.3  Total
      Money Borrowed.  Create, incur, assume, or suffer to exist, or
      permit any Subsidiary of Borrower to create, incur or suffer to exist, any
      Money
      Borrowed, except:

     

    (i)  Obligations
      owing to Agent or any Lender under this Agreement or any of the other Loan
      Documents;

     

    (ii)  Money
      Borrowed, including without limitation Subordinated Debt, existing on the date
      of this Agreement and listed on Exhibit 7.2.3;

     

    (iii)  Permitted
      Purchase Money Indebtedness;

     

    (iv)  Guaranties
      of any Money Borrowed permitted hereunder;

     

    (v)  Money
      Borrowed in respect of intercompany loans permitted under
      subsection 7.2.2(v);

     

    (vi)  obligations
      to pay Rentals permitted by subsection 7.2.18;

     

    (vii)  unsecured
      Money Borrowed in connection with the financing of insurance premiums;
provided that the aggregate amount of any such Money Borrowed does not
      exceed, at any point in time, $2,000,000; and

     

    (viii)  Money
      Borrowed not included in paragraphs (i) through (vii) above, which does not
      exceed at any time, in the aggregate, $650,000.

     

    7.2.4  Affiliate
      Transactions.  Enter into, or be a party to, or permit any
      Subsidiary of any Borrower to enter into or be a party to, any transaction
      with
      any Affiliate of Borrower or any holder of any Securities of any Borrower or
      any
      Subsidiary of any Borrower, including without limitation any management,
      consulting or similar fees, except:

     

    (i)  in
      the
      ordinary course of and pursuant to the reasonable requirements of such
      Borrower’s or such Subsidiary’s business and upon fair and reasonable terms
      which are fully disclosed to Agent and are no less favorable to such Borrower
      or
      such Subsidiary than would be obtained in a comparable arms-length transaction
      with a Person not an Affiliate or Security holder of Katy;

     

    
      
        
        

      

      
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    (ii)  Borrowers
      and/or any other Loan Party may pay management fees to K&C pursuant to the
      terms and conditions of the Management Agreement as such terms and conditions
      are in effect as of the Closing Date so long as (x) the aggregate amount of
      such fees paid in any fiscal year of Katy does not exceed $500,000 plus
      out-of-pocket expenses and (y) either no Default or Event of Default has
      occurred and is continuing or would be caused by such payment or a Default
      or
      Event of Default (other than a payment default of the type referred to in
      subsection 9.1.1 or 9.1.2) and Aggregate Availability after giving effect to
      the
      payment of any such management fee shall exceed $5,000,000 (it being understood
      that nothing in this subsection 7.2.4 shall prohibit the accrual of the
      management fees under the Management Agreement during the period that such
      fees
      or other amounts are prohibited from being paid pursuant to this subsection
      7.2.4); and

     

    (iii)  So
      long
      as no Event of Default or Default shall have occurred and is continuing or
      shall
      be caused thereby, Katy may make payments to K&C or K&C’s Affiliates to
      the extent necessary to pay Katy’s obligations under any Kohlberg Agreement in
      effect on the Closing Date or entered into by Katy after the Closing Date in
      accordance with this subsection 7.2.4, as it may be amended from time to time
      in
      accordance with subsection 7.2.19.

     

    7.2.5  Limitation
      on Liens.  Create or suffer to exist, or permit any Subsidiary
      (other than Inactive Subsidiaries) of any Borrower to create or suffer to exist,
      any Lien upon any of its Property, income or profits, whether now owned or
      hereafter acquired, except:

     

    (i)  Liens
      at
      any time granted in favor of Agent for the benefit of Lenders;

     

    (ii)  Liens
      for
      taxes, assessments or governmental charges (excluding any Lien imposed pursuant
      to any of the provisions of ERISA) not yet due, or being contested in the manner
      described in subsection 6.1.14 hereto, but only, with respect to contested
      taxes, if in Agent’s judgment such Lien would not reasonably be expected to
      adversely effect Agent’s rights or the priority of Agent’s lien on any
      Collateral;

     

    (iii)  Liens
      arising in the ordinary course of the business of any such Borrower or any
      of
      its Subsidiaries by operation of law or regulation, but only if payment in
      respect of any such Lien is not at the time required and such Liens do not,
      in
      the aggregate, materially detract from the value of the Property of such
      Borrower or any of its Subsidiaries or materially impair the use thereof in
      the
      operation of the business of such Borrower or any of its
      Subsidiaries;

     

    (iv)  Purchase
      Money Liens securing Permitted Purchase Money Indebtedness;

     

    (v)  such
      other Liens as appear on Exhibit 7.2.5 hereto;

     

    
      
        
        

      

      
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    (vi)  Liens
      incurred or deposits made in the ordinary course of business in connection
      with
      (1) worker’s compensation, social security, employer’s health tax,
      unemployment insurance and other like laws or (2) sales contracts, leases,
      statutory obligations, work in progress advances and other similar obligations
      not incurred in connection with the borrowing of money or the payment of the
      deferred purchase price of property;

     

    (vii)  reservations,
      covenants, zoning and other land use regulations, title exceptions or
      encumbrances granted in the ordinary course of business, affecting real Property
      owned or leased by a Borrower or one of its Subsidiaries; provided that
      such exceptions do not in the aggregate materially interfere with the use of
      such Property in the ordinary course of such Borrower’s or such Subsidiary’s
      business;

     

    (viii)  judgment
      Liens that do not give rise to an Event of Default under
      subsection 9.1.16;

     

    (ix)  Liens
      securing intercompany loans permitted under
      subsection 7.2.2(v);

     

    (x)  such
      other Liens as Majority Lenders may hereafter approve in writing;
      and

     

    (xi)  with
      respect to a Canadian Loan Party, the reservations, limitations, provisos and
      conditions, if any, expressed in any original grants from the
      Crown.

     

    7.2.6  Payments
      and Amendments of Certain Debt.  Make or permit any Subsidiary of
      any Borrower to make any payment of any part or all of any Subordinated Debt
      or
      take any other action or omit to take any other action in respect of any
      Subordinated Debt, except in accordance with the subordination agreement
      relative thereto or the subordination provisions thereof; or amend or modify
      any
      agreement, instrument or document evidencing or relating to any Subordinated
      Debt.

     

    7.2.7  Distributions.  Declare
      or make, or permit any Subsidiary of any Borrower to declare or make, any
      Distributions, except for:

     

    (i)  Distributions
      by any Subsidiary of a Borrower to such Borrower or to an intermediate
      Subsidiary of such Borrower;

     

    (ii)  Distributions
      paid solely in Securities of a Borrower or any of its Subsidiaries including,
      without limitation, Distributions paid by Katy solely in Securities on Katy’s
      Convertible Preferred Stock;

     

    (iii)  Distributions
      by a Borrower in amounts necessary to permit such Borrower to repurchase
      Securities of such Borrower from employees of such Borrower or any of its
      Subsidiaries upon the termination of their employment or to permit Katy to
      make
      open market repurchases of its Securities, so long as no Default or Event of
      Default exists at the time of or would be caused by the making of such
      Distributions and the aggregate cash amount of such Distributions, measured
      at
      the time when made, does not exceed $1,000,000 in any fiscal year of
      Katy;

     

    
      
        
        

      

      
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    (iv)  so
      long
      as no Default or Event of Default exists at the time of or would be caused
      by
      the making of such Distributions, Distributions by Katy in an amount sufficient
      to permit Parent to pay Consolidated tax liabilities of Parent, Katy and Katy’s
      Subsidiaries relating to the business of Borrowers and Borrowers’ Subsidiaries,
      so long as Parent applies the amount of such Distributions for such purpose;
      and

     

    (v)  Distributions
      by Katy to the extent necessary to permit Parent to pay administrative costs
      and
      expenses related to the business of Borrowers and their Subsidiaries, not to
      exceed $100,000 in any fiscal year of Katy, so long as Parent applies the amount
      of such Distributions for such purpose.

     

    7.2.8  Intentionally
      Omitted.

     

    7.2.9  Disposition
      of Assets.  Sell, lease or otherwise dispose of any of, or permit
      any Subsidiary of any Borrower to sell, lease or otherwise dispose of any of,
      its Properties, including any disposition of Property as part of a sale and
      leaseback transaction, to or in favor of any Person, except for:

     

    (i)  sales
      of
      Inventory in the ordinary course of business;

     

    (ii)  transfers
      of Property to a Borrower by a Subsidiary of Borrower or transfers of Property
      by a Loan Party to another Loan Party;

     

    (iii)  dispositions
      of Property that is substantially worn, damaged, uneconomic, redundant or
      obsolete; provided that the sales proceeds from such dispositions are (A)
      reinvested in Equipment or other real Property in which Agent has a Lien
      (subject only to Permitted Liens that are not Purchase Money Liens) within
      180
      days after the date of such disposition as provided in subsection 3.3.1 of
      the Agreement or (B) applied to the Loans pursuant to subsection 3.3.1 of
      the Loan Agreement;

     

    (iv)  dispositions
      of investments described in clauses (iv), (v), (vi) and (vii) of the definition
      of the term “Restricted Investments”;

     

    (v)  other
      dispositions expressly authorized by this Agreement;

     

    (vi)  leases
      or
      subleases of unused real Property or Equipment; provided that such leases
      or subleases are pursuant to arms-length agreements with third parties at fair
      market rates;

     

    
      
        
        

      

      
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    (vii)  Asset
      Sales of assets having a fair market value not in excess of $5,000,000 in any
      single transaction (or a series of related transactions) or in excess of
      $10,000,000 in the aggregate over the Term; provided that in any such
      Asset Sale, (x) the consideration received for such assets shall be in an amount
      at least equal to the greater of (i) the fair market value thereof, and (ii)
      (A)
      in the case of Accounts and Inventory, the aggregate value attributable to
      such
      Accounts and Inventory in determining the Canadian, U.K. or U.S. Borrowing
      Base,
      as applicable (but without giving effect to any reduction due to advance rates
      or any reserves), and (B), as long as the Term Loan is outstanding, in the
      case
      of Equipment and real Property Assets, seventy percent (70%), with respect
      to
      real Property, or eighty percent (80%), with respect to Equipment, of the
      Appraised Value of such asset; it being understood that in the case of Asset
      Sales of capital stock or other equity interests (or any options or warrants
      to
      purchase stock or other Securities exchangeable for or convertible into stock
      or
      other equity interests) of any Person, the consideration received therefor
      shall
      be in an amount equal to the greater of (i) the fair market value thereof and
      (ii) the aggregate value attributable to such Person’s Accounts and Inventory in
      determining the Canadian, U.K. or U.S. Borrowing Base, as applicable (but
      without giving effect to any reduction due to advance rates or any reserves)
      plus seventy percent (70%), with respect to real Property, or eighty
      percent (80%) with respect to Equipment, of the Appraised Value of such Person’s
      Equipment or real Property; (y) the sole consideration received shall be cash
      or, if the disposition in question is of a business line, entire facility or
      division, assumption of Indebtedness; and (z) the proceeds of such Asset Sales
      shall be applied as required by subsection 3.3.1 of the Agreement or, with
      respect to sales proceeds of Equipment or real Property, are reinvested in
      Equipment or other real Property in which Agent has a Lien (subject only to
      Permitted Liens that are not Purchase Money Liens) within 180 days after the
      date of disposition as provided in subsection 3.3.1 of the Agreement; and
provided, further, that in any such Asset Sale in which the
      consideration received exceeds $20,000, Agent shall have received a certificate
      of an officer of Borrower Representative evidencing that the conditions in
      clauses (x) and (y) above will be satisfied and certifying that Borrowers and
      their Subsidiaries will comply with clause (z) above and setting forth in
      reasonable detail the calculations relating thereto and otherwise in form and
      substance satisfactory to Agent at least 5 Business Days prior to the
      consummation of the proposed Asset Sale;

     

    (viii)  the
      transactions contemplated by that certain Purchase Agreement (“Woods Purchase
      Agreement”) dated November 1, 2007 by and among Coleman Cable, Inc., Woods
      Industries, Inc., Woods Industries (Canada) Inc. and Katy Industries, Inc.,
      a
      true, correct and complete (in all material respects) copy of which Borrowers
      represent and covenant has been delivered to Agent;

     

    (ix)  sales
      of
      Equipment and real Property located at 511 Third Avenue, SW, Carmel, Indiana
      (the Woods Wire Mill); provided that the aggregate net sales proceeds
      from such dispositions are applied to U.S. Revolving Credit Loans (without
      a
      permanent reduction of the U.S. Revolving Credit Loan Commitment);

     

    
      
        
        

      

      
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    (x)  the
      sale
      of the capital stock of Sahlman Holding Company, Inc., owned by Katy or one
      of
      its Subsidiaries; provided that the aggregate net sales proceeds from
      such sale equal or exceed $2,200,000 and that the sales proceeds thereof shall
      be applied to U.S. Revolving Credit Loans (without a permanent reduction of
      the
      U.S. Revolving Credit Loan Commitment);

     

    (xi)  sales
      or
      liquidations of Inactive Subsidiaries;

     

    (xii)  sales
      of
      Equipment located at Katy’s facility in Bridgeton, Missouri; provided
      that the aggregate net sales proceeds from such disposition are applied to
      the
      Term Loan pursuant to subsection 3.3.1 and that in connection with such
      disposition, the Term Loan is paid down by an amount equal to or greater than
      eighty percent (80%) of the Appraised Value of the disposed Equipment;
      and

     

    (xiii)  mergers
      or consolidations otherwise permitted by this Agreement.

     

    7.2.10  Securities
      of Subsidiaries.  Permit any of its Subsidiaries to issue any
      additional Securities except to a Borrower or a wholly-owned Subsidiary of
      a
      Borrower and except for director’s qualifying Securities; except in connection
      with dispositions permitted pursuant to subsection 7.2.9 above and for
      director’s qualifying shares, permit any Person other than Katy or another Loan
      Party to own or control any issued and outstanding Security or Voting Stock
      of
      any Loan Party (other than Parent).

     

    7.2.11  Bill-and-Hold
      Sales, Etc.  Make, or permit any Subsidiary of any Borrower to
      make, a sale to any customer on a bill-and-hold, guaranteed sale, sale and
      return, sale on approval, repurchase or return or consignment basis, except
      for
      immaterial consignments reflected on the most recent Borrowing Base
      Certificate.

     

    7.2.12  Restricted
      Investment.  Make or have, or permit any Subsidiary of any
      Borrower to make or have, any Restricted Investment.

     

    7.2.13  Subsidiaries
      and Joint Ventures.  Create, acquire or otherwise suffer to exist,
      or permit any Subsidiary of any Borrower to create, acquire or otherwise suffer
      to exist, any Subsidiary or joint venture arrangement not in existence as of
      the
      date hereof, except for as set forth in Exhibit 7.2.12 or in
      connection with a Permitted Acquisition.

     

    7.2.14  Tax
      Consolidation.  File or consent to the filing of any consolidated
      income tax return with any Person other than Parent and Borrowers’
Subsidiaries.

     

    7.2.15  Organizational
      Documents.  Agree to, or suffer to occur, any amendment,
      supplement or addition to any Borrower’s or any of its Subsidiaries’ charter,
      articles or certificate of incorporation, certificate of formation, limited
      partnership agreement, bylaws, limited liability agreement, operating agreement
      or other organizational documents (as the case may be), that would reasonably
      be
      expected to have a Material Adverse Effect.

     

    7.2.16  Fiscal
      Year End.  Change, or permit any Subsidiary of any Borrower to
      change, its fiscal year end.

     

    
      
        
        

      

      
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    7.2.17  Negative
      Pledges.  Enter into any agreement limiting the ability of any
      Borrower or any of its Subsidiaries to voluntarily create Liens upon any of
      its
      Property other than Property securing Permitted Purchase Money Indebtedness
      and
      other than pursuant to the Second Lien Documents.

     

    7.2.18  Leases.  Become,
      or permit any Subsidiary of any Borrower to become, a lessee under any operating
      lease (other than a lease under which Borrowers or any of their Subsidiaries
      is
      lessor) of Property if the aggregate Rentals payable during any current or
      future period of twelve (12) consecutive months under the lease in question
      and all other leases under which Borrowers or any of their Subsidiaries is
      then
      lessee would exceed $7,000,000.  The term “Rentals” means, as of the
      date of determination, all payments which the lessee is required to make by
      the
      terms of any lease.

     

    7.2.19  Amendments
      or Waivers of Certain Agreements.  Agree, or permit any Subsidiary
      to agree, to any material amendment to, or waive any of its material rights
      under, or terminate or agree to terminate any Kohlberg Agreement, the SESCO
      Note
      or any Related Agreements after the Closing Date, in each case in a manner
      that
      could materially and adversely affect Agent or Lenders without in each case
      obtaining the prior written consent of Majority Lenders to such amendment,
      waiver or termination.

     

    SECTION 8.                                CONDITIONS
      PRECEDENT

     

    Notwithstanding
      any other provision of this Agreement or any of the other Loan Documents, and
      without affecting in any manner the rights of Agent or any Lender under the
      other sections of this Agreement, no Lender shall be required to make any Loan,
      nor shall Agent be required to issue or procure any Letter of Credit or LC
      Guaranty unless and until each of the following conditions has been and
      continues to be satisfied:

     

    8.1  Documentation.  Agent
      shall have received, in form and substance satisfactory to Agent and its
      counsel, a duly executed copy of this Agreement and the other Loan Documents,
      together with such additional documents, instruments, opinions and certificates
      as Agent and its counsel shall require in connection therewith from time to
      time
      (including, without limitation, all items set forth in Exhibit 8.1),
      all in form and substance satisfactory to Agent and its counsel.

     

    8.2  No
      Default.  No Default or Event of Default shall exist.

     

    8.3  Other
      Conditions.  Each of the conditions precedent set forth in the
      Loan Documents shall have been satisfied.

     

    8.4  Aggregate
      Availability.  Agent shall have determined that immediately after
      Lenders have made the initial Loans and after Agent has issued or procured
      the
      initial Letters of Credit and LC Guaranties contemplated hereby, Katy and
      Borrowers have paid (or, if accrued, treated as paid), all closing costs
      incurred in connection with the transactions contemplated hereby, Aggregate
      Availability shall not be less than $12,000,000.

     

    8.5  No
      Litigation.  No action, proceeding, investigation, regulation or
      legislation shall have been instituted, threatened or proposed before any court,
      governmental agency or legislative body to enjoin, restrain or prohibit, or
      to
      obtain damages in respect of, or which is related to or arises out of this
      Agreement or the consummation of the transactions contemplated
      hereby.

     

    
      
        
        

      

      
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    8.6  Material
      Adverse Effect.  As of the Closing Date, since September 30, 2007,
      there has not been any material adverse change in its business, assets,
      financial condition, income or prospects and no event or condition exists which
      would be reasonably likely to result in any Material Adverse
      Effect.

     

    SECTION 9.                                EVENTS
      OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT

     

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

     

    9.1.1  Payment
      of Obligations.  Any Borrower shall fail to pay any of the
      Obligations hereunder or under any Note consisting of principal, interest,
      unused line fees or letter of credit fees on the due date thereof (whether
      due
      at stated maturity, on demand, upon acceleration or otherwise); any Borrower
      shall fail to pay any of the other Obligations hereunder or under any Note
      on
      the due date thereof (whether due at stated maturity or demand, upon
      acceleration or otherwise) and such failure shall continue for more than 5
      days.

     

    9.1.2  Misrepresentations.  Any
      representation, warranty or other statement made or furnished to Agent or any
      Lender by or on behalf of any Borrower, any Subsidiary of any Borrower or any
      other Loan Party in this Agreement, any of the other Loan Documents or any
      instrument, certificate or financial statement furnished in compliance with
      or
      in reference thereto proves to have been false or misleading in any material
      respect when made, furnished or reaffirmed pursuant to Section 6.2
      hereof.

     

    9.1.3  Breach
      of Specific Covenants.  Any Borrower shall fail or neglect to
      perform, keep or observe any covenant contained in Section or
      subsection 5.1.1, 5.1.2, 5.2.4, 5.2.5, 7.1.1, 7.1.2, 7.1.4, 7.2 or 7.3
      hereof on the date that such Borrower is required to perform, keep or observe
      such covenant or shall fail or neglect to perform, keep or observe any covenant
      contained in Section 7.1.3 or 7.1.7 hereof within 5 days following the date
      on which such Borrower is required to perform, keep or observe such
      covenant.

     

    9.1.4  Breach
      of Other Covenants.  Any Borrower shall fail or neglect to
      perform, keep or observe any covenant contained in this Agreement (other than
      a
      covenant which is dealt with specifically elsewhere in Section 9.1 hereof)
      and the breach of such other covenant is not cured to Agent’s satisfaction
      within 30 days after the sooner to occur of such Borrower’s receipt of notice of
      such breach from Agent or the date on which such failure or neglect first
      becomes known to any officer of such Borrower.

     

    9.1.5  Default
      Under Security Documents or Other Agreements.  Any event of
      default shall occur under, or any Borrower, any of its Subsidiaries or any
      other
      Loan Party shall default in the performance or observance of any term, covenant,
      condition or agreement contained in, any of the Security Documents, or the
      Other
      Agreements and such default shall continue beyond any applicable grace
      period.

     

    
      
        
        

      

      
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    9.1.6  Other
      Defaults.  There shall occur any default or event of default on
      the part of any Borrower, any Subsidiary of any Borrower or any other Loan
      Party
      under any agreement, document or instrument to which such Borrower, such
      Subsidiary of such Borrower or such other Loan Party is a party or by which
      such
      Borrower, such Subsidiary of such Borrower or such other Loan Party or any
      of
      its Property is bound, evidencing or relating to any Money Borrowed (other
      than
      the Obligations) with an outstanding principal balance in excess of $1,000,000,
      if the payment or maturity of such Indebtedness is or could be accelerated
      in
      consequence of such event of default or demand for payment of such Indebtedness
      is made or could be made in accordance with the terms thereof.

     

    9.1.7  Uninsured
      Losses.  Any material loss, theft, damage or destruction of any
      portion of the Collateral having a fair market value of $1,000,000, in the
      aggregate, in any twelve month period if not fully covered (subject to such
      deductibles and self-insurance retentions as Agent shall have permitted) by
      insurance and such loss, theft, damage or destruction could reasonably be
      expected to have a Material Adverse Effect.

     

    9.1.8  Insolvency
      and Related Proceedings.  Any Borrower, any Subsidiary of any
      Borrower or any other Loan Party shall suffer the appointment of a receiver,
      trustee, custodian, administrator, administrative receiver or manager, examiner
      interim receiver, sheriff, monitor, sequestrator or similar officer or
      fiduciary, or shall pass or convene any meeting for the purpose of considering
      any resolution for winding up, examination or administration, or shall make
      an
      assignment, composition or arrangement for the benefit of creditors, or any
      petition for an order for relief (or similar proceedings, including, without
      limitation, an application for a stay order or filing of a proposal or notice
      of
      intention to make a proposal) shall be filed by or against any Borrower, any
      Subsidiary of any Borrower or any other Loan Party under U.S. federal bankruptcy
      laws, the Insolvency Laws of Canada, England’s Insolvency Act of 1986 or any
      other insolvency laws in the United Kingdom or Ireland (if against any Borrower,
      any Subsidiary of any Borrower or any other Loan Party (except with respect
      to
      any event occurring as set forth in the last sentence of this
      subsection 9.1.8) and such action is not taken voluntarily by such
      Borrower, any Subsidiary of any Borrower or any other Loan Party, the
      continuation of such proceeding for more than 60 days, or, with respect to
      any
      proceeding in the United Kingdom, 14 days), or such Borrower, such Subsidiary
      or
      such other Loan Party shall make any offer of settlement, extension or
      composition to their respective unsecured creditors generally.  With
      respect to U.K. Borrower, any of its Subsidiaries or any other U.K. Loan Party,
      a petition has been presented or meeting convened or application made for the
      purpose of appointing a liquidator, an examiner, an administrator or receiver
      or
      other similar officer of, or for the making of an administration or examination
      order in respect of, U.K. Borrower, its such subsidiary or such other U.K.
      Loan
      Party and (a) other than in the case of a petition to appoint an administrator,
      such petition or application is not stayed or discharged within fourteen (14)
      days or in any event before it is heard or (b) in the case of a petition to
      appoint an administrator, U.K. Agent is not satisfied in its sole discretion
      that it will be discharged before it is heard.

     

    
      
        
        

      

      
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    9.1.9  Business
      Disruption; Condemnation.  There shall occur a cessation of a
      substantial part of the business of any Borrower, any Subsidiary of any Borrower
      or any other Loan Party for a period which could reasonably be expected to
      have
      a Material Adverse Effect; or any Borrower, any Subsidiary of any Borrower
      or
      any other Loan Party shall suffer the loss or revocation of any license or
      permit now held or hereafter acquired by such Borrower, any Subsidiary of any
      Borrower or any other Loan Party which loss could reasonably be expected to
      have
      a Material Adverse Effect; or any Borrower, any Subsidiary of any Borrower
      or
      any other Loan Party shall be enjoined, restrained or in any way prevented
      by
      court, governmental or administrative order from conducting all or any part
      of
      its business affairs which injunction, restraint or other action could
      reasonably be expected to have a Material Adverse Effect; or any lease or
      agreement pursuant to which such Borrower, any Subsidiary of any Borrower or
      any
      other Loan Party leases, uses or occupies any Property shall be canceled or
      terminated prior to the expiration of its stated term, except any such lease
      or
      agreement the cancellation or termination of which could not reasonably be
      expected to have a Material Adverse Effect; or any portion of the Collateral
      shall be taken through condemnation or the value of such Property shall be
      impaired through condemnation, which taking or impairment could reasonably
      be
      expected to have a Material Adverse Effect.

     

    9.1.10  Lien
      on Katy Preferred or Common Stock.  There shall exist any Lien on
      the Preferred Stock or Common Stock of Katy owned by Parent.

     

    9.1.11  ERISA.  A
      Reportable Event shall occur which, in Agent’s determination, constitutes
      grounds for the termination by the Pension Benefit Guaranty Corporation of
      any
      Plan or for the appointment by the appropriate United States district court
      of a
      trustee for any Plan, or any Plan shall be terminated or any such trustee shall
      be requested or appointed, or any Borrower, any Subsidiary of any Borrower
      or
      any other Loan Party is in “default” (as defined in Section 4219(c)(5) of
      ERISA) with respect to payments to a Multiemployer Plan resulting from
      Borrower’s, such Subsidiary’s or such Loan Party’s complete or partial
      withdrawal from such Plan and any such event could reasonably be expected to
      have a Material Adverse Effect.

     

    9.1.12  Canadian
      Pension Plans.  Any of the following events or conditions has
      occurred and such event or condition could reasonably be expected to have a
      Material Adverse Effect:  (a) Canadian Borrower terminates any
      Canadian Pension Plan; (b) an event providing grounds to terminate or
      wind-up a Canadian Pension Plan in whole or in part by order of any applicable
      pension regulatory authority; (c) any event or condition which would
      require the appointment by the applicable regulator of a trustee or similar
      Person to administer a Canadian Pension Plan.

     

    9.1.13  Challenge
      to Agreement.  Any Borrower, any Subsidiary of any Borrower or any
      other Loan Party, or any Affiliate of any of them, shall challenge or contest
      in
      any action, suit or proceeding the validity or enforceability of this Agreement
      or any of the other Loan Documents, the legality or enforceability of any of
      the
      Obligations or the perfection or priority of any Lien granted to
      Agents.

     

    9.1.14  Repudiation
      of or Default Under Guaranty Agreement.  Any Borrower or other
      Loan Party shall revoke or attempt to revoke the Guaranty Agreement signed
      by
      such Loan Party or the guaranty of such Borrower contained herein, or shall
      repudiate such Borrower’s or such other Loan Party’s liability thereunder or
      shall be in default under the terms thereof.

     

    9.1.15  Criminal
      Forfeiture.  Any Borrower, any Subsidiary of any Borrower or any
      other Loan Party shall be criminally indicted or convicted under any law that
      in
      Agent’s Permitted Discretion, could reasonably be expected to have a Material
      Adverse Effect.

     

    
      
        
        

      

      
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    9.1.16  Judgments.  Any
      money judgment, writ of attachment or similar processes (collectively,
“Judgments”) are issued or rendered against any Borrower, any Subsidiary of any
      Borrower or any other Loan Party, or any of their respective Property
      (i) in the case of money judgments, in an amount of $1,000,000 or more for
      any single judgment, attachment or process or $2,500,000 or more for all such
      judgments, attachments or processes in the aggregate, in each case in excess
      of
      any applicable insurance with respect to which the insurer has admitted
      liability, and (ii) in the case of non-monetary Judgments, such Judgment or
      Judgments (in the aggregate) could reasonably be expected to have a Material
      Adverse Effect, in each case with respect to any Judgment referred to in
      clauses (i) or (ii) above, which Judgment is not stayed, pending
      appeal or otherwise, released or discharged within 30 days.

     

    9.2  Acceleration
      of the Obligations.  Upon or at any time after the occurrence and
      during the continuance of an Event of Default, (i) the Revolving Loan
      Commitments shall, at the option of Agent or Majority Lenders be terminated
      and/or (ii) Agent or Majority Lenders may declare all or any portion of the
      Obligations at once due and payable without presentment, demand, protest or
      further notice by Agent or any Lender, and Borrowers shall forthwith pay to
      Agent, in the case of U.S. Borrower, to Canadian Agent, in the case of Canadian
      Borrower, and to U.K. Agent, in the case of U.K. Borrower, the full amount
      of
      such Obligations; provided, that upon the occurrence of an Event of
      Default specified in subsection 9.1.8 hereof, the Revolving Loan
      Commitments shall automatically be terminated and all of the Obligations shall
      become automatically due and payable, in each case without declaration, notice
      or demand by Agent or any Lender.

     

    9.3  Other
      Remedies.  Upon the occurrence and during the continuance of an
      Event of Default, Agent shall have and may exercise from time to time the
      following other rights and remedies:

     

    9.3.1  All
      of
      the rights and remedies of a secured party under the UCC, PPSA and the laws
      of
      the United Kingdom or under other applicable law, and all other legal and
      equitable rights to which Agent or Lenders may be entitled, all of which rights
      and remedies shall be cumulative and shall be in addition to any other rights
      or
      remedies contained in this Agreement or any of the other Loan Documents, and
      none of which shall be exclusive.

     

    9.3.2  The
      right
      to take immediate possession of the Collateral, and to (i) require
      Borrowers and each other Loan Party to assemble the Collateral, at Borrowers’
expense, and make it available to Agents at a place designated by Agent which
      is
      reasonably convenient to both parties, and (ii) enter any premises where
      any of the Collateral shall be located and to keep and store the Collateral
      on
      said premises until sold (and if said premises be the Property of a Borrower
      or
      any Subsidiary of any Borrower, such Borrower agrees not to charge, or permit
      any of its Subsidiaries to charge, Agents for storage thereof).

     

    9.3.3  The
      right
      to sell or otherwise dispose of all or any Collateral in its then condition,
      or
      after any further manufacturing or processing thereof, at public or private
      sale
      or sales, with such notice as may be required by law, in lots or in bulk, for
      cash or on credit, all as Agents, in their sole discretion, may deem
      advisable.  Agents may, at their option, disclaim any and all
      warranties regarding the Collateral in connection with any such
      sale.  Each Borrower agrees that 10 days’ written notice to such
      Borrower or any other Loan Party of any public or private sale or other
      disposition of Collateral shall be reasonable notice thereof, and such sale
      shall be at such locations as Agents may designate in said
      notice.  

     

    
      
        
        

      

      
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      Agents
        shall have the right to conduct such sales on any Borrower’s or any of its
        Subsidiaries’ or any other Loan Party’s premises, without charge therefor, and
        such sales may be adjourned from time to time in accordance with applicable
        law.  Agents shall have the right to sell, lease or otherwise dispose
        of the Collateral, or any part thereof, for cash, credit or any combination
        thereof, and Agents, on behalf of Lenders, may purchase all or any part of
        the
        Collateral at public or, if permitted by law, private sale and, in lieu of
        actual payment of such purchase price, may set off the amount of such price
        against the Obligations.  The proceeds realized from the sale of any
        Collateral may be applied, after allowing 2 Business Days for collection,
        first
        to the costs, expenses and attorneys’ fees incurred by Agents in collecting the
        Obligations secured thereby, in enforcing the rights of Agents and Lenders
        under
        the Loan Documents and in collecting, retaking, completing, protecting,
        removing, storing, advertising for sale, selling and delivering any Collateral,
        second to the interest due upon any of the Obligations secured thereby; and
        third, to the principal of the Obligations secured thereby.  Subject
        to Section 1.3 of this Agreement, if any deficiency shall arise, Borrowers
        and each Loan Party shall remain jointly and severally liable to Agents and
        Lenders therefor.

    

     

    9.3.4  Agent,
      with respect to the U.S. Collateral, Canadian Agent, with respect to the
      Canadian Collateral, and U.K. Agent, with respect to the U.K. Collateral, is
      hereby granted a non-exclusive license or other right to use, without charge,
      each Borrower’s licenses for Software or any Property of a similar nature, as it
      pertains to the Collateral, in realizing upon any Collateral and each Borrower’s
      rights under all such licenses shall inure to Agent’s, Canadian Agent’s and U.K.
      Agent’s benefit; provided that any such license or right to use shall be subject
      to the terms and conditions of the underlying license.

     

    9.3.5  Agents,
      at their option, may require each applicable Borrower to deposit with Agent,
      funds equal to the U.S. LC Amount, with Canadian Agent, funds equal to the
      Canadian LC Amount and with U.K. Agent, the U.K. LC Amount, and, if such
      Borrower fails to promptly make such deposit, Agent, Canadian Agent and U.K.
      Agent, as the case may be, may advance such amount as a Revolving Credit Loan
      (whether or not an Overadvance is created thereby).  Each such
      Revolving Credit Loan shall be secured by all of the Collateral (except that
      (x)
      Canadian Collateral shall not secure Revolving Credit Loans to U.S. Borrower,
      (y) U.K. Collateral shall not secure the Revolving Credit Loans to the Canadian
      Borrower and (z) the Canadian Collateral shall not secure the Revolving Credit
      Loans to the U.K. Borrower) and shall constitute a Base Rate Revolving
      Portion.  Any such deposit or advance shall be held by Agent, Canadian
      Agent or U.K. Agent, as applicable, as a reserve to fund future payments on
      such
      applicable LC Guaranties and future drawings against such applicable Letters
      of
      Credit.  At such time as all LC Guaranties have been paid or
      terminated and all Letters of Credit have been drawn upon or expired, any
      amounts remaining in such reserve shall be applied against any outstanding
      Obligations, or, if all Obligations have been indefeasibly paid in full,
      returned to the applicable Borrower; provided, that in no event shall (i) any
      such reserves held as Canadian Collateral or U.K. Collateral be applied to
      the
      U.S. Obligations, (ii) any such reserves held as U.K. Collateral be applied
      to the Canadian Obligations, and (iii) any such reserves held as Canadian
      Collateral be applied to the U.K. Obligations.

     

    
      
        
        

      

      
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    9.4  Set
      Off and Sharing of Payments.  In addition to any rights now or
      hereafter granted under applicable law and not by way of limitation of any
      such
      rights, during the continuance of any Event of Default, each Lender is hereby
      authorized by Borrowers at any time or from time to time, with prior written
      consent of Agents, and with reasonably prompt subsequent notice to Borrower
      Representative (any prior or contemporaneous notice to Borrower Representative
      being hereby expressly waived) to set off and to appropriate and to apply any
      and all (i) balances held by such Lender at any of its offices for the
      account of any Borrower (regardless of whether such balances are then due to
      any
      such Borrower); and (ii) other property at any time held or owing by such
      Lender to or for the credit or for the account of any Borrower against and
      on
      account of any of the Obligations.  Any Lender exercising a right to
      set off shall, to the extent the amount of any such set off exceeds its
      Aggregate Percentage of the amount set off, purchase for cash (and the other
      Lenders shall sell) interests in each such other Lender’s pro rata share of the
      Obligations as would be necessary to cause such Lender to share such excess
      with
      each other Lender in accordance with their respective Aggregate
      Percentages.  Borrowers agree, to the fullest extent permitted by law,
      that any Lender may exercise its right to set off with respect to amounts in
      excess of its prorata share of the Obligations and upon doing so
      shall deliver such excess to Agent for the benefit of all Lenders in accordance
      with the Aggregate Percentages.  Notwithstanding the foregoing, no
      Lender shall exercise set off rights with respect to (i) Canadian Borrower’s
      assets and apply such proceeds to the U.S. Obligations or (ii) U.K. Borrower’s
      assets and apply such proceeds to the Canadian Obligations or (iii) Canadian
      Borrower’s assets and apply such proceeds to the U.K. Obligations.

     

    9.5  Remedies
      Cumulative; No Waiver.  All covenants, conditions, provisions,
      warranties, guaranties, indemnities, and other undertakings of Borrowers
      contained in this Agreement and the other Loan Documents, or in any document
      referred to herein or contained in any agreement supplementary hereto or in
      any
      schedule given to Agents or any Lender or contained in any other agreement
      between any Lender and any Borrower or between Agents and any Borrower
      heretofore, concurrently, or hereafter entered into, shall be deemed cumulative
      to and not in derogation or substitution of any of the terms, covenants,
      conditions, or agreements of any Borrower herein contained.  The
      failure or delay of Agents or any Lender to require strict performance by
      Borrowers of any provision of this Agreement or to exercise or enforce any
      rights, Liens, powers, or remedies hereunder or under any of the aforesaid
      agreements or other documents or security or Collateral shall not operate as
      a
      waiver of such performance, Liens, rights, powers and remedies, but all such
      requirements, Liens, rights, powers, and remedies shall continue in full force
      and effect until all Loans and other Obligations owing or to become owing from
      Borrowers to Agents and each Lender have been fully satisfied.  None
      of the undertakings, agreements, warranties, covenants and representations
      of
      Borrowers contained in this Agreement or any of the other Loan Documents and
      no
      Default or Event of Default by Borrowers under this Agreement or any other
      Loan
      Documents shall be deemed to have been suspended or waived by Lenders, unless
      such suspension or waiver is by an instrument in writing specifying such
      suspension or waiver and is signed by a duly authorized representative of Agents
      and directed to Borrowers.

     

    
      
        
        

      

      
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    SECTION 10.                                AGENT;
      ASSIGNMENTS; AMENDMENTS

     

    10.1  Authorization
      and Action.

     

    (a)  Each
      Lender hereby appoints and authorizes Agent to take such action on its behalf
      and to exercise such powers under this Agreement and the other Loan Documents
      as
      are delegated to Agent by the terms hereof and thereof, together with such
      powers as are reasonably incidental thereto.  Each Lender hereby
      appoints and authorizes Canadian Agent to take such action on its behalf (and
      on
      behalf of Agent) and to exercise such powers under this Agreement and the other
      Loan Documents with respect to the administration of all Loans made to Canadian
      Borrower and with respect to Canadian Collateral.  Each Lender hereby
      appoints and authorizes U.K. Agent to take such action on its behalf (and on
      behalf of Agent) and to exercise such powers under this Agreement and the other
      Loan Documents with respect to the administration of all Loans made to U.K.
      Borrower and with respect to U.K. Collateral.  Each Lender hereby
      acknowledges that Agents shall not have by reason of this Agreement assumed
      a
      fiduciary relationship in respect of any Lender.  In performing its
      functions and duties under this Agreement, Agents shall act solely as agent
      of
      Lenders and shall not assume, or be deemed to have assumed, any obligation
      toward, or relationship of agency or trust with or for, any
      Borrower.  As to any matters not expressly provided for by this
      Agreement and the other Loan Documents (including without limitation enforcement
      and collection of the Notes), Agents may, but 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 Majority Lenders, whenever such instruction
      shall be requested by Agents or required hereunder, or a greater or lesser
      number of Lenders if so required hereunder, and such instructions shall be
      binding upon all Lenders; provided, that Agents shall be fully justified
      in failing or refusing to take any action which exposes Agents to any liability
      (other than taxes payable in the ordinary course of business) or which is
      contrary to this Agreement, the other Loan Documents or applicable law, unless
      Agent, Canadian Agent or U.K. Agent, as applicable, is indemnified to its
      satisfaction by the other Lenders against any and all liability and expense
      (other than any taxes that are not Tax Liabilities) which it may incur by reason
      of taking or continuing to take any such action.  If Agent, Canadian
      Agent or U.K. Agent seeks the consent or approval of the Majority Lenders (or
      a
      greater or lesser number of Lenders as required in this Agreement), with respect
      to any action hereunder, Agent, Canadian Agent or U.K. Agent, as applicable,
      shall send notice thereof to each Lender and shall notify each Lender at any
      time that the Majority Lenders (or such greater or lesser number of Lenders)
      have instructed Agent, Canadian Agent or U.K. Agent, as applicable, to act
      or
      refrain from acting pursuant hereto.

     

    (b)  Each
      Lender hereby authorizes Agent to delegate to Canadian Agent and U.K. Agent
      any
      and all of its obligations under this Agreement and the Loan Documents with
      respect to all actions required to be taken in Canada and the United Kingdom,
      respectively, of any kind whatsoever.  Canadian Agent and U.K. Agent,
      when acting pursuant to the authority granted hereunder, shall have all the
      protections, indemnities, rights and powers granted to Agent under this
      Agreement and any Loan Document.

     

    
      
        
        

      

      
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    (c)  To
      the
      extent necessary, each Canadian Lender appoints the Canadian Agent as its agent
      to hold in the name of the Canadian Agent, for the benefit of each Canadian
      Lender, any of the debentures issued by Canadian Borrower and outstanding from
      time to time forming part of the Security Documents, and appoints CIBC Mellon
      Trust Company as the person holding the power of attorney for the holders of
      bonds or other titles of indebtedness for all purposes of Article 2692 of
      the Civil Code of Quebec. Each Borrower, to the extent necessary, hereby
      consents to all present and future appointments made in this
      Section 10.1(c) or pursuant thereto.

     

    10.2  Agent’s
      Reliance, Etc.  None of Agents or their Affiliates, nor any of
      their respective directors, officers, agents or employees, shall be liable
      for
      any action taken or omitted to be taken by it or them under or in connection
      with this Agreement or the other Loan Documents, except for its or their own
      gross negligence or willful misconduct.  Without limitation of the
      generality of the foregoing, Agents:  (i) may treat each Lender
      party hereto as the holder of Obligations until Agent receives written notice
      of
      the assignment or transfer of such Lender’s portion of the Obligations signed by
      such Lender and in form reasonably satisfactory to Agent; (ii) may consult
      with legal counsel, independent public accountants and other experts selected
      by
      them and shall not be liable for any action taken or omitted to be taken in
      good
      faith by it or them in accordance with the advice of such counsel, accountants
      or experts; (iii) make no warranties or representations to any Lender and
      shall not be responsible to any Lender for any recitals, statements, warranties
      or representations made in or in connection with this Agreement or any other
      Loan Documents; (iv) shall not have any duty beyond Agents’ customary
      practices in respect of loans in which Agent, Canadian Agent or U.K. Agent
      is
      the only lender, to ascertain or to inquire as to the performance or observance
      of any of the terms, covenants or conditions of this Agreement or the other
      Loan
      Documents on the part of Borrowers, to inspect the property (including the
      books
      and records) of Borrowers, to monitor the financial condition of Borrowers
      or to
      ascertain the existence or possible existence or continuation of any Default
      or
      Event of Default; (v) shall not be responsible to any Lender for the due
      execution, legality, validity, enforceability, genuineness, sufficiency or
      value
      of this Agreement or the other Loan Documents or any other instrument or
      document furnished pursuant hereto or thereto; (vi) shall not be liable to
      any Lender for any action taken, or inaction, by Agent, Canadian Agent or U.K.
      Agent upon the instructions of Majority Lenders pursuant to Section 10.1
      hereof or refraining to take any action pending such instructions;
      (vii) shall not be liable for any apportionment or distributions of
      payments made by it pursuant to Section 3 hereof, absent gross negligence
      or willful misconduct; (viii) shall incur no liability under or in respect
      of this Agreement or the other Loan Documents by acting upon any notice,
      consent, certificate, message or other instrument or writing (which may be
      by
      telephone, facsimile, telegram, cable or telex) believed in good faith by it
      to
      be genuine and signed or sent by the proper party or parties; and (ix) may
      assume that no Event of Default has occurred and is continuing, unless Agent
      has
      actual knowledge of the Event of Default, has received notice from Borrower
      Representative or Borrowers’ independent certified public accountants stating
      the nature of the Event of Default, or has received notice from a Lender stating
      the nature of the Event of Default and that such Lender considers the Event
      of
      Default to have occurred and to be continuing.

     

    10.3  Bank
      of America and Affiliates.  With respect to its commitment
      hereunder to make Loans, Bank of America shall have the same rights and powers
      under this Agreement and the other Loan Documents as any other Lender and may
      exercise the same as though it were not Agent, Canadian Agent and U.K. Agent,
      as
      applicable; and the terms “Lender,” “Lenders” or “Majority Lenders” shall,
      unless otherwise expressly indicated, include Bank of America in its capacity
      as
      a Lender.  Bank of America and its Affiliates may lend money to, and
      generally engage in any kind of business with, Borrowers and any Person who
      may
      do business with or own Securities of Borrowers all as if they were not Agents
      and without any duty to account therefor to any other Lender.

     

    
      
        
        

      

      
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    10.4  Lender
      Credit Decision.  Each Lender acknowledges that it has,
      independently and without reliance upon Agents or any other Lender and based
      on
      the financial statements referred to herein and such other documents and
      information as it has deemed appropriate, made its own credit analysis and
      decision to enter into this Agreement.  Each Lender also acknowledges
      that it will, independently and without reliance upon Agents or any other Lender
      and based on such documents and information as it shall deem appropriate at
      the
      time, continue to make its own credit decisions in taking or not taking action
      under this Agreement.  Except as otherwise provided for herein or in
      the other Loan Documents, Agents shall not have any duty or responsibility,
      either initially or on an ongoing basis, to provide any Lender with any credit
      or other similar information regarding Borrowers.

     

    10.5  Indemnification.  Lenders
      agree to indemnify Agents (to the extent not reimbursed by Borrowers), in
      accordance with their respective Aggregate Percentages, from and against any
      and
      all liabilities, obligations, losses, damages, penalties, actions, judgments,
      suits, costs, expenses (other than taxes that are not Tax Liabilities) or
      disbursements of any kind or nature whatsoever which may be imposed on, incurred
      by, or asserted against Agents, in any way relating to or arising out of this
      Agreement or any other Loan Document or any action taken or omitted by Agents
      under this Agreement; provided that no Lender shall be liable for any
      portion of such liabilities, obligations, losses, damages, penalties, actions,
      judgments, suits, costs, expenses or disbursements resulting from Agents’ gross
      negligence or willful misconduct.  Without limitation of the
      foregoing, each Lender agrees to reimburse Agents promptly upon demand for
      its
      ratable share, as set forth above, of any out-of-pocket expenses (other than
      taxes that are not Tax Liabilities but including legal fees) incurred by Agents
      in connection with the preparation, execution, delivery, administration,
      modification, amendment or enforcement (whether through negotiation, legal
      proceedings or otherwise) of, or legal advice in respect of rights or
      responsibilities under, this Agreement and each other Loan Document, to the
      extent that Agents are not reimbursed for such expenses by
      Borrowers.  The obligations of Lenders under this Section 10.5
      shall survive the payment in full of all Obligations and the termination of
      this
      Agreement.  If after payment and distribution of any amount by Agents
      to Lenders, any Lender or any other Person, including Borrowers, any creditor
      of
      Borrowers, a liquidator, administrator or trustee in bankruptcy, recovers from
      Agents any amount found to have been wrongfully paid to Agents or disbursed
      by
      Agents to Lenders, then Lenders, in accordance with their respective Aggregate
      Percentages, shall reimburse Agents for all such amounts.

     

    10.6  Rights
      and Remedies to be Exercised by Agent Only.  Each Lender agrees
      that, except as set forth in Section 9.4, no Lender shall have any right
      individually (i) to realize upon the security created by this Agreement or
      any other Loan Document, (ii) to enforce any provision of this Agreement or
      any other Loan Document, or (iii) to make demand for payment by Borrowers
      under this Agreement or any other Loan Document.

     

    
      
        
        

      

      
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    10.7  Agency
      Provisions Relating to Collateral.  Each Lender authorizes and
      ratifies Agents’ entry into this Agreement and the Security Documents for the
      benefit of Lenders.  Each Lender agrees that any action taken by
      Agents with respect to the Collateral in accordance with the provisions of
      this
      Agreement or the Security Documents, and the exercise by Agents of the powers
      set forth herein or therein, together with such other powers as are reasonably
      incidental thereto, shall be authorized and binding upon all
      Lenders.  Agents are hereby authorized on behalf of all Lenders,
      without the necessity of any notice to or further consent from any Lender to
      take any action with respect to any Collateral or the Loan Documents which
      may
      be necessary to perfect and maintain perfected Agents’ Liens upon the
      Collateral, for their benefit and the ratable benefit of
      Lenders.  Lenders hereby irrevocably authorize Agents at their option
      and in their discretion, to release any Lien granted to or held by Agents upon
      any Collateral (i) upon termination of the Agreement and payment and
      satisfaction of all Obligations; or (ii) constituting property being sold
      or disposed of if Borrower Representative certifies to Agent that the sale
      or
      disposition is made in compliance with subsection 7.2.9 hereof (and Agents
      may
      rely conclusively on any such certificate, without further inquiry); or
      (iii) constituting property in which Borrowers owned no interest at the
      time the Lien was granted or at any time thereafter; or (iv) in connection
      with any foreclosure sale or other disposition of Collateral after the
      occurrence and during the continuation of an Event of Default; or (v) if
      approved, authorized or ratified in writing by Agent at the direction of all
      Lenders.  Upon request by Agent at any time, Lenders will confirm in
      writing Agents’ authority to release particular types or items of Collateral
      pursuant hereto.  Agents shall have no obligation whatsoever to any
      Lender or to any other Person to assure that the Collateral exists or is owned
      by Borrower or is cared for, protected or insured or has been encumbered or
      that
      the Liens granted to Agents herein or pursuant to the Security Documents have
      been properly or sufficiently or lawfully created, perfected, protected or
      enforced or are entitled to any particular priority, or to exercise at all
      or in
      any particular manner or under any duty of care, disclosure or fidelity, or
      to
      continue exercising, any of its rights, authorities and powers granted or
      available to Agents in this Section 10.7 or in any of the Loan Documents,
      it being understood and agreed that in respect of the Collateral, or any act,
      omission or event related thereto, Agents may act in any manner they may deem
      appropriate, in their sole discretion, but consistent with the provisions of
      this Agreement, including given Agents’ own interest in the Collateral as
      Lenders and that Agents shall have no duty or liability whatsoever to any
      Lender.

     

    10.8  Agents’
      Right to Purchase Commitments.  Agents shall have the right, but
      shall not be obligated, at any time upon written notice to any Lender and with
      the consent of such Lender, which may be granted or withheld in such Lender’s
      sole discretion, to purchase for Agents’ own account all of such Lender’s
      interests in this Agreement, the other Loan Documents and the Obligations,
      for
      the available amount of the outstanding Obligations owed to such Lender,
      including without limitation, all accrued and unpaid interest and
      fees.

     

    10.9  Right
      of Sale, Assignment, Participations.  Any Lender shall be
      permitted to participate, sell, assign, transfer or otherwise dispose, at any
      time or times hereafter, of this Agreement and any of the other Loan Documents,
      or of any portion hereof or thereof, including, without limitation, such
      Lender’s rights, title, interests, remedies, powers and duties hereunder or
      thereunder subject to the terms and conditions set forth below and within
      Section 2.12:

     

    
      
        
        

      

      
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    10.9.1  Sales,
      Assignments.  Each Lender hereby agrees that, with respect to any
      sale or assignment (other than the purchase of a Participating Interest pursuant
      to Section 3.13 or 3.14) or in the case of an assignment by Canadian
      Lender or U.K. Lender to an Affiliate of Agent (i) no such sale or
      assignment (except with respect to an assignment of a Lender’s entire Loan
      Commitments) shall be for an amount of less than $5,000,000 in the aggregate
      and
      $1,000,000 increments in excess thereof, (ii) after giving effect to any
      such assignment, the aggregate amount of the assigning Lender’s Loan Commitments
      is equal to or greater than $5,000,000, (iii) Agent and, in the absence of
      an Event of Default, Borrowers, must consent, such consent not to be
      unreasonably withheld, to each such assignment to a Person that is not an
      original signatory to this Agreement, (iv) the assigning Lender shall pay
      to Agent a processing and recordation fee of $3,500 and any out-of-pocket legal
      fees and expenses incurred by Agent in connection with any such sale or
      assignment and (v) Agent, the assigning Lender and the assignee Lender
      shall each have executed and delivered an Assignment and Acceptance
      Agreement.  After such sale or assignment has been consummated
      (x) the assignee Lender thereupon shall become a “Lender” for all purposes
      of this Agreement and (y) the assigning Lender shall have no further
      liability for funding the portion of Revolving Loan Commitments assumed by
      such
      other Lender.

     

    10.9.2  Participations.  Any
      Lender may grant participations in its extensions of credit hereunder to any
      other Lender or other lending institution (a “Participant”); provided
      that (i) no such participation shall be for an amount of less than
      $5,000,000 in the aggregate and $1,000,000 increments in excess thereof,
      (ii) no Participant shall thereby acquire any direct rights under this
      Agreement, (iii) no Participant shall be granted any right to consent to
      any amendment, except to the extent any of the same pertain to (1) reducing
      the aggregate principal amount of, or interest rate on, or fees applicable
      to,
      any Loan or (2) extending the final stated maturity of any Loan or the
      stated maturity of any portion of any payment of principal of, or interest
      or
      fees applicable to, any of the Loans; provided, that the rights described
      in this subclause (2) shall not be deemed to include the right to consent
      to any amendment with respect to or which has the effect of requiring any
      mandatory prepayment of any portion of any Loan or any amendment or waiver
      of
      any Default or Event of Default, (iv) no sale of a participation in
      extensions of credit shall in any manner relieve the originating Lender of
      its
      obligations hereunder, (v) the originating Lender shall remain solely
      responsible for the performance of such obligations, (vi) Borrowers and
      Agent shall continue to deal solely and directly with the originating Lender
      in
      connection with the originating Lender’s rights and obligations under this
      Agreement and the other Loan Documents, (vii) in no event shall any
      financial institution purchasing the participation grant a participation in
      its
      participation interest in the Loans without the prior written consent of Agent,
      and, in the absence of a Default or an Event of Default, Borrowers, which
      consents shall not unreasonably be withheld and (viii) all amounts payable
      by Borrowers hereunder shall be determined as if the originating Lender had
      not
      sold any such participation.  The provisions of clause (iii) of the
      first sentence of this subsection 10.9.2 do not apply to the Participating
      Interests of the Lenders or their Affiliates in their capacity as holders of
      the
      Participating Interests.

     

    10.9.3  Certain
      Agreements of Borrowers.  Each Borrower agrees that (i) it
      will use its reasonable efforts to assist and cooperate with each Lender in
      any
      manner reasonably requested by such Lender to effect the sale of participation
      in or assignments of any of the Loan Documents or any portion thereof or
      interest therein, including, without limitation, assisting in the preparation
      of
      appropriate disclosure documents and making members of management available
      at
      reasonable times to meet with and answer questions of potential assignees and
      Participants; and (ii) subject to the provisions of Section 11.14
      hereof, such Lender may disclose credit information regarding Borrowers to
      any
      potential Participant or assignee.

     

    
      
        
        

      

      
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    10.9.4  Non
      U.S. Resident Lenders and Transferees.  If, pursuant to this
      Section 10.9, any interest in this Agreement or any Loans is transferred to
      any transferee which is organized under the laws of any jurisdiction other
      than
      the United States or any state thereof, the transferor Lender shall cause such
      transferee (including any Participant) concurrently with and as a condition
      precedent to the effectiveness of such transfer, to (i) represent to the
      transferor Lender (for the benefit of the transferor Lender, Agent and
      Borrowers) that under applicable law and treaties no taxes will be required
      to be withheld by Agent, Borrowers or the transferor Lender with respect to
      any
      payments to be made to such transferee in respect of the interest so
      transferred, (ii) furnish to the transferor Lender, Agent and Borrower
      Representative either United States Internal Revenue Service Form W-8BEN or
      United States Internal Revenue Service Form W-8ECI (wherein such transferee
      claims and establishes entitlement to complete exemption from United States
      federal withholding tax on all interest payments hereunder) and (iii) agree
      (for the benefit of the transferor Lender, Agent and Borrowers) to provide
      the
      transferor Lender, Agent and Borrower Representative a new Form W-8BEN or Form
      W-8ECI upon the obsolescence of any previously delivered form and comparable
      statements in accordance with applicable United States laws and regulations
      and
      amendments duly executed and completed by such transferee, and to comply from
      time to time with all applicable United States laws and regulations with regard
      to such withholding tax exemption.  Each Lender that is a Lender on
      the Closing Date that is not a United States person for United States federal
      income tax purposes hereby agrees to fully comply with the provisions of Section
      10.9.4(i), (ii) and (iii) as if it were a transferee and each Lender that is
      a
      Lender on the Closing Date that is a United States person for United States
      federal income tax purposes hereby agrees to provide to Borrower Representative
      a fully executed United States Internal Revenue Form
      W-9.  Notwithstanding anything to the contrary herein, to the extent
      that any Lender or any transferee (including any Participant) of any Lender
      fails to comply with the provisions of this Section 10.9.4, then such
      Lender or such transferee or such Participant shall not be entitled to any
      payment on account of or indemnification for any Tax Liabilities.  The
      foregoing notwithstanding, unless an Event of Default has occurred and is
      continuing, no Lender shall be permitted to transfer its interest in this
      Agreement or any Loans if the result of such transfer is to impose additional
      costs on Borrowers pursuant to Section 2.12 or 3.8 of the
      Agreement.

     

    10.10  Amendment.  No
      amendment or waiver of any provision of this Agreement or any other Loan
      Document (including without limitation any Note), nor consent to any departure
      by Borrower therefrom, shall in any event be effective unless the same shall
      be
      in writing and signed by the Majority Lenders and Borrower, and then such waiver
      or consent shall be effective only in the specific instance and for the specific
      purpose for which given; provided, that no amendment, waiver or consent
      shall be effective, unless (i) in writing and signed by each Lender, to do
      any of the following:  (1) increase or decrease the aggregate
      Loan Commitments, or any Lender’s Revolving Loan Commitment, or Term Loan
      Commitment, (2) reduce the principal of, or interest on, any amount payable
      hereunder or under any Note, other than those payable only to Bank of America,
      in its capacity as Agents, which may be reduced by Bank of America unilaterally,
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      (4) postpone
        any date fixed for any payment of principal of, or interest on, any amounts
        payable hereunder or under any Note, other than those payable only to Bank
        of
        America in its capacity as an Agent, which may be postponed by Bank of America
        unilaterally, (5) increase any advance percentage contained in the
        definition of the terms Aggregate Borrowing Base, U.S. Borrowing
        Base, U.K. Borrowing Base or Canadian Borrowing Base to
        amounts greater than the percentages in effect on the Closing Date,
        (6) reduce the number of Lenders that shall be required for Lenders or any
        of them to take any action hereunder, (7) except as otherwise specifically
        contemplated by the provisions of this Agreement or in connection with the
        sale
        of the Securities of any Loan Party (other than Katy or Parent) permitted
        hereunder or consented to by Majority Lenders, release or discharge any Person
        liable for the performance of any obligations of Borrower hereunder or under
        any
        of the Loan Documents, (8) amend any provision of this Agreement that
        requires the consent of all Lenders or consent to or waive any breach thereof,
        (9) amend the definition of the term Majority Lenders,
        (10) amend this Section 10.10 or (11) release any substantial
        portion of the Collateral, unless otherwise permitted pursuant to
        Section 10.7 hereof or as otherwise contemplated by the terms of this
        Agreement, including, without limitation, any Asset Sale permitted pursuant
        to
        subsection 7.2.9 of the Agreement or any Asset Sale consented to by
        Majority Lenders; or (ii) in writing and signed by Agent in addition to the
        Lenders required above to affect the rights or duties of Agent under this
        Agreement, any Note or any other Loan Document.  Notwithstanding the
        foregoing, in the event that the U.K. Sublimit and Canadian Sublimit are
        adjusted in accordance with the terms hereof, Agent may, without the consent
        of
        the Lenders, make conforming changes to the signature pages hereof and any
        Assignment and Assumption Agreement to reflect such adjustments.  If a
        fee is to be paid by Borrowers in connection with any waiver or amendment
        hereunder, the agreement evidencing such amendment or waiver may, at the
        discretion of Agent (but shall not be required to), provide that only Lenders
        executing such agreement by a specified date may share in such fee (and in
        such
        case, such fee shall be divided among the applicable Lenders on a
prorata basis without including the interests of any Lenders who
        have not timely executed such agreement).

    

     

    10.11  Resignation
      of Agent; Appointment of Successor.  Each of Agent, Canadian Agent
      and U.K. Agent may resign as such by giving not less than thirty (30) days’
prior written notice, in the case of Agent, to Lenders and Borrower, and in
      the
      case of Canadian Agent and U.K. Agent, to Lenders.  If Agent, Canadian
      Agent or U.K. Agent shall resign under this Agreement, then, (i) subject to
      the consent of Borrowers (which consent shall not be unreasonably withheld
      and
      which consent shall not be required during any period in which a Default or
      an
      Event of Default exists) in the case of Agent only, Majority Lenders shall
      appoint from among Lenders (located in the relevant jurisdiction) successor
      agents or agent, as applicable, for Lenders or (ii) if successor agents or
      agent, as applicable, shall not be so appointed and approved within the thirty
      (30) day period following such Agents’ notice of such resignation, then Agent
      shall appoint successor agents or agent, as applicable, who shall serve as
      Agent
      until such time as Majority Lenders appoint successor agents or agent, as
      applicable, subject to Borrowers’ consent, if applicable, as set forth
      above.  Subject to the consent of Borrowers (which consent shall not
      be unreasonably withheld and which consent shall not be required during any
      period in which a Default or an Event of Default exists), in the case of
      Canadian Agent or U.K. Agent only, Agent shall appoint from among the Lenders
      or
      any Affiliate of Agent located in the relevant jurisdiction a successor agent
      or
      agents, as applicable.  Upon its appointment, such successor agents or
      agent shall succeed to the rights, powers and duties of Agents and the term
      “Agent”, “Canadian Agent”, “U.K. Agent” and “Agents”, as applicable, shall mean
      each such successor effective upon its appointment, and the former Agents’
rights, powers and duties as Agents shall, as applicable, be terminated without
      any other or further act or deed on the part of such former Agents or any of
      the
      parties to this Agreement.  After the resignation of such Agents
      hereunder, the provisions of this Section 10 shall inure to the benefit of
      such former Agents and such former Agents shall not by reason of such
      resignation be deemed to be released from liability for any actions taken or
      not
      taken by it while acting as Agents under this Agreement.

     

    
      
        
        

      

      
        78

        
          

        

      

      
        
        

      

    

     

    10.12  Audit
      and Examination Reports; Disclaimer by Lenders.  By signing this
      Agreement, each Lender:

     

    (a)  is
      deemed
      to have requested that Agents furnish such Lender, promptly after it becomes
      available, a copy of each audit or examination report (each a “Report” and
      collectively, “Reports”) prepared by or on behalf of any Agent;

     

    (b)  expressly
      agrees and acknowledges that Agents (i) do not make any representation or
      warranty as to the accuracy of any Report, and (ii) shall not be liable for
      any information contained in any Report;

     

    (c)  expressly
      agrees and acknowledges that the Reports are not comprehensive audits or
      examinations, that Agents or other party performing any audit or examination
      will inspect only specific information regarding Borrowers and will rely
      significantly upon Borrowers’ books and records, as well as on representations
      of Borrowers’ personnel;

     

    (d)  agrees
      to
      keep all Reports confidential and strictly for its internal use, and not to
      distribute except to its participants, or use any Report in any other manner,
      in
      accordance with the provisions of Section 11.14; and

     

    (e)  without
      limiting the generality of any other indemnification provision contained in
      this
      Agreement, agrees:  (i) to hold Agents and any such other Lender
      preparing a Report harmless from any action the indemnifying Lender may take
      or
      conclusion the indemnifying Lender may reach or draw from any Report in
      connection with any loans or other credit accommodations that the indemnifying
      Lender has made or may make to Borrowers, or the indemnifying Lender’s
      participation in, or the indemnifying Lender’s purchase of, a loan or loans of
      Borrowers; and (ii) to pay and protect, and indemnify, defend and hold
      Agents and any such other Lender preparing a Report harmless from and against,
      the claims, actions, proceedings, damages, costs, expenses (other than taxes
      that are not Tax Liabilities) and other amounts (including attorneys’ fees and
      expenses) incurred by any Agent and any such other Lender preparing a Report
      as
      the direct or indirect result of any third parties who might obtain all or
      part
      of any Report through the indemnifying Lender.

     

    SECTION 11.                                MISCELLANEOUS

     

    11.1  Power
      of Attorney.  Each Borrower hereby irrevocably designates, makes,
      constitutes and appoints Agent, Canadian Agent and U.K. Agent (and all Persons
      designated by Agent, Canadian Agent and U.K. Agent) as such Borrower’s and each
      other Loan Party’s (other than Parent) true and lawful attorney (and
      agent-in-fact), solely with respect to the matters set forth in this
      Section 11.1, and Agents, or any Agent’s agent, may, without notice to such
      Borrower or any other Loan Party and in such Borrower’s, such other Loan Party’s
      or such Agent’s name, but at the cost and expense of such Borrower:

     

    
      
        
        

      

      
        79

        
          

        

      

      
        
        

      

    

     

    11.1.1  At
      such
      time or times as Agents or said agent, in their sole discretion, may determine,
      endorse such Borrower’s or such other Loan Party’s name on any checks, notes,
      acceptances, drafts, money orders or any other evidence of payment or proceeds
      of the Collateral which come into the possession of any Agent or under any
      Agent’s control.

     

    11.1.2  At
      such
      time or times upon or after the occurrence and during the continuance of an
      Event of Default (provided that the occurrence of an Event of Default shall
      not
      be required with respect to clauses (iv), (vi), (viii) and (ix) below), as
      any Agent or its agent in its sole discretion may determine: (i) demand
      payment of the Accounts from the Account Debtors, enforce payment of the
      Accounts by legal proceedings or otherwise, and generally exercise all of any
      Borrower’s or any other Loan Party’s rights and remedies with respect to the
      collection of the Accounts; (ii) settle, adjust, compromise, discharge or
      release any of the Accounts or other Collateral or any legal proceedings brought
      to collect any of the Accounts or other Collateral; (iii) sell or assign
      any of the Accounts and other Collateral upon such terms, for such amounts
      and
      at such time or times as any Agent deems advisable, and at such Agent’s option,
      with all warranties regarding the Collateral disclaimed; (iv) take control,
      in any manner, of any item of payment or proceeds relating to any Collateral;
      (v) prepare, file and sign any Borrower’s or such other Loan Party’s name
      to a proof of claim in bankruptcy or similar document against any Account Debtor
      or to any notice of lien, assignment or satisfaction of lien or similar document
      in connection with any of the Collateral; (vi) receive, open and dispose of
      all mail addressed to any Borrower or such other Loan Party and notify postal
      authorities to change the address for delivery of remittances on Accounts to
      such address as any Agent may designate; (vii) endorse the name of any
      Borrower or such other Loan Party upon any of the items of payment or proceeds
      relating to any Collateral and deposit the same to the account of any Agent
      on
      account of the Obligations; (viii) endorse the name of any Borrower or any
      other Loan Party upon any chattel paper, document, instrument, invoice, freight
      bill, bill of lading or similar document or agreement relating to the Accounts,
      Inventory and any other Collateral; (ix) use any Borrower’s or any other
      Loan Party’s stationery and sign the name of any Borrower or such other Loan
      Party to verifications of the Accounts and notices thereof to Account Debtors;
      (x) use the information recorded on or contained in any data processing
      equipment and Computer Hardware and Software relating to the Accounts,
      Inventory, Equipment and any other Collateral; (xi) make and adjust claims
      under policies of insurance; and (xii) do all other acts and things
      necessary, in any Agent’s determination, to fulfill the applicable Borrower’s or
      any other Loan Party’s obligations under this Agreement.

     

    The
      power
      of attorney granted hereby shall constitute a power coupled with an interest
      and
      shall be irrevocable.

     

    11.2  Indemnity.  Borrowers
      hereby agree to indemnify Agents and each Lender (and each of their Affiliates)
      and hold Agents and each Lender (and each of their Affiliates) harmless from
      and
      against any liability, loss, damage, suit, action or proceeding ever suffered
      or
      incurred by any such Person (including reasonable attorneys’ fees and legal
      expenses) as the result of any Borrower’s failure to observe, perform or
      discharge Borrower’s duties hereunder.  

     

    
      
        
        

      

      
        80

        
          

        

      

      
        
        

      

       

      In
        addition, each Borrower shall defend Agents and each Lender (and each of
        their
        Affiliates) against and save it harmless from all claims of any Person with
        respect to the Collateral (except those resulting from the gross negligence
        or
        intentional misconduct of any Agent, any Lender or any Affiliate of any Agent
        or
        any Lender, as applicable).  Without limiting the generality of the
        foregoing, these indemnities shall extend to any claims asserted against
        any
        Agent or any Lender (and each of their Affiliates) by any Person under any
        Environmental Laws by reason of any Borrower’s or any other Person’s failure to
        comply with laws applicable to solid or hazardous waste materials or other
        toxic
        substances.  Notwithstanding any contrary provision in this Agreement,
        the obligation of each Borrower under this Section 11.2 shall survive the
        payment in full of the Obligations and the termination of this
        Agreement.

    

     

    11.3  Sale
      of Interest.  Borrowers may not sell, assign or transfer any
      interest in this Agreement, any of the other Loan Documents, or any of the
      Obligations, or any portion thereof, including, without limitation, Borrowers’
rights, title, interests, remedies, powers and duties hereunder or
      thereunder.

     

    11.4  Severability.  Wherever
      possible, each provision of this Agreement shall be interpreted in such manner
      as to be effective and valid under applicable law, but if any provision of
      this
      Agreement shall be prohibited by or invalid under applicable law, such provision
      shall be ineffective only to the extent of such prohibition or invalidity,
      without invalidating the remainder of such provision or the remaining provisions
      of this Agreement.

     

    11.5  Successors
      and Assigns.  This Agreement, the Other Agreements and the
      Security Documents shall be binding upon and inure to the benefit of the
      successors and assigns of Borrowers, Agents and each Lender permitted under
      Section 10.9 hereof.

     

    11.6  Cumulative
      Effect; Conflict of Terms.  The provisions of the Other Agreements
      and the Security Documents are hereby made cumulative with the provisions of
      this Agreement.  Except as otherwise provided in any of the other Loan
      Documents by specific reference to the applicable provision of this Agreement,
      if any provision contained in this Agreement is in direct conflict with, or
      inconsistent with, any provision in any of the other Loan Documents, the
      provision contained in this Agreement shall govern and control.

     

    11.7  Execution
      in Counterparts.  This Agreement may be executed in any number of
      counterparts and by different parties hereto in separate counterparts, each
      of
      which when so executed and delivered shall be deemed to be an original and
      all
      of which counterparts taken together shall constitute but one and the same
      instrument.

     

    11.8  Notice.  Except
      as otherwise provided herein, all notices, requests and demands to or upon
      a
      party hereto, to be effective, shall be in writing, and shall be sent by
      certified or registered mail, return receipt requested, by personal delivery
      against receipt, by overnight courier or by facsimile and, unless otherwise
      expressly provided herein, shall be deemed to have been validly served, given,
      delivered or received immediately when delivered against receipt, three (3)
      Business Days’ after deposit in the mail, postage prepaid, one (1) Business Day
      after deposit with an overnight courier or, in the case of facsimile notice,
      when sent with respect to machine confirmed, addressed as follows:

     

    
      
        
        

      

      
        81

        
          

        

      

      
        
        

      

    

    

    
      	
              (A)           If
                to Agent:

            	
              Bank
                of America, N.A.

              231
                South LaSalle Street, 7th
                Floor

              Chicago,
                Illinois  60604

              Attention:  Senior
                Portfolio Manager

              Facsimile
                No.:  (312) 755-3300

               

            
	
              With
                a copy to:

            	
              Vedder,
                Price, Kaufman & Kammholz, P.C.

              222
                North LaSalle Street

              Suite
                2600

              Chicago,
                Illinois  60601

              Attention:  John
                T. McEnroe

              Facsimile
                No.:  (312) 609-5005

               

            
	
              (B)           If
                to Borrower:

            	
              Katy
                Industries, Inc.

              2461
                S. Clark Street, Suite 600

              Arlington,
                VA  22202

              Attention:  Amir
                Rosenthal

              Facsimile
                No.:  (703) 236-3170

               

            
	
              With
                copies to:

            	
              Ropes
                & Gray LLP

              One
                International Place

              Boston,
                MA  02110

              Attention:  Thomas
                B. Draper

              Facsimile
                No.:  (617) 951-7050

               

            
	 	
              and

               

            
	 	
              KKTY
                Holding Company, L.L.C.

              c/o
                Kohlberg Management IV, LLC

              111
                Radio Circle

              Mount
                Kisco, NY  10549

              Attention:  Christopher
                Anderson

              Facsimile
                No.:  (914) 241-7476

               

               

            
	
              (C)  If
                to any Lender, at its address indicated on the signature pages hereof
                and
                in an Assignment and Acceptance
                Agreement,

            

    

    

    or
      to
      such other address as each party may designate for itself by notice given in
      accordance with this Section 11.8; provided, however, that
      any notice, request or demand to or upon Agent or a Lender pursuant to
      subsection 3.1.1 or 4.2.2 hereof shall not be effective until received by
      Agent or such Lender.

     

    11.9  Consent.  Whenever
      Agent’s, Agents’, Majority Lenders’ or all Lenders’ consent is required to be
      obtained under this Agreement, any of the Other Agreements or any of the
      Security Documents as a condition to any action, inaction, condition or event,
      except as otherwise specifically provided herein, Agent, Agents, Majority
      Lenders or all Lenders, as applicable, shall be authorized to give or withhold
      such consent in its or their sole and absolute discretion and to condition
      its
      or their consent upon the giving of additional Collateral security for the
      Obligations, the payment of money or any other matter.

     

    
      
        
        

      

      
        82

        
          

        

      

      
        
        

      

    

     

    11.10  Credit
      Inquiries.  Each Borrower hereby authorizes and permits Agent and
      each Lender to respond to usual and customary credit inquiries from third
      parties concerning Borrower or any of its Subsidiaries.

     

    11.11  Time
      of Essence.  Time is of the essence of this Agreement, the Other
      Agreements and the Security Documents.

     

    11.12  Entire
      Agreement.  This Agreement and the other Loan Documents, together
      with all other instruments, agreements and certificates executed by the parties
      in connection therewith or with reference thereto, embody the entire
      understanding and agreement between the parties hereto and thereto with respect
      to the subject matter hereof and thereof and supersede all prior agreements,
      understandings and inducements, whether express or implied, oral or
      written.

     

    11.13  Interpretation.  No
      provision of this Agreement or any of the other Loan Documents shall be
      construed against or interpreted to the disadvantage of any party hereto by
      any
      court or other governmental or judicial authority by reason of such party having
      or being deemed to have structured or dictated such provision.

     

    11.14  Confidentiality.  Each
      Agent and each Lender shall hold all nonpublic information obtained pursuant
      to
      the requirements of this Agreement in accordance with such Agent’s and such
      Lender’s customary procedures for handling confidential information of this
      nature and in accordance with safe and sound banking practices and in any event
      may make disclosure reasonably required by a prospective participant or assignee
      in connection with the contemplated participation or assignment or as required
      or requested by any governmental authority or representative thereof or pursuant
      to legal process and shall require any such participant or assignee to agree
      to
      comply with this Section 11.14.

     

    11.15  GOVERNING
      LAW; CONSENT TO FORUM.  THIS AGREEMENT HAS BEEN NEGOTIATED,
      EXECUTED AND DELIVERED IN AND SHALL BE DEEMED TO HAVE BEEN MADE IN CHICAGO,
      ILLINOIS.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
      ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS; PROVIDED,
HOWEVER, THAT IF ANY OF THE COLLATERAL SHALL BE LOCATED IN ANY
      JURISDICTION OTHER THAN ILLINOIS, THE LAWS OF SUCH JURISDICTION SHALL GOVERN
      THE
      METHOD, MANNER AND PROCEDURE FOR FORECLOSURE OF ANY AGENT’S LIEN UPON SUCH
      COLLATERAL AND THE ENFORCEMENT OF ANY AGENT’S OTHER REMEDIES IN RESPECT OF SUCH
      COLLATERAL TO THE EXTENT THAT THE LAWS OF SUCH JURISDICTION ARE DIFFERENT FROM
      OR INCONSISTENT WITH THE LAWS OF ILLINOIS.  AS PART OF THE
      CONSIDERATION FOR NEW VALUE RECEIVED, AND REGARDLESS OF ANY PRESENT OR FUTURE
      DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF ANY BORROWER, ANY AGENT OR ANY
      LENDER, EACH BORROWER HEREBY CONSENTS AND AGREES THAT THE CIRCUIT COURT OF
      COOK
      COUNTY, ILLINOIS, OR, AT AGENT’S OPTION, THE UNITED STATES DISTRICT COURT FOR
      THE NORTHERN DISTRICT OF ILLINOIS, EASTERN DIVISION, SHALL HAVE EXCLUSIVE
      JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWERS
      ON
      THE ONE HAND AND AGENTS OR ANY LENDER ON THE OTHER HAND PERTAINING TO THIS
      AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS
      AGREEMENT.  

     

    
      
        
        

      

      
        83

        
          

        

      

      
        
        

      

       

      EACH
        BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN
        ANY
        ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH BORROWER HEREBY WAIVES
        ANY
        OBJECTION WHICH SUCH BORROWER MAY HAVE BASED UPON LACK OF PERSONAL
        JURISDICTION, IMPROPER VENUE OR FORUMNONCONVENIENS AND
        HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
        APPROPRIATE BY SUCH COURT.  EACH BORROWER HEREBY WAIVES PERSONAL
        SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION
        OR
        SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS
        MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWER AT THE
        ADDRESS SET FORTH IN THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED
        COMPLETED UPON THE EARLIER OF SUCH BORROWER’S ACTUAL RECEIPT THEREOF OR 3 DAYS
        AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.  NOTHING IN
        THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO AFFECT THE RIGHT OF ANY AGENT
        OR
        ANY LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW, OR
        TO
        PRECLUDE THE ENFORCEMENT BY ANY AGENT OR ANY LENDER OF ANY JUDGMENT OR ORDER
        OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO
        ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR
        JURISDICTION.

    

     

    11.16  WAIVERS
      BY BORROWER.  EACH BORROWER WAIVES (i) THE RIGHT TO TRIAL BY
      JURY (WHICH EACH AGENT AND EACH LENDER HEREBY ALSO WAIVES) IN ANY ACTION, SUIT,
      PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF
      THE
      LOAN DOCUMENTS, THE OBLIGATIONS OR THE COLLATERAL; (ii) PRESENTMENT, DEMAND
      AND PROTEST AND NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NON PAYMENT, MATURITY,
      RELEASE, COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL COMMERCIAL
      PAPER, ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS , CHATTEL PAPER AND
      GUARANTIES AT ANY TIME HELD BY ANY AGENT OR ANY LENDER ON WHICH ANY BORROWER
      MAY IN ANY WAY BE LIABLE AND HEREBY RATIFIES AND CONFIRMS WHATEVER ANY
      AGENT OR ANY LENDER MAY DO IN THIS REGARD; (iii) NOTICE PRIOR TO ANY
      AGENT’S TAKING POSSESSION OR CONTROL OF THE COLLATERAL OR ANY BOND OR SECURITY
      WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING ANY AGENT TO EXERCISE
      ANY
      OF SUCH AGENT’S REMEDIES; (iv) THE BENEFIT OF ALL VALUATION, APPRAISEMENT
      AND EXEMPTION LAWS; (v) NOTICE OF ACCEPTANCE HEREOF; AND (vi) EXCEPT
      AS PROHIBITED BY LAW, A RIGHT TO CLAIM OR RECOVER ANY SPECIAL, EXEMPLARY,
      PUNITIVE OR ANY CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION
      TO, ACTUAL DAMAGES.  EACH BORROWER ACKNOWLEDGES THAT THE FOREGOING
      WAIVERS ARE A MATERIAL INDUCEMENT TO EACH AGENT’S AND EACH LENDER’S ENTERING
      INTO THIS AGREEMENT AND THAT EACH AGENT AND EACH LENDER IS RELYING UPON THE
      FOREGOING WAIVERS IN ITS FUTURE DEALINGS WITH
      BORROWERS.  

     

    
      
        
        

      

      
        84

        
          

        

      

      
        
        

      

       

      EACH
        BORROWER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVERS
        WITH
        ITS LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL
        RIGHTS
        FOLLOWING CONSULTATION WITH LEGAL COUNSEL.  IN THE EVENT OF
        LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY
        THE COURT.

    

     

    11.17  No
      Novation.  Notwithstanding anything to the contrary contained
      herein, this Agreement is not intended to and does not serve to effect a
      novation of the Obligations.  Instead, it is the express intention of
      the parties hereto to reaffirm the indebtedness created under the 2004 Loan
      Agreement which is evidenced by the notes provided for therein and secured
      by
      the Collateral.  Borrowers acknowledge and confirm that the liens and
      security interests granted pursuant to the Loan Documents secured the
      indebtedness, liabilities and obligations of Borrowers to Agent and Lenders
      under the 2004 Loan Agreement, as amended and restated hereby, and that the
      term
“Obligations” as used in the Loan Documents (or any other terms used therein to
      describe or refer to the indebtedness, liabilities and obligations of Borrowers
      to Agent and Lenders) includes, without limitation, the indebtedness,
      liabilities and obligations of Borrowers under the Notes to be delivered
      hereunder, and under the 2004 Loan Agreement, as amended and restated hereby,
      as
      the same may be further amended, modified, supplemented or restated from time
      to
      time.  The Loan Documents and all agreements, instruments and
      documents executed or delivered in connection with any of the foregoing shall
      each be deemed to be amended to the extent necessary to give effect to the
      provisions of this Agreement.  Cross-references in the Loan Documents
      to particular section numbers in the 2004 Loan Agreement shall be deemed to
      be
      cross-references to the corresponding sections, as applicable, to this
      Agreement.

     

    11.18  Advertisement.  Each
      Borrower hereby authorizes Agent to publish the name of such Borrower or any
      other Loan Party and the amount of the credit facility provided hereunder in
      any
“tombstone” or comparable advertisement which Agent elects to
      publish.

     

    
      
              

          
            	 	              

                                                      
                                                    
            	 

          
      

                                       
    

        
        

      

      
        85

        
          

        

      

      
        
        

      

    

    11.19  English
      Language.  The parties hereby confirm their express wish that this
      Agreement and all documents and agreements directly and indirectly related
      thereto, including notices, be drawn up in English.  Notwithstanding
      such express wish, the parties agree that any of such documents, agreements
      and
      notices or any part thereof or of this Agreement may be drawn up in
      French.  Les parties reconnaissent leur volonté expresse que la
      présente convention ainsi que tous les documents et conventions qui s’y
      rattachent directement ou indirectement, y compris les avis, soient rédigés en
      langue anglaise.  Nonobstant telle volonté expresse, les parties
      conviennent que n’importe quelle desdits documents, conventions et avis ou toute
      partie de ceux-ci ou de cette convention puissent être rédigés en langue
      francaise.

     

    (Signature
      Page Follows)

     

    
      
              

          
            	 	              

                                                      
                                                    
            	 

          
      

                                        
    

        
        

      

      
        86

        
          

        

      

      
        
        

      

    

    (Signature
      Page to Second Amended and Restated Loan
      Agreement)

     

    IN
      WITNESS WHEREOF, this Agreement has been duly executed on the day and
      year specified at the beginning of this Agreement.

     

    

    
      	 	
              KATY
                INDUSTRIES, INC.

               

              By:  /s/
                Amir
                Rosenthal                                                                         

              Name:  Amir
                Rosenthal

              Title:    Vice
                President

            

    

    

    
      
              

          
            	 	              

                                                      
                                                    
            	 

          
      

                                     
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (Signature
      Page to Second Amended and Restated Loan
      Agreement)

     

    
      	 	
              CEH
                LIMITED

               

              By:  /s/
                Anthony T. Castor
                III                                                                         

              Name: 
Anthony
                T. Castor
                III                                                        

              Title:    Managing
                Director

                                                                  

              and

               

              By:  /s/
                Christopher
                Anderson                                                                         

              Name: 
Christopher
                Anderson                                                        

              Title:    Managing
                Director                                                    

            

    

    

    
      
              

          
            	 	 	 

          
      

                                      
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (Signature
      Page to Second Amended and Restated Loan
      Agreement)

     

    
      	 	
              GLIT/GEMTEX,
                LTD.

               

              By:  /s/
                Amir
                Rosenthal                                                                         

              Name:  Amir
                Rosenthal                                                      

              Title:   
                Secretary                                                        

            

    

    

    
      
              

          
            	 	 	 

          
      

                                       
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (Signature
      Page to Second Amended and Restated Loan
      Agreement)

     

    
      	 	
              BANK
                OF AMERICA, NA., as
                Agent and as a Lender

               

              By:  /s/
                Jason
                Riley                                                                         

              Name:  Jason
                Riley

              Title:    Senior
                Vice President

               

              Revolving
                Loan Commitment:  $40,000,000

              Outstanding
                Principal Balance of Existing Term
                Loan:  $10,026,680.04

              2007
                Term Loan Commitment:  $573,319.96

               

            

    

    

    
      
              

          
            	 	 	 

          
      

                                        
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (Signature
      Page to Second Amended and Restated Loan
      Agreement)

    
      	 	
              BANK
                OF AMERICA, N.A., London branch, as U.K. Agent and U.K.
                Lender

               

              By:  /s/
                Jason
                Riley                                                                         

              Name:  Jason
                Riley                                                         

              Title:   
Senior
                Vice
                President                                                           

            

    

    

    
      
              

          
            	 	 	 

          
      

           
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (Signature
      Page to Second Amended and Restated Loan
      Agreement)

     

    
      	 	
              BANK
                OF AMERICA, N.A. (acting through its Canadian branch), as
                Canadian Agent and Canadian Lender

               

              By: 
                /s/ Nelson
                Lam                                                                           

              Name:  Nelson
                Lam                                                         

              Title:   
Vice
                President                                                           

            

    

    

    
      
              

          
            	 	 	 

          
      

                                    
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (Signature
      Page to Second Amended and Restated Loan
      Agreement)

    
      	
              ACCEPTED
                AND AGREED TO THIS 30TH
                DAY OF
                NOVEMBER, 2007

            	
              GUARANTORS:

               

            
	 	
              KKTY
                HOLDING COMPANY, L.L.C.

               

              By: 
                /s/ Christopher
                Anderson                                                                           

              Name: 
Christopher
                Anderson                                                           

              Title:   
                Authorized Manager       

                                                                  

            
	 	
              AMERICAN
                GAGE & MACHINE CO.

               

              By: 
                /s/ Amir
                Rosenthal                                                                           

              Name: 
Amir
                Rosenthal                                                           

              Title:   
Vice
                President

                                                                         

            
	 	
              CONTINENTAL
                COMMERCIAL PRODUCTS, LLC

               

              By: 
                /s/ Amir
                Rosenthal                                                                           

              Name: 
Amir
                Rosenthal                                                           

              Title:   
Vice
                President                                                           

            

    

    

    
      
              

          
            	 	 	 

          
      

                 
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    APPENDIX
      A

     

    GENERAL
      DEFINITIONS

     

    When
      used
      in the Second Amended and Restated Loan Agreement dated as of November 30,
      2007, by and among Bank of America, N.A., individually and as Agent, Bank of
      America, N.A. (acting through its Canadian branch) as Canadian Agent, Bank
      of
      America, N.A., London branch, as U.K. Agent, the other financial institutions
      which are or become parties thereto and Katy Industries, Inc., GLIT/Gemtex,
      Ltd.
      and CEH Limited, (a) the terms Certificated Security, Chattel Paper, Commercial
      Tort Claims, Deposit Account, Document, Electronic Chattel Paper, Equipment,
      Financial Asset, Fixture, General Intangibles, Goods, Instruments, Inventory,
      Investment Property, Letter-of-Credit Rights, Payment Intangibles, Proceeds,
      Promissory Notes, Security, Security Entitlement, Software, Supporting
      Obligations, Tangible Chattel Paper and Uncertificated Security have the
      respective meanings assigned thereto under the UCC or the PPSA, as applicable;
      (b) all terms reflecting Collateral having the meanings assigned thereto under
      the UCC or the PPSA, as applicable, shall be deemed to mean such Property,
      whether now owned or hereafter created or acquired by the applicable Borrower
      or
      in which the applicable Borrower now has or hereafter acquires any interest;
      (c)
      to the extent that any term reflecting Collateral has different meanings under
      the PPSA and the UCC, such term shall be defined in the alternative so as to
      include both meanings; (d) capitalized terms which are not otherwise defined
      have the respective meanings assigned thereto in said Loan Agreement; and (e)
      the following terms shall have the following meanings (terms defined in the
      singular to have the same meaning when used in the plural and vice
      versa):

     

    2004
      Loan Agreement– as defined in the first WHEREAS to the Loan
      Agreement.

     

    Account–
      has the meaning assigned thereto under the UCC and the PPSA and, in addition
      thereto, shall include as to U.K. Borrower:  the amounts now or
      subsequently standing to the credit of any account which U.K. Borrower has,
      or
      has an interest in, with any Person and the debts represented thereby and all
      book and other debts and monetary claims now or subsequently due or owing to
      U.K. Borrower, the proceeds of the same and the benefit of all securities or
      investments, Liens and guarantees or other rights of any nature now or
      subsequently enjoyed or held by it in relation thereto (other than
      Accounts).

     

    Account
      Debtor - any Person who is or may become obligated under or on account
      of any Account, Chattel Paper or General Intangible.

     

    Affiliate -
      a Person (other than a Subsidiary): (i) which directly or indirectly
      through one or more intermediaries controls, or is controlled by, or is under
      common control with, a Person; (ii) which beneficially owns or holds 5% or
      more of any class of the Voting Stock of a Person; or (iii) 5% or more of
      the Voting Stock (or in the case of a Person which is not a corporation, 5%
      or
      more of the equity interest) of which is beneficially owned or held by a Person
      or a Subsidiary of a Person.

     

    Agent –
      Bank of America, N.A., in its capacity as agent for itself, the Lenders,
      Canadian Agent and U.K. Agent under the Agreement and any successor in that
      capacity appointed pursuant to Section 10.11 of the Agreement.

     

    
      
        
        

      

      
        A-1

        
          

        

      

      
        
        

      

    

     

    Agents–
      Agent, Canadian Agent and U.K. Agent.

     

    Agent
      Loans - as defined in subsection 1.1.5 of the Agreement.

     

    Aggregate
      Availability– the sum of U.S. Availability, U.K. Availability and Canadian
      Availability in the aggregate.

     

    Aggregate
      Borrowing Base– as at any date of determination thereof, an amount equal to
      the lesser of (i) the Revolving Credit Maximum Amount; or (ii) the sum of U.S.
      Borrowing Base, the U.K. Borrowing Base and the Canadian Borrowing
      Base.

     

    Aggregate
      Percentage - with respect to each Lender, the percentage equal to the
      quotient of (i) such Lender’s Loan Commitment divided by
      (ii) the aggregate of all Loan Commitments.

     

    Agreement -
      the Loan Agreement referred to in the first sentence of this Appendix A,
      all Exhibits and Schedules thereto and this Appendix A, as each of the
      same may be amended from time to time.

     

    ALTA
      Survey - a survey prepared in accordance with the standards adopted by the
      American Land Title Association and the American Congress on Surveying and
      Mapping in 1997, known as the “Minimum Standard Detail Requirements of Land
      Title Surveys”.  The ALTA Survey shall be in sufficient form to
      satisfy the requirements of [Name of] Title Insurance Company to provide
      extended coverage over survey defects and shall also show the location of all
      easements, utilities, and covenants of record, dimensions of all improvements,
      encroachments from any adjoining property, and certify as to the location of
      any
      flood plain area affecting the subject real estate.  The ALTA Survey
      shall contain the following certification:  “To [Name of Borrower or
      applicable Loan Party], Bank of America, N.A., as Agent, and [Name of] Title
      Insurance Company.  This is to certify that this map of plat and the
      survey on which it is based were made in accordance with the “Minimum Standard
      Detail Requirements for Land Title Surveys” jointly established and adopted by
      ALTA and ACSM in 1997.  (signed (SEAL) License
      No. __________”.

     

    Applicable
      Margin -

     

    (a)           U.K.
      and Canadian Loans.  With respect to Revolving Credit Loans to
      U.K. Borrower in Sterling and Euros, to Revolving Credit Loans to Canadian
      Borrower in Canadian Dollars and the issuance of Canadian Letters of Credit
      or
      Canadian LC Guaranties or U.K. Letters of Credit or U.K. LC Guaranties, from
      the
      Closing Date to, but not including, the first Adjustment Date (as hereinafter
      defined) the percentages set forth below with respect to the Base Rate Revolving
      Portion, Canadian Prime Loans, the LIBOR Revolving Portion, Canadian BA Rate
      Loans and the Letter of Credit and LC Guaranty Fees:

     

    
      
        
        

      

      
        A-2

        
          

        

      

      
        
        

      

    

     

    
      	
              Base
                Rate Revolving Portion or Canadian Prime Loans

            	
              2.25%

            
	
              LIBOR
                Revolving Portion or Canadian BA Rate Loans

            	
              0.50%

            
	
              LC
                Fee

            	
              2.00%

            

    

    

    The
      percentages set forth above will be adjusted on the first day of the month
      following delivery by Borrower to Agent of the Borrowing Base Certificate
      required to be delivered pursuant to Section 8.1.4 of the Agreement for the
      most
      recently ended month during the Term, commencing with the month ending December
      31, 2007 (each such date an “Adjustment Date”), effective prospectively, by
      reference to the applicable “Financial Measurement” (as defined below) for the
      days most recently ended month in accordance with the following:

     

    
      	
              Financial
                Measurement

            	
              Base
                Rate Revolving Portion or Canadian Prime Loans

               

            	
              LIBOR
                Revolving Portion or Canadian Bank Rate Loans

            	
              LC
                Fee

            
	
              <
                $10,000,000

            	
              0.75%

            	
              2.50%

            	
              2.25%

               

            
	
              >
                $10,000,000, but < $20,000,000

               

            	
              0.50%

            	
              2.25%

            	
              2.00%

            
	
              >
                $20,000,000

            	
              0.25%

            	
              2.00%

            	
              1.75%

            

    

     

    provided
      that, (i) if Borrower fails to deliver the Borrowing Base Certificate
      required to be delivered pursuant to Section 8.1.4 of the Agreement on or before
      the due date thereof, the Applicable Margin shall automatically adjust to the
      highest interest rate set forth above, effective prospectively from such due
      date until the next Adjustment Date.  For purposes hereof, “Financial
      Measurement” shall mean average daily Aggregate Availability for the most
      recently ended month.

     

    (b)           U.S.
      Loans.  With respect to Revolver Loans to U.S. Borrower in
      Dollars, the U.S. Letters of Credit and the U.S. LC Guaranties, from the Closing
      Date to, but not including, the first Adjustment Date (as hereinafter defined)
      the percentages set forth below with respect to any type of Loan:

     

    
      	
              Base
                Rate Revolving Portion

            	
              0.50%

            
	
              LIBOR
                Revolving Portion

            	
              2.25%

            
	
              Base
                Rate Term Portion

            	
              0.75%

            
	
              LIBOR
                Term Portion

            	
              2.50%

            
	
              LC
                Fee

            	
              2.00%

            

    

    

    The
      percentages set forth above will be adjusted on the first day of the month
      following delivery by Borrower to Agent of the Borrowing Base Certificate
      required to be delivered pursuant to Section 8.1.4 of the Agreement for the
      most
      recently ended month during the Term, commencing with the month ending December
      31, 2007 (each such date an “Adjustment Date”), effective prospectively, by
      reference to the applicable “Financial Measurement” (as defined below) most
      recently ended month in accordance with the following:

     

    
      
        
        

      

      
        A-3

        
          

        

      

      
        
        

      

    

     

    
      	
              Financial
                Measurement

            	
              Base
                Rate

              Revolver

              Loans

               

            	
              LIBOR

              Revolver

              Loans

            	
              Base
                Rate Term Loans

            	
              LIBOR
                Term Loans

            	
              LC
                Fee

            
	
              <
                $10,000,000

            	
              0.75%

            	
              2.50%

            	
              1.00%

               

            	
              2.75%

            	
              2.25%

            
	
              >
                $10,000,000, but < $20,000,000

               

            	
              0.50%

            	
              2.25%

            	
              0.75%

            	
              2.50%

            	
              2.00%

            
	
              >
                $20,000,000

            	
              0.25%

            	
              2.00%

            	
              0.50%

            	
              2.25%

            	
              1.75%

            

    

     

    provided
      that, (i) if Borrower fails to deliver the Borrowing Base Certificate
      required to be delivered pursuant to Section 8.1.4 of the Agreement on or before
      the due date thereof, the Applicable Margin shall automatically adjust to the
      highest interest rate set forth above, effective prospectively from such due
      date until the next Adjustment Date.  For purposes hereof, “Financial
      Measurement” shall mean average daily Aggregate Availability for the most
      recently ended month.

     

    Appraised
      Value– means with respect to any Loan Party’s real Property or Equipment,
      the appraised value of such real Property or Equipment as shown on
Schedule B attached hereto and incorporated herein, as such
      appraised values may be updated from time to time by Agent based on appraisals
      obtained pursuant to Section 2.10 of the Agreement.

     

    Appropriate
      Notice Office– means (x) with respect to U.S. Revolving Credit Loans, U.S.
      Letters of Credit, Canadian Revolving Credit Loans and Canadian Letters of
      Credit, the office of Agent located at 231 South LaSalle Street, 7th Floor,
      Chicago,
      Illinois 60604, Attn: Katy Loan Administration Manager, facsimile:
      (312) 755-3300, (y) with respect to U.K. Revolving Credit Loans and U.K.
      Letters of Credit, the office of U.K. Agent located at
      ___________________________________________, Attn: _________________________and
      (z) with respect to the Canadian Revolving Credit Loans and U.K. Letters of
      Credit, the office of the Canadian Agent located at
      ____________________________, Attn:___________________.

     

    Appropriate
      Payment Office– means with respect to (i) Revolving Credit Loans, Term
      Loans and U.S. LC Obligations of U.S. Borrower, the office of Agent located
      at
      231 South LaSalle Street, 7th Floor,
      Chicago,
      Illinois 60604, Attn: Katy Loan Administration Manager, facsimile:
      (312) 755-3300, or such other office as Agent may designate to Borrower
      Representative and the Lenders from time to time, (ii) Revolving Credit
      Loans and U.K. LC Obligations of U.K. Borrower, the office of Bank of America,
      N.A. located at Bank of America New York, 100 West 33rd Street,
      New York,
      NY  10001, Reference: Katy Industries, Inc. or such other office as
      U.K. Agent may designate to Borrower Representative and the Lenders from time
      to
      time and (iii) Revolving Credit Loans and Canadian LC Obligations of
      Canadian Borrower), the office of Canadian Agent located at Bank of America,
      N.A. located at Bank of America New York, 100 West 33rd Street,
      New York,
      NY  10001, Reference: Katy Industries, Inc, or such other office as
      Canadian Agent may designate to Borrower Representative and the Lenders from
      time to time.

     

    
      
        
        

      

      
        A-4

        
          

        

      

      
        
        

      

    

     

    Asset
      Sale– the sale by Parent, any Borrower or any of its Subsidiaries to any
      Person other than a Borrower or any other Loan Party of (i) any of the stock
      of
      any Borrower or of any of such Borrower’s Subsidiaries, (ii) substantially all
      of the assets of any division or line of business of Parent, any Borrower or
      any
      Subsidiary of any Borrower, (iii) any other assets (whether tangible or
      intangible) of Parent, any Borrower or any Subsidiary of any Borrower (other
      than Inventory sold in the ordinary course of business).

     

    Assignment
      and Acceptance Agreement - an assignment and acceptance agreement in form
      and content reasonably acceptable to Agent pursuant to which a Lender assigns
      to
      another Lender all or any portion of any of such Lender’s Revolving Loan
      Commitment or Term Loan Commitment, as permitted pursuant to the terms of this
      Agreement.

     

    Associated
      Costs Rate– with respect to any Revolving Credit Loan made to U.K. Borrower,
      the Mandatory Costs and up to date U.K. Loan Markets Association
      formula.

     

    Availability
      Block– as of any date, Five Million Dollars ($5,000,000).

     

    Bank –
      Bank of America, N.A.

     

    Bankruptcy
      Code– Title 11 of the United States Code entitled “Bankruptcy,” as now and
      hereinafter in effect, or any successor statute.

     

    Base
      Rate - (i) with respect to Revolving Credit Loans in Dollars to U.S.
      Borrower, the rate of interest announced or quoted by Bank from time to time
      as
      its prime rate for commercial loans for Dollars, whether or not such rate is
      the
      lowest rate charged by Bank of America, N.A. to its most preferred borrowers;
      and, if such prime rate for commercial loans is discontinued by Bank as a
      standard, a comparable reference rate designated by Bank as a substitute
      therefor shall be the Base Rate; (ii) with respect to Revolving Credit
      Loans to Canadian Borrower in Canadian Dollars, the Canadian Prime Rate, and
      (iii) with respect to Revolving Credit Loans in Sterling or Euros to U.K.
      Borrower, the rate of interest announced or quoted by Bank as its U.K. Base
      Rate
      for Sterling or Euros, as applicable, whether or not such rate is the lowest
      rate charged by Bank to its most preferred borrowers; and, if such U.K. Base
      Rate is discontinued by Bank as a standard, a comparable reference rate
      designated by Bank as a substitute therefor shall be the Base Rate.

     

    Base
      Rate Portion - a Base Rate Term Portion, or a Base Rate Revolving
      Portion.

     

    Base
      Rate Revolving Portion - that portion of the Revolving Credit Loans
      that is not subject to a LIBOR Option.

     

    Base
      Rate Term Portion - that portion of the Term Loan that is not subject
      to a LIBOR Option.

     

    Borrower(s)–
      shall have the meaning contained in the first paragraph of this
      Agreement.

     

    
      
        
        

      

      
        A-5

        
          

        

      

      
        
        

      

    

     

    Borrower
      Organizational Documents– means the Organizational Documents of any
      Borrower, in the form delivered to Agent prior to the execution of this
      Agreement and as such Organizational Documents may be amended from time to
      time
      thereafter to the extent permitted by the terms of the Agreement.

     

    Borrower
      Representative– has the meaning set forth in Section 3.12
      hereof.

     

    Borrowing
      Base Certificate– a certificate by an officer of Borrower Representative,
      substantially in the form of Exhibit 8.1.4 (or another form
      acceptable to Agent) setting forth the calculation of the Aggregate Borrowing
      Base, U.S. Borrowing Base, U.K. Borrowing Base and Canadian Borrowing Base,
      including a calculation of each component thereof, all in such detail as shall
      be satisfactory to Agent.  All calculations of the Aggregate Borrowing
      Base, U.S. Borrowing Base, U.K. Borrowing Base and Canadian Borrowing Base
      in
      connection with the preparation of any Borrowing Base Certificate shall
      originally be made by Borrower Representative and certified to Agent;
provided, that Agent shall have the right to review and adjust, in the
      exercise of its reasonable credit judgment, any such calculation after giving
      notice thereof to Borrower Representative, (1) to reflect its reasonable
      estimate of declines or increases in value of any of the Collateral described
      therein, and (2) to the extent that Agent determines that such calculation
      is not in accordance with this Agreement.  All Borrowing Base
      Certificate calculations shall be made in Dollars at the exchange rates most
      recently quoted by Agent.

     

    Business
      Day– any day excluding Saturday, Sunday and any day which is a legal holiday
      under the laws of the (i) State of Wisconsin or the State of Illinois,
      (ii) Province of Ontario, Canada, (iii) City of London, England or is
      a day on which banking institutions located in either of such states, provinces
      or city, as applicable, are closed or (iv) with respect to Revolving Credit
      Loans made in Euros to U.K. Borrower any day on which the Trans-European
      Automated Real-Time Gross Settlement Express Transfer Payment System is open
      for
      settlement of payments in Euros.

     

    Canadian
      Agent–Bank of America, N.A. (acting through its Canadian branch) in its
      capacity as Canadian Agent for itself, the Lenders and U.K. Agent under the
      Agreement and any successor in that capacity appointed pursuant to the
      Agreement.

     

    Canadian
      Availability– the amount of additional money which Canadian Borrower is
      entitled to borrow from time to time as Canadian Revolving Credit Loans, such
      amount being the lesser of (i) the Canadian Sublimit minus the
      outstanding balance of the Dollar Equivalent of the Canadian Revolving Credit
      Loans and the Canadian LC Obligations and (ii) the difference derived when
      the sum of the Dollar Equivalent of the principal amount of Canadian Revolving
      Credit Loans to Canadian Borrower then outstanding (including any amounts which
      Agent, Canadian Agent or Canadian Lender may have paid for the account of any
      Canadian Borrower pursuant to any of the Loan Documents and which have not
      been
      reimbursed by Canadian Borrower) and the Dollar Equivalent of the Canadian
      LC
      Obligations is subtracted from the Dollar Equivalent of the Canadian Borrowing
      Base.  If the applicable outstanding Canadian Obligations are equal to
      or greater than the Canadian Sublimit or the Canadian Borrowing Base, Canadian
      Availability is 0.

     

    
      
        
        

      

      
        A-6

        
          

        

      

      
        
        

      

    

     

    Canadian
      BA– a depository bill as defined in the Depository Bills and Notes Act
      (Canada) in Canadian Dollars that is in the form of an order drawn by a Borrower
      and accepted by the Canadian Lender.

     

    Canadian
      BA Rate– for the applicable Interest Period of a Canadian BA Rate Loan, the
      rate of interest per annum equal to the annual rate of interest quoted by Agent
      as being the rate of interest applicable to Canadian BAs with a face amount
      similar to the principal amount of the applicable Canadian BA Rate Loan and
      for
      the applicable Interest Period.

     

    Canadian
      BA Rate Loan– a Canadian Revolving Credit Loan in Canadian Dollars
      maintained at the Canadian BA Rate.

     

    Canadian
      BA Request– a notice in writing (or by telephone confirmed electronically or
      by telecopy or other facsimile transmission on the same day as the telephone
      request) from Borrower Representative to Canadian Agent and Agent requesting
      that interest on a Canadian Revolving Credit Loan be based on the Canadian
      BA
      Rate, specifying:  (i) the first day of the Interest Period
      (which shall be a Business Day); (ii) the length of the Interest Period;
      (iii) whether the Canadian BA Rate Loan is a new Loan, a conversion of a
      Canadian Prime Rate Loan, or a continuation of a Canadian BA Rate Loan; and
      (iv) the Canadian Dollar Equivalent of the Canadian BA Rate Loan, which
      shall be in an amount not less than $1,000,000 Canadian Dollars or an integral
      multiple of $100,000 Canadian Dollars in excess thereof.

     

    Canadian
      Benefit Plans– all material employee benefit plans, programs or arrangements
      of any nature or kind whatsoever that are not Canadian Pension Plans and are
      maintained or contributed to by, or to which there is or may be an obligation
      to
      contribute by, any Borrower or its Subsidiaries in respect of their employees
      or
      former employees in Canada.

     

    Canadian
      Borrower– GLIT/Gemtex, Ltd.

     

    Canadian
      Borrowing Base - as at any date of determination thereof, an amount equal to
      the lesser of:

     

    
      	
               

            	
              (i)

            	
              the
                Canadian Sublimit, or

            

    

     

    
      	
               

            	
              (ii)

            	
              an
                amount equal to:

            

    

     

    (a)           85%
      of the net amount of Eligible Accounts of Canadian Loan Parties outstanding
      at
      such date; plus

     

    (b)           85%
      of the Net Orderly Liquidation Value of Eligible Inventory of Canadian Loan
      Parties at such date, minus (subtract from the sum of (a) and (b) above);
      plus

     

    (c)           to
      the extent not included in the U.K. Borrowing Base as evidenced by a Borrowing
      Base Certificate, 85% of the net amount of Eligible Accounts of U.K. Loan
      Parties outstanding at such date; plus

     

    
      
        
        

      

      
        A-7

        
          

        

      

      
        
        

      

    

     

    (d)           to
      the extent not included in the U.K. Borrowing Base as evidenced by a Borrowing
      Base Certificate, 85% of the Net Orderly Liquidation Value of Eligible Inventory
      of U.K. Loan Parties at such date; minus

     

    (e)           the
      sum of (1) the Hedge Reserve applicable to Canadian Loan Parties, (2) Dilution
      Reserves applicable to Canadian Loan Parties, (3) Rent Reserves applicable
      to
      Canadian Loan Parties, (4) the Revolving Loan Repayment Reserve applicable
      to
      Canadian Loan Parties, (5) any Reserve established by Canadian Agent in its
      Permitted Discretion for Prior Claims, (6) the PAYE Reserve (to the extent
      Eligible Accounts and Eligible Inventory of U.K. Loan Parties are included
      in
      the Canadian Borrowing Base) and (7) the aggregate amount of other reserves
      applicable to Canadian Loan Parties, if any, established by Agent in the
      exercise of its Permitted Discretion against Eligible Accounts and Eligible
      Inventory.

     

    provided
      that Agent, in the exercise of its Permitted Discretion, may (a) increase or
      decrease reserves against Eligible Accounts Receivable and Eligible Inventory
      and (b) reduce the advance rates provided in this definition, or restore such
      advance rates to any level equal to or below the advance rates in effect as
      of
      the Closing Date.

     

    For
      purposes hereof, (1) the net amount of Eligible Accounts at any time shall
      be
      the face amount of such Eligible Accounts, less any and all returns, rebates,
      discounts (which may, at Agent’s option, be calculated on shortest terms),
      credits allowance or excise taxes of any nature at any time issued, owing,
      claimed by Account Debtors, granted, outstanding or payable in connection with
      such accounts at such time and (2) the amount of Eligible Inventory shall be
      determined on a first-in, first-out, lower of cost or market basis in accordance
      with GAAP, with costs adjusted for differences between standard and actual
      costs.

     

    Canadian
      Collateral– all of Canadian Borrower’s and each other Canadian Loan Party’s
      right, title and interest in (i) the Property and interests in Property
      described in the Security Documents, and (ii) all other Property and
      interests in Property that now or hereafter secure the payment and performance
      of any of the Obligations.

     

    Canadian
      Dollar– the lawful currency of Canada.

     

    Canadian
      Dollar Equivalent– the amount of Canadian Dollars as of any date of
      determination into which Dollars can be converted as determined in accordance
      with Section 1.4.

     

    Canadian
      Fronting Fee– has the meaning set forth in Section 2.6
      hereof.

     

    Canadian
      Lender–an Affiliate of Bank of America, N.A. that is not a non-resident of
      Canada for purposes of the ITA to be selected by Agent, in its capacity as
      the
      Person obligated to make Canadian Revolving Credit Loans to Canadian Borrower
      hereunder, together with its successors and permitted assigns.

     

    
      
        
        

      

      
        A-8

        
          

        

      

      
        
        

      

    

     

    Canadian
      LC Amount– at any time, the Dollar Equivalent of the aggregate undrawn
      available amount of all Canadian Letters of Credit and Canadian LC Guaranties
      (without duplication) then outstanding.

     

    Canadian
      LC Guaranty– any guaranty pursuant to which Canadian Agent or Canadian
      Lender or any Affiliate of Canadian Agent or Canadian Lender shall guaranty
      the
      payment or performance by Canadian Borrower or any other Canadian Loan Party
      of
      their reimbursement obligation under any letter of credit.

     

    Canadian
      LC Obligations– any Canadian LC Amount plus any Obligations that
      arise from any draw against any Canadian Letter of Credit or against any letter
      of credit supported by a Canadian LC Guaranty.

     

    Canadian
      Lender– Bank of America, N.A. (acting through its Canadian branch), together
      with its successors and permitted assigns.

     

    Canadian
      Letter of Credit– any standby or documentary letter of credit or guaranties
      or bonds issued by Canadian Agent or any Affiliate of Canadian Agent for the
      account of any Canadian Borrower or any other Canadian Loan Party.

     

    Canadian
      Loan Parties– any Loan Party that is incorporated or organized under the
      laws of Canada or any province thereof.

     

    Canadian
      Obligations– means the outstanding principal balance of the Canadian
      Revolving Credit Loans made to Canadian Borrower and the Canadian LC Obligations
      and all accrued interest, fees and expenses (other than taxes that are not
      Tax
      Liabilities) with respect thereto.

     

    Canadian
      Participant– means each Lender (including, without limitation, Bank of
      America, N.A. (acting through its Canadian branch) in its capacity as a Lender)
      or any Affiliates thereof (which Affiliate shall be a resident of Canada) as
      set
      forth on the execution pages to this Agreement or the relevant Assignment and
      Acceptance Agreement.  Canadian Participant shall not include the
      Agents.

     

    Canadian
      Participating Interest– with respect to each Canadian Participant other than
      Canadian Lender, such Canadian Participant’s obligation to fund a Participating
      Interest in the Canadian Revolving Credit Loans as set forth in
Section 3.13 of the Agreement.

     

    Canadian
      Pension Plans– means each plan, program or arrangement which is required to
      be registered as a pension plan under any applicable pension benefits standards
      or tax statute and/or regulation in Canada maintained or contributed to by,
      or
      to which there is or may be an obligation to contribute by, any Borrower or
      its
      Subsidiaries in respect of their Canadian employees or former
      employees.

     

    Canadian
      Prime Rate– a per annum rate of interest quoted by Canadian Lender as its
      reference rate for commercial loans made by it in Canada in Canadian
      Dollars.

     

    
      
        
        

      

      
        A-9

        
          

        

      

      
        
        

      

    

     

    Canadian
      Prime Rate Loans– a Canadian Revolving Credit Loan maintained at the
      Canadian Prime Rate.

     

    Canadian
      Revolving Credit Loan– as defined in subsection 1.1.1(c) of the
      Agreement.

     

    Canadian
      Revolving Notes– the Secured Promissory Notes to be executed by each
      Canadian Borrower on or about the Closing Date in favor of each Canadian Lender
      to evidence the Canadian Revolving Credit Loans, which shall be in the form
      of
Exhibit 1.1 to the Agreement, together with any replacement or
      successor notes therefor.

     

    Canadian
      Sublimit– with respect to all Lenders, initially, the Dollar Equivalent of
      $3,000,000 and with respect to any Lender, such Lender’s (or its Affiliate’s)
      commitment to purchase Canadian Revolving Credit Loans and thereafter to fund
      Canadian Revolving Credit Loans in Canadian Dollars to Canadian Borrower,
      expressed in Dollar Equivalents (including such Lender’s or its Affiliate’s
      Canadian Participating Interest and deducting such Canadian Participating
      Interests from Canadian Lender’s commitment), as initially set forth on the
      signature page of the Agreement or any Assignment and Acceptance Agreement
      executed by such Lender, in each case as adjusted from time to time in
      accordance with this Agreement.

     

    Canadian
      Subsidiary– a Subsidiary of Katy organized under the laws of Canada or any
      province thereof.

     

    Capital
      Expenditures - expenditures made or liabilities incurred for the
      acquisition of any fixed assets or improvements, replacements, substitutions
      or
      additions thereto which have a useful life of more than one year, including
      the
      total principal portion of Capitalized Lease Obligations.

     

    Capitalized
      Lease Obligation - any Indebtedness represented by obligations under a
      lease that is required to be capitalized for financial reporting purposes in
      accordance with GAAP.

     

    Cash
      Equivalents– means any Investment in (i) direct obligations of the United
      States or any agency thereof, or obligations guaranteed by the United States
      or
      any agency thereof, (ii) commercial paper rated at least A-1 by Standard
& Poor’s Ratings Services and P-1 by Moody’s Investors Services, Inc., (iii)
      time deposits with, including certificates of deposit issued by, any office
      located in the United States of any bank or trust company which is organized
      under the laws of the United States or any State thereof and has capital,
      surplus and undivided profits aggregating at least $500,000,000 and which issues
      (or the parent of which issues) certificates of deposit or commercial paper
      with
      a rating described in clause (ii) above, (iv) repurchase agreements with
      respect to securities described in clause (i) above entered into with an office
      of a bank or trust company meeting the criteria specified in clause (iii) above,
      provided in each case that such Investment matures within one year from
      the date of acquisition thereof by any Loan Party, or (v) any money market
      or
      mutual fund which invests only in the foregoing types of investments and the
      liquidity of which is satisfactory to Agent.

     

    CCP–
      Continental Commercial Products, L.L.C., a Delaware limited liability company
      (formerly known as Contico International, L.L.C.) and a Subsidiary of the U.S.
      Borrower.

     

    
      
        
        

      

      
        A-10

        
          

        

      

      
        
        

      

    

     

    Change
      in Control– means any of the following:  (i) Parent Funds shall
      cease to beneficially own and control 51% of the issued and outstanding shares
      of capital stock of Parent entitled (without regard to the occurrence of any
      contingency) to vote for the election of members of the Governing Body of
      Parent; (ii) Parent shall cease to beneficially own and control all of the
      issued and outstanding shares of Convertible Preferred Stock; (iii) Parent
      shall
      cease to beneficially own and control at least 51% of the issued and outstanding
      capital stock of Borrower on a fully diluted basis entitled (after giving effect
      to conversion of the Convertible Preferred Stock, whether or not such
      Convertible Preferred Stock is convertible at such time, but without regard
      to
      the occurrence of any other contingency) to vote for the election of members
      of
      the Governing Body of Borrower; (iv) the occurrence of a change in the
      composition of the Governing Body of Parent such that a majority of the members
      of such Governing Body are not Continuing Members or the occurrence of a change
      in the composition of the Governing Body of Borrower such that a majority of
      the
      members of the Governing Body of Borrower are not Parent Designated Members;
      (v)
      the occurrence of any “Change in Control” as defined in the Borrower
      Organizational Documents; or (vi) the occurrence of any “Distribution Date,”
“Section 11(a)(ii) Event” or “Section 13 Event,” in each case as
      defined in the Rights Agreement.  As used herein, the term
“beneficially own” or “beneficial ownership” shall have the Exchange Act and the
      rules and regulations promulgated thereunder.

     

    Closing
      Date - the date on which all of the conditions precedent in
      Section 8 of the Agreement are satisfied or waived and the initial Loan is
      made or the initial Letter of Credit or LC Guaranty is issued under the
      Agreement.

     

    Collateral -
      all of the Property and interests in Property described as “Collateral” in the
      Security Agreement, and all other Property and interests in Property that now
      or
      hereafter secure the payment and performance of any of the
      Obligations.

     

    Collateral
      Access Agreement– any landlord waiver, mortgagee waiver, bailee letter or
      any similar acknowledgement agreement of any landlord or mortgagee in respect
      of
      any real Property of any Loan Party where any Inventory is located or any
      warehouseman or processor in possession of Inventory, substantially in the
      form
      supplied to Loan Parties by Agent, with such changes thereto as may be
      reasonably satisfactory to Agent.

     

    Common
      Stock– Borrower’s common stock, par value $1.00 per share.

     

    Companies
      Act– means the Companies Act of 1985 of England and Wales.

     

    Compliance
      Certificate - as defined in subsection 8.1.3 of the
      Agreement.

     

    Computer
      Hardware and Software - all of any Borrower’s or any other Loan Party’s
      rights (including rights as licensee and lessee) with respect to
      (i) computer and other electronic data processing hardware, including all
      integrated computer systems, central processing units, memory units, display
      terminals, printers, computer elements, card readers, tape drives, hard and
      soft
      disk drives, cables, electrical supply hardware, generators, power equalizers,
      accessories, peripheral devices and other related computer hardware;
      (ii) all Software and all software programs designed for use on the
      computers and electronic data processing hardware described in clause (i)
      above, including all operating system software, utilities and application
      programs in any form (source code and object code in magnetic tape, disk or
      hard
      copy format or any other listings whatsoever); (iii) any firmware
      associated with any of the foregoing; and (iv) any documentation for
      hardware, Software and firmware described in clauses (i), (ii) and (iii)
      above, including flow charts, logic diagrams, manuals, specifications, training
      materials, charts and pseudo codes.

     

    
      
        
        

      

      
        A-11

        
          

        

      

      
        
        

      

    

     

    Consolidated -
      the consolidation in accordance with GAAP of the accounts or other items as
      to
      which such term applies.

     

    Consolidated
      Current Assets– means, as at any date of determination, the total assets of
      Katy and its Subsidiaries on a Consolidated basis which may properly be
      classified as current assets in conformity with GAAP, excluding cash and Cash
      Equivalents, the current portions of deferred tax assets which are not
      receivable in cash within one year of such date of determination, and current
      assets which are LIFO reserves.

     

    Consolidated
      Current Liabilities– means, as at any date of determination, the total
      liabilities of Katy and its Subsidiaries on a Consolidated basis which may
      properly be classified as current liabilities in conformity with GAAP, excluding
      the current portions of long-term Money Borrowed and Capital Leases, the current
      portions of deferred tax liabilities which are not payable in cash within one
      year of such date of determination.

     

    Consolidated
      Working Capital– means, as at any date of determination, the excess (or
      deficit) of Consolidated Current Assets over Consolidated Current
      Liabilities.

     

    Consolidated
      Working Capital Adjustment– means, for any period on a consolidated basis,
      the amount (which may be a negative number) by which Consolidated Working
      Capital as of the beginning of such period exceeds (or is less than)
      Consolidated working Capital as of the end of such period.

     

    Continuing
      Member – as of any date of determination any member of the Governing
      Body of Parent who (i) was a member of such Governing Body on the Closing
      Date or (ii) was nominated for election or elected to such Governing Body
      with the affirmative vote of a majority of the members who were either members
      of such Governing Body on the Closing Date or whose nomination or election
      was
      previously so approved.

     

    Convertible
      Preferred Stock – Katy’s convertible preferred stock par value $100 per
      share.

     

    Current
      Assets - at any date means the amount at which all of the current
      assets of a Person would be properly classified as current assets shown on
      a
      balance sheet at such date in accordance with GAAP.

     

    Default -
      an event or condition the occurrence of which would, with the lapse of time or
      the giving of notice, or both, become an Event of Default.

     

    Default
      Rate - as defined in subsection 2.1.2 of the
      Agreement.

     

    
      
        
        

      

      
        A-12

        
          

        

      

      
        
        

      

    

     

    Derivative
      Obligations - every obligation of a Person under any forward contract,
      futures contract, exchange contract, swap, option or other financing agreement
      or arrangement (including, without limitation, caps, floors, collars and similar
      agreement), the value of which is dependent upon interest rates, currency
      exchange rates, commodities or other indices.

     

    Dilution–
      for any period with respect to any Loan Party, the fraction, expressed as a
      percentage, the numerator of which is the aggregate amount of reductions in
      the
      Accounts of such Loan Party for such period other than by reason of dollar
      (or
      equivalent currency) for dollar (or equivalent currency) cash payment and the
      denominator of which is the aggregate dollar (or equivalent currency) amount
      of
      the sales of such Loan Party for such period.

     

    Dilution
      Reserves– as of any date of determination, without duplication, such
      reserves as Agent may from time to time establish and revise with respect to
      any
      Loan Party in its Permitted Discretion in such amounts as Agent may determine
      in
      its Permitted Discretion to reflect the Dilution as of any such date with
      respect to the Accounts of such Loan Party for the immediately preceding
      twelve-month period to the extent such Dilution exceeds five percent
      (5%).

     

    Distribution -
      in respect of any Person means and includes: (i) the payment of any
      dividends or other distributions on Securities (except distributions in such
      Securities) and (ii) the redemption or acquisition of Securities of such
      Person, as the case may be, unless made contemporaneously from the net proceeds
      of the sale of Securities.

     

    Dollars
      and the sign $ - the lawful money of the United States of
      America.  Unless otherwise specified, all payments under the Loan
      Documents shall be made in Dollars.

     

    Dollar
      Equivalent– the amount of Dollars, as of any date of determination, into
      which Canadian Dollars, Sterling or Euros (as the context may require) can
      be
      converted in accordance with Section 1.4 of the Agreement.

     

    Domestic
      Active Subsidiary – any Domestic Subsidiary of Borrower (other than TTI
      Holdings, Inc., Katy Teweh, Inc., WP Liquidating Corp., Wabash Holding Corp.,
      GCW, Inc., PTR Machine Corp., DBPI, Inc., Hermann Loewenstein, Inc., W.J. Smith
      Wood Preserving Company, Ashford Holding Corporation, Katy Seghers, Inc.,
      Chatham Resources Recovery Systems, Inc., K-S Energy Corporation, Savannah
      Energy Systems Company, and HPMI, Inc., in each case so long as each such
      specified Subsidiary (other than W.J. Smith Wood Preserving Company) does not
      own or acquire assets with an aggregate fair market value in excess of $10,000
      determined after netting intercompany payables and receivables).

     

    Domestic
      Pledge Agreement.  Each pledge agreement or similar instrument
      (other than a Foreign Pledge Agreement), executed on or about January 31, 2003
      or from time to time thereafter in accordance with subsection 7.1.7 by Parent,
      Borrower or any Domestic Subsidiary that owns capital stock or other ownership
      interests of one or more Domestic Active Subsidiaries, in form and substance
      satisfactory to Agent, as such Domestic Pledge Agreement may be amended,
      supplemented or otherwise modified from time to time.

     

    Domestic
      Subsidiary – any Subsidiary of Katy that is incorporated or organized
      under the laws of the United States of America, any state thereof or in the
      District of Columbia.

     

    
      
        
        

      

      
        A-13

        
          

        

      

      
        
        

      

    

     

    Dominion
      Account – a special bank account or accounts of Agent, Canadian Agent
      or U.K. Agent, as applicable, established by a Borrower pursuant to subsection
      5.2.4 of the Agreement at banks selected by such Borrower (provided that U.K.
      Borrower shall select U.K. Agent), but acceptable to Agents in their sole
      discretion, and over which Agent, Canadian Agent or U.K. Agent, as applicable,
      shall have sole and exclusive access and control for withdrawal
      purposes.

     

    Eligible
      Accounts– means, with respect to Borrowers and each other Loan Party (other
      than Parent), Accounts of such Loan Party (other than Parent) deemed by Agent
      in
      the exercise of its Permitted Discretion to be eligible for inclusion in the
      calculation of the Canadian Borrowing Base, U.K. Borrowing Base or U.S.
      Borrowing Base, as applicable.  In determining the amount to be so
      included, the face amount of such Accounts shall be reduced by the amount of
      all
      returns, discounts, deductions, claims, credits, charges, or other
      allowances.  Unless otherwise approved in writing by Agent, an Account
      shall not be an Eligible Account if:

     

    (a)  it
      arises
      out of a sale made by such Loan Party to an Affiliate; or

     

    (b)  it
      is
      unpaid (i) more than 60 days after the original payment due date or
      (ii) more than 120 days from date of invoice; or

     

    (c)  it
      is
      from the same Account Debtor or its Affiliate and 50% or more of all Accounts
      from that Account Debtor (and its Affiliates) are ineligible under (b) above;
      or

     

    (d)  when
      aggregated with all other Accounts of an Account Debtor, such account exceeds
      20% in face value of all Eligible Accounts of all Loan Parties then outstanding,
      but only to the extent of such excess, unless such excess is supported by an
      irrevocable letter of credit satisfactory to Agent (as to form, substance and
      issuer) and assigned to and directly drawable by Agent; or

     

    (e)  the
      Account Debtor for such Account is a creditor of such Loan Party, has or has
      asserted a right of setoff against such Loan Party, has disputed its liability
      or otherwise has made any claim with respect to such Account or any other
      Account which has not been resolved or the applicable Account(s) is subject
      to
      claims for rebates or allowances, in each case to the extent of the amount
      owed
      by such Loan Party to such Account Debtor, the amount of such actual or asserted
      right of setoff, the amount of such dispute or claim or the amount of any such
      rebate or allowance, as the case may be; Agent acknowledges and agrees that
      for
      Borrowing Base Certificates submitted for dates other than the last day of
      a
      fiscal quarter, Borrowers shall estimate the amount of rebates and outstanding
      allowances chargeable against Accounts based on the actual calculation of such
      amounts for the previous fiscal quarter; or

     

    (f)  the
      Account arises from a sale made or services rendered to an Account Debtor that
      does not have substantial business operations and assets in the United States,
      Canada or the United Kingdom, unless backed by a letter of credit, guaranty
      or
      acceptance terms or a guaranty by a Person with substantial business operations
      in the United States, Canada or the United Kingdom, in each case acceptable
      to
      Agent in its sole and absolute discretion; or

     

    (g)  such
      Account is not payable in Dollars, Canadian Dollars or Sterling; or

     

    
      
        
        

      

      
        A-14

        
          

        

      

      
        
        

      

    

     

    (h)  the
      sale
      to the Account Debtor is on a bill-and-hold, guaranteed sale, sale-and-return,
      sale on approval or consignment basis or made pursuant to any other written
      agreement providing for repurchase or return; or

     

    (i)  Agent
      in
      its Permitted Discretion determines by its own credit analysis that collection
      of such Account is uncertain or that such Account may not be paid;
      or

     

    (j)  the
      Account Debtor has commenced a voluntary case under the federal bankruptcy
      laws,
      the Insolvency Laws of Canada or England’s Insolvency Act of 1986 (or any other
      applicable insolvency laws) as now constituted or hereafter amended, or made
      an
      assignment, composition or arrangement for the benefit of creditors, or a decree
      or order for relief has been entered by a court having jurisdiction in the
      premises in respect of the Account Debtor in an involuntary case under the
      federal bankruptcy laws, the Insolvency Laws of Canada or England’s Insolvency
      Act of 1986 (or any other applicable insolvency laws) as now constituted or
      hereafter amended, or any other petition or other application for relief under
      the federal bankruptcy laws, the Insolvency Laws of Canada or England’s
      Insolvency Act of 1986 (or any other applicable insolvency laws), as now
      constituted or hereafter amended, has been filed against the Account Debtor,
      or
      if the Account Debtor has failed, suspended business, ceased to be Solvent,
      or
      consented to or suffered a receiver, trustee, liquidator, custodian,
      administrator receiver or manager, interim receiver, sheriff, monitor,
      sequestrator or similar officer of fiduciary to be appointed for it or for
      all
      or a significant portion of its assets or affairs; or

     

    (k)  the
      Account Debtor is the United States of America, the United Kingdom (or any
      country therein) or Canada or any department, agency or instrumentality thereof,
      unless the applicable Loan Party assigns its right to payment of such Account
      to
      the applicable Agent, in a manner satisfactory to such Agent, in its sole
      judgment, so as to comply with the Assignment of Claims Act of 1940
      (31 U.S.C. §3727, 41 U.S.C. §15  etseq., as amended) or
      any applicable U.K. law relating to the creation of valid assignments or the
      Financial Administration Act (Canada), as applicable; or

     

    (l)  the
      goods
      giving rise to such Account have not been shipped and delivered to and accepted
      by the Account Debtor, the services giving rise to such Account have not been
      performed and accepted, or such Account otherwise does not represent a final
      sale; or

     

    (m)  such
      Account does not comply with all Requirements of Law, including without
      limitation the Federal Consumer Credit Protection Act, the Federal Truth in
      Lending Act and Regulation Z of the Board of Governors of the Federal Reserve
      System; or

     

    (n)  such
      Account is subject to any adverse security deposit, progress payment. or other
      similar advance made by or for the benefit of the applicable Account Debtor,
      but
      only to the extent thereof; or

     

    (o)  it
      is not
      subject to a valid and perfected First Priority Lien in favor of Agent, Canadian
      Agent or U.K. Agent, as applicable, or does not otherwise conform to the
      representations and warranties contained in the Loan Documents; or

     

    (p)  it
      is
      subject to unapplied cash receipts or an unprocessed credit memo.

     

    
      
        
        

      

      
        A-15

        
          

        

      

      
        
        

      

    

     

    provided
      that Agent, in the exercise of its Permitted Discretion, may impose additional
      restrictions (or eliminate the same) to the standards of eligibility set forth
      in this definition.

     

    Eligible
      Inventory - means, with respect to Borrowers and each other Loan Party
      (other than Parent), the aggregate amount of Inventory of such Loan Party (other
      than Parent) deemed by Agent in the exercise of its Permitted Discretion to
      be
      eligible for inclusion in the calculation of the Canadian Borrowing Base, U.S.
      Borrowing Base or U.K. Borrowing Base, as applicable.  In determining
      the amount to be so included, Inventory shall be valued at the lower of cost
      (based on FIFO) or market on a basis consistent with such Loan Party’s current
      and historical accounting practice.  Unless otherwise approved in
      writing by Agent, an item of Inventory shall not be included in Eligible
      Inventory if:

     

    (a)  it
      is not
      owned solely by such Loan Party or such Loan Party does not have good, valid
      and
      marketable title thereto; or

     

    (b)  it
      is not
      located in the United States, Canada or the United Kingdom; or

     

    (c)  it
      is not
      located on property owned or leased by such Loan Party or in a contract
      warehouse, in each case subject to a Collateral Access Agreement: executed
      by
      any applicable mortgagee, lessor or contract warehouseman, as the case may
      be,
      and segregated or otherwise separately identifiable from goods of others, if
      any, stored on the premises; provided that if such Inventory is not subject
      to a
      Collateral Access Agreement, Agent may, in its sole discretion, include such
      Inventory as Eligible Inventory so long as a reserve (the “Rent Reserves”) is
      established in an amount equal to rental payments paid or payable by Loan
      Parties to applicable mortgagees, lessors or contract warehousemen for the
      immediately succeeding three-month period with respect to such Inventory;
      or

     

    (d)  it
      is
      work in progress Inventory; or

     

    (e)  it
      is not
      subject to a valid and perfected First Priority Lien in favor of Agent, Canadian
      Agent or U.K. Agent, as applicable, (including Inventory covered by any
      negotiable documents of title (including documents, warehouse receipts, dock
      receipts and bills of lading)) issued by any Person to the extent such
      negotiable documents of title have not been delivered to Agent) except, with
      respect to Inventory stored at sites described in clause (c) above, for Liens
      for unpaid rent or normal and customary warehousing charges; or

     

    (f)  it
      consists of goods returned or rejected by such Loan Party’s customers or goods
      in transit to third parties (other than to warehouse or other sites covered
      by a
      Collateral Access Agreement or with respect to which Rent Reserves exist in
      accordance with subsection (c) above); or

     

    (g)  it
      is not
      first-quality goods, is obsolete, slow moving, unsalable (including, without
      limitation, unsalability due to branding), damaged or unfit for further
      processing, or does not otherwise conform to the representations and warranties
      contained in the Loan Documents; or

     

    (h)  it
      consists of purchased components which are not classified as raw materials
      and
      which are manufactured specifically for such Loan Party; or

     

    
      
        
        

      

      
        A-16

        
          

        

      

      
        
        

      

    

     

    (i)  it
      consists of components or supplies used or consumed in the Loan Parties’
business (other than raw materials used for manufacturing of finished goods
      for
      sale), spare parts, packaging or shipping materials; or

     

    (j)  it
      consists of Inventory delivered to or held by the Loan Parties on “sale on
      approval”, “sale or return”, “consignment”, “guarantee sale” or “bill and hold”
or that is subject to any repurchase or return agreement, or otherwise has
      terms
      by reason of which the Loan Parties’ ownership or possession thereof may be
      conditional.

     

    provided
      that Agent in the exercise of its Permitted Discretion, may impose additional
      restrictions (or eliminate the same) to the standards of eligibility set forth
      in this definition.

     

    Environmental
      Laws– all federal, state and local laws, rules, regulations, ordinances,
      orders and consent decrees relating to health, safety and environmental
      matters.

     

    ERISA -
      the Employee Retirement Income Security Act of 1974, as amended, and any
      successor statute, and all rules and regulations from time to time promulgated
      thereunder.

     

    ERISA
      Affiliate– means any entity with which U.S. Borrower is treated as a single
      employer under Section 414(b), (c), (m) and/or (o) of the Internal Revenue
      Code
      of 1986, as amended.

     

    Euro,
      euro or euros– the single currency of Participating Member
      States.

     

    Euro
      Equivalent– the amount of Euros as of any date of determination into which
      Dollars can be converted, as determined in accordance with
      Section 1.4.

     

    Event
      of Default - as defined in Section 9.1 of the
      Agreement.

     

    Existing
      Lenders– as defined in the first WHEREAS clause to the
      Agreement.

     

    Facility
      Office– in relation to any Lender, Canadian Participant or U.K. Participant,
      the office specified as such office on the signature page of this Agreement
      or any Assignment and Acceptance Agreement executed by a new Lender through
      which it will perform its obligations hereunder.

     

    Fee
      Letter - as defined in Section 2.3 of the Agreement.

     

    First
      Priority (Lien) – with respect to any Lien purported to be created in
      any Collateral pursuant to any Security Document, that (i) such Lien is
      perfected and has priority over any other Lien on such Collateral other than
      nonconsensual property tax Liens that arise by operation of law and that relate
      to amounts the payment of which are not required under subsection 7.2.5,
      purchase money security interests for acquisitions of specific equipment
      permitted, and purchase money security interests granted in connection with
      the
      acquisition of property pursuant to subsection 7.2.5(iv) hereof and
      (ii) such Lien is the only Lien (other than Permitted Liens) to which such
      Collateral is subject.

     

    
      
        
        

      

      
        A-17

        
          

        

      

      
        
        

      

    

     

    Foreign
      Active Subsidiary – any Foreign Subsidiary of Borrower (other than Glit
      Limited (English company number 2347069)) and Labour Holdings, Limited (English
      company number 1083809)), in each case so long as each such specified Subsidiary
      does not own or acquire assets with an aggregate fair market value in excess
      of
      $10,000.

     

    Foreign
      Pledge Agreement – each pledge agreement or similar instrument governed
      by the laws of a country other than the United States, executed on or about
      January 31, 2003 or from time to time thereafter in accordance with subsection
      7.1.7 by Katy or any Domestic Subsidiary that owns capital stock or other
      ownership interests of one or more Foreign Active Subsidiaries organized in
      such
      country, in form and substance satisfactory to Agent, as such Foreign Pledge
      Agreement may be amended, supplemented or otherwise modified from time to
      time.

     

    Foreign
      Subsidiary – any Subsidiary of Katy that is not a Domestic
      Subsidiary.

     

    Fronting
      Fees - as defined in Section 2.6.

     

    GAAP -
      generally accepted accounting principles in the United States of America in
      effect from time to time.

     

    Glit–
      Glit/Gemtex, Ltd., a Canadian corporation and a Subsidiary of Katy.

     

    Governmental
      Authority– any governmental or regulatory body, commission, central bank,
      board, bureau, organ or instrumentality or any court, any political subdivision
      or department thereof, in each case whether federal, state, local or
      foreign.

     

    Governing
      Body – the board of directors or other body having the power to direct
      or cause the direction of the management and policies of a Person that is a
      corporation, partnership, trust or limited liability company.

     

    Guarantors –
      Parent, Borrower or any Subsidiary of Katy (other than an Inactive Subsidiary)
      executing a Loan Document including, without limitation, Woods and Glit, and
      each other Person who now or hereafter executes a Loan Document as a guarantor
      or as a hypothecator.

     

    Guaranty
      Agreements - the Amended and Restated Guaranty Agreement which was or
      will be executed on or about the Closing Date by Katy and each other Loan Party,
      in form and substance satisfactory to Agent, together with each other guaranty
      hereafter executed by any Guarantor; pursuant to which each U.S. Loan Party
      shall guaranty the full and complete performance and payment of all Obligations
      and each Canadian Loan Party shall guaranty the full and complete performance
      of
      the Canadian Obligations and each U.K. Loan Party shall guaranty the full and
      complete performance of the U.S. Obligations and the U.K.
      Obligations.

     

    Hedge
      Reserve– the fluctuating reserve established by Agent against the U.S.
      Borrowing Base, the U.K. Borrowing Base or the Canadian Borrowing Base, as
      applicable, in an amount equal to the aggregate Mark-to-Market Adjustments
      under
      all agreements evidencing any Derivative Obligation included within the
      Obligations.  Agent shall adjust the Hedge Reserve to reflect any
      change in the Mark-to-Market Adjustment Amount under such an agreement
      evidencing such a Derivative Obligation as set forth in a certificate of a
      related Lender Counterparty and any other reserve established by Agent in its
      Permitted Discretion, with respect to any other Product Obligation.

     

    
      
        
        

      

      
        A-18

        
          

        

      

      
        
        

      

    

     

    Inactive
      Subsidiary – any Domestic or Foreign Subsidiary of Borrowers that owns
      or acquires assets with an aggregate fair market value of $10,000 or less after
      netting intercompany payables and receivables.

     

    Indebtedness -
      as applied to a Person means, without duplication:

     

    (i)  all
      items
      which in accordance with GAAP would be included in determining total liabilities
      as shown on the liability side of a balance sheet of such Person at the date
      as
      of which Indebtedness is to be determined, including, without limitation,
      Capitalized Lease Obligations;

     

    (ii)  all
      obligations of other Persons which such Person has guaranteed;

     

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

     

    (iv)  Derivative
      Obligations; and

     

    (v)  in
      the
      case of Borrowers (without duplication), the Obligations.

     

    Insolvency
      Laws of Canada– means each of the Bankruptcy and Insolvency Act (Canada) and
      the Companies Creditors’ Arrangement Act (Canada), each as now and hereafter in
      effect, any successors to such statutes and any other applicable insolvency
      or
      other similar law of any jurisdiction including, without limitation, any law
      of
      any jurisdiction permitting a debtor to obtain a stay or a compromise of the
      claims of its creditors against it.

     

    Interest
      Period– means,

     

    (a)           as
      applicable to any LIBOR Portion for Revolving Credit Loans or the Term Loan
      to
      U.S. Borrower, a period commencing on the date such LIBOR Portion is advanced,
      continued or converted, and ending on the date which is one (1) month,
      two (2) months, three (3) months, or six (6) months later, as may
      then be requested by Borrower Representative on behalf of U.S. Borrower;
provided that (i) any Interest Period which would otherwise end on a
      day which is not a Business Day shall end in the next preceding or succeeding
      Business Day as is Agent’s custom in the market to which such LIBOR Portion
      relates; (ii) there remains a minimum of one (1) month, two (2)
      months, three (3) months or six (6) months (depending upon which
      Interest Period Borrower Representative selects) in the Term, unless Borrower
      Representative and Lenders have agreed to an extension of the Term beyond the
      expiration of the Interest Period in question; (iii) all Interest Periods
      of the same duration which commence on the same date shall end on the same
      date;
      and (iv) with respect to any LIBOR Term Portion, no applicable Interest Period
      shall extend beyond the scheduled installment payment date for such LIBOR Term
      Portion.

     

    
      
        
        

      

      
        A-19

        
          

        

      

      
        
        

      

    

     

    (b)           as
      applicable to any LIBOR Portion, for Revolving Credit Loans to U.K. Borrower,
      a
      period commencing on the date such LIBOR Portion is advanced, continued or
      converted, and ending on the date which is one (1) month, two (2)
      months, three (3) months, or six (6) months later, as may then be
      requested by Borrower Representative on behalf of U.K. Borrower (or U.K.
      Borrower); provided that (i) any Interest Period which would
      otherwise end on a day which is not a Business Day shall end in the next
      preceding or succeeding Business Day as is Agent’s custom in the market to which
      such LIBOR Portion relates; (ii) there remains a minimum of one (1)
      month, two (2) months, three (3) months or six (6) months
      (depending upon which Interest Period Borrower Representative selects) in the
      Term, unless Borrower Representative and Lenders have agreed to an extension
      of
      the Term beyond the expiration of the Interest Period in question; and
      (iii) all Interest Periods of the same duration which commence on the same
      date shall end on the same date.

     

    (c)           as
      applicable to Canadian BA Rate Loans to Canadian Borrower, a period commencing
      on the date such Canadian BA Rate Loan is advanced, continued or converted,
      and
      ending on the date which is 30, 60, 90 or 180 days later, as may then be
      requested by Borrower Representative on behalf of Canadian Borrower;
provided that (i) any Interest Period which would otherwise end on a
      day which is not a Business Day shall end on the next preceding or succeeding
      Business Day as is Canadian Agent’s custom in the market to which such Canadian
      BA Rate Loan relates; (ii) there remains a minimum of 30, 60, 90 or 180
      days (depending upon which Interest Period Borrower Representative selects)
      in
      the Term, unless Borrower Representative and Lenders have agreed to an extension
      of the Term beyond the expiration of the Interest Period in question; and
      (iii) all Interest Periods of the same duration which commence on the same
      date shall end on the same date.

     

    Investment–
      means any investment in any Person, whether by means of acquiring or holding
      Securities, capital contributions, loans, time deposits, advances or
      otherwise.

     

    ITA–
      means collectively the Income Tax Act (Canada) and the regulations to the Income
      Tax Act (Canada), all as the same may from time to time be in
      effect.

     

    Judgment
      Conversion Date– has the meaning set forth in
      Section 1.5(a).

     

    Judgment
      Currency– has the meaning set forth in Section 1.5(a).

     

    K&C –
      Kohlberg & Company, L.L.C., a Delaware limited liability
      company.

     

    Kohlberg
      Agreements – any and all agreements relating to any services (including
      without limitation consulting, management broker or investment banking services)
      to be provided by K&C or any of its Affiliates to any Loan Party, including
      the Management Agreement.

     

    LC
      Amount– the Dollar Equivalent of the U.S. LC Amount, the Canadian LC Amount
      and U.K. LC Amount , in the aggregate.

     

    LC
      Guaranty– the U.S. LC Guaranty, the Canadian LC Guaranty and U.K. LC
      Guaranty, in the aggregate.

     

    LC
      Obligations – the U.S. LC Obligations, the Canadian LC Obligations
      and U.K. LC Obligations, in the aggregate.

     

    
      
        
        

      

      
        A-20

        
          

        

      

      
        
        

      

    

     

    Lenders–
      Bank and each other Lender holding, or obligated to make, Revolving Credit
      Loans
      and/or the Term Loan.

     

    Lender
      Counterparty– Bank, Agent, a Lender or any Affiliate of Bank, Agent or a
      Lender party to an agreement evidencing a Derivative Obligation included within
      the Obligations.

     

    Letter
      of Credit– the U.S. Letters of Credit, the Canadian Letters of Credit and
      U.K. Letters of Credit, in the aggregate.

     

    LIBOR–
      means

     

    (a)           for
      Revolving Loans and the Term Loan to the U.S. Borrower, for any Interest Period
      with respect to a LIBOR Portion, the per annum rate of interest (rounded upward,
      if necessary, to the nearest 1/8th of 1%),
      determined
      by Agent at approximately 11:00 a.m. (London time) two Business Days prior
      to
      commencement of such Interest Period, for a term comparable to such Interest
      Period, equal to (a) the British Bankers Association LIBOR rate (“BBA LIBOR”),
      as published by Reuters (or other commercially available source designated
      by
      Agent); or (b) if BBA LIBOR is not available for any reason, the interest rate
      at which Dollar deposits in the approximate amount of the LIBOR Portion would
      be
      offered by Bank of America’s London branch to major banks in the London
      interbank Eurodollar market.  If the Board of Governors of the Federal
      Reserve System imposes a Reserve Percentage with respect to LIBOR deposits,
      then
      LIBOR shall be the foregoing rate, divided by 1 minus the Reserve
      Percentage.

     

    (b)           for
      Revolving Credit Loans in Sterling to U.K. Borrower, as applicable to any LIBOR
      Portion, (i) the rate for the applicable Interest Period appearing on
      page 3750 of the Telerate screen which displays British Bankers Association
      Interest Settlement Rates for deposits in Sterling (or such other page or
      service as may replace such page on such system or service for the purpose
      of displaying such rates) at or about 11:00 a.m. on the quotation date for
      the Interest Period; or (ii) if no such display rate is then available for
      deposits in Sterling or for the Interest Period relating to such LIBOR Portion
      by prime banks in the London Interbank Market at or about 11:00 a.m. on the
      quotation date for the Interest Period, then the arithmetic mean (rounded
      upwards to four decimal places) of the rates, as supplied to Bank of America
      at
      its request, quoted by the Reference Banks to leading banks in the London
      interbank market; and

     

    (c)           for
      Revolving Credit Loans in Euros to U.K. Borrower to any LIBOR Portion,
      (i) the rate for the applicable Interest Period appearing on page 3750
      of the Telerate screen which displays British Bankers Association Interest
      Settlement Rates for deposits in Euros (or such other page or service as
      may replace such page on such system or service for the purpose of
      displaying such rates) at or about 11:00 a.m. on the quotation date for the
      Interest Period; or (ii) if no such display rate is then available for
      deposits in Euros or for the Interest Period relating to such LIBOR Portion
      by
      prime banks in the London Interbank Market at or about 11:00 a.m. on the
      quotation date for the Interest Period, then the arithmetic mean (rounded
      upwards to four decimal places) of the rates, as supplied to Bank of America
      at
      its request, quoted by the Reference Banks to leading banks in the London
      interbank market.

     

    
      
        
        

      

      
        A-21

        
          

        

      

      
        
        

      

    

     

    LIBOR
      Interest Payment Date – the first day of each calendar month during any
      Interest Period.

     

    LIBOR
      Option– the option granted pursuant to Section 3.1 of the
      Agreement to have the interest on all or any portion of the principal amount
      of
      the Term Loan or the Revolving Credit Loans (except Canadian Revolving Credit
      Loans) based on the LIBOR.

     

    LIBOR
      Portion – a LIBOR Revolving Portion or a LIBOR Term
      Portion.

     

    LIBOR
      Request– a notice in writing (or by telephone confirmed electronically or by
      telecopy or other facsimile transmission on the same day as the telephone
      request) from Borrower Representative to Agent or U.K. Borrower to U.K. Agent
      requesting that interest on a Revolving Credit Loan (except Canadian Revolving
      Credit Loans) be based on the LIBOR, specifying: (i) whether the Revolving
      Credit Loan is to be made to U.S. Borrower or U.K. Borrower, (ii) the first
      day of the Interest Period (which shall be a Business Day); (iii) the
      length of the Interest Period; (iv) whether the LIBOR Portion is a new
      Loan, a conversion of a Base Rate Portion, or a continuation of a LIBOR Portion,
      and (v) the dollar amount of the LIBOR Revolving Portion, which shall be in
      an amount not less than $1,000,000 (or the Sterling Equivalent or Euro
      Equivalent, as applicable) or an integral multiple of $100,000 (or the Sterling
      Equivalent or Euro Equivalent, as applicable) in excess thereof.

     

    LIBOR
      Revolving Portion - that portion of the Revolving Credit Loans made to
      U.S. Borrower or U.K. Borrower specified in a LIBOR Request (including any
      portion of Revolving Credit Loans which is being borrowed by U.S. Borrower
      or
      U.K. Borrower concurrently with such LIBOR Request) which, as of the date of
      the
      LIBOR Request specifying such LIBOR Revolving Portion, has met the conditions
      for basing interest on the LIBOR in Section 3.1 of the Agreement and the
      Interest Period of which has not terminated.

     

    LIBOR
      Term Portion - that portion of the Term Loan specified in a LIBOR
      Request which, as of the date of the LIBOR Request specifying such LIBOR Term
      Portion, has met the conditions for basing interest on the LIBOR in
Section 3.1 of the Agreement and the Interest Period of which has
      not terminated.

     

    Lien -
      any interest in Property securing an obligation owed to, or a claim by, a Person
      other than the owner of the Property, whether such interest is based on common
      law, statute or contract.  The term “Lien” shall also include rights
      of seller under conditional sales contracts or title retention agreements,
      reservations, exceptions, encroachments, easements, rights-of-way, covenants,
      conditions, restrictions, leases and other title exceptions and encumbrances
      affecting Property.  For the purpose of the Agreement, Borrower shall
      be deemed to be the owner of any Property which it has acquired or holds subject
      to a conditional sale agreement or other arrangement pursuant to which title
      to
      the Property has been retained by or vested in some other Person for security
      purposes.

     

    Loan
      Account - the loan account established on the books of Agent, Canadian
      Agent or U.K. Agent pursuant to Section 3.6 of the Agreement.

     

    Loan
      Commitment - with respect to any Lender, the amount of such Lender’s
      Revolving Loan Commitment plus such Lender’s Term Loan Commitment.

     

    
      
        
        

      

      
        A-22

        
          

        

      

      
        
        

      

    

     

    Loan
      Documents - the Agreement, the Other Agreements and the Security
      Documents.

     

    Loan
      Party(ies) – the individual and collective reference to the Borrowers
      and the Guarantors.

     

    Loans -
      all loans and advances of any kind made by Agent, any Lender, or any Affiliate
      of Agent or any Lender, pursuant to the Agreement, including, without
      limitation, any LC Obligations.

     

    London
      Banking Day - any date on which commercial banks are open for business
      in London, England.

     

    Majority
      Lenders - as of any date, Lenders holding 51% or more of the Term Loan
      and Revolving Loan Commitments determined on a combined basis and following
      the
      termination of the Revolving Loan Commitments, Lenders (and, if Canadian
      Participants or U.K. Participants have purchased Participating Interests
      pursuant to Section 3.13 or 3.14 respectively, such Lenders’ corresponding
      Canadian Participants and U.K. Participants) holding 51% or more of the
      outstanding Loans, including Participating Interests, LC Amounts and LC
      Obligations not yet reimbursed by Borrowers or funded with a Revolving Credit
      Loan; provided, that (i) in each case, if there are 2 or more such
      Lenders with outstanding Loans, LC Amounts, unfunded and unreimbursed LC
      Obligations or Revolving Loan Commitments, at least 2 Lenders shall be required
      to constitute Majority Lenders; and (ii) prior to termination of the
      Revolving Loan Commitments, if any Lender breaches its obligation to fund any
      requested Revolving Credit Loan, for so long as such breach exists, its voting
      rights hereunder shall be calculated with reference to its outstanding Loans,
      LC
      Amounts and unfunded and unreimbursed LC Obligations, rather than its Revolving
      Loan Commitment.

     

    Management
      Agreement– that certain Management Agreement by and between K&C and
      Borrower dated on or about June 28, 2001 as such agreement is in effect as
      of the Closing Date and as such agreement may be amended from time to time
      thereafter to the extent permitted by Section 7.2.19.

     

    Mandatory
      Costs– with respect to a Loan, the cost of complying with certain regulatory
      requirements expressed as a percentage per annum calculated by Agent in
      accordance with Schedule A.

     

    Mark-to-Market
      Adjustment– the fluctuating credit exposure of a Lender Counterparty under
      an agreement evidencing a Derivative Obligation included within the Obligations
      based on increases or decreases in interest rates, exchange rates or commodity
      prices.  Each Lender Counterparty shall provide to Agent a certificate
      containing the calculation of the Mark-to-Market Adjustment amount under the
      related agreement in reasonable detail not less frequently than
      monthly.

     

    Material
      Adverse Effect – (i) a material adverse effect on the business,
      condition (financial or otherwise), operation, performance or properties of
      the
      Loan Parties, taken as a whole, which impairs the ability of Loan Parties to
      perform, in any material respect, their obligations hereunder or under any
      Loan
      Document or (ii) a material adverse effect on the validity or
      enforceability of any of the Loan Documents, Liens in favor of the Agents or
      the
      rights and remedies of Agents or Lenders under the Loan Documents.

     

    
      
        
        

      

      
        A-23

        
          

        

      

      
        
        

      

    

     

    Money
      Borrowed - means (i) Indebtedness arising from the lending of
      money by any Person to any Borrower or any of its Subsidiaries;
      (ii) Indebtedness, whether or not in any such case arising from the lending
      by any Person of money to any Borrower or any of its Subsidiaries,
      (1) which is represented by notes payable or drafts accepted that evidence
      extensions of credit, (2) which constitutes obligations evidenced by bonds,
      debentures, notes or similar instruments, or (3) upon which interest
      charges are customarily paid (other than accounts payable) or that was issued
      or
      assumed as full or partial payment for Property (other than accounts payable);
      (iii) Indebtedness that constitutes a Capitalized Lease Obligation;
      (iv) reimbursement obligations with respect to letters of credit or
      guaranties of letters of credit and (v) Indebtedness of any Borrower or any
      of its Subsidiaries under any guaranty of obligations that would constitute
      Indebtedness for Money Borrowed under clauses (i) through (iii) hereof, if
      owed directly by any Borrower or any of its Subsidiaries.  Money
      Borrowed shall not include trade payables or accrued expenses; provided,
however, that Money Borrowed shall not include amounts outstanding
      or
      payable under the SESCO Note.

     

    Mortgages -
      the mortgages or deeds of trust executed by any Borrower or another Loan Party
      on or about January 31, 2003 in favor of Agent, for the benefit of itself and
      Lenders, Canadian Agent for the benefit of itself and Canadian Lender or U.K.
      Agent for the benefit of itself and U.K. Agent, as applicable, by which such
      Borrower or such Loan Party has granted to Agent, Canadian Agent or U.K. Agent,
      as applicable, as security for the Obligations, a Lien upon the real Property
      of
      such Borrower or such Loan Party located at 809 Broad Street, Wrens, Georgia,
      together with all mortgages, deeds of trust and comparable documents now or
      at
      any time hereafter securing the whole or any part of the
      Obligations.

     

    Multiemployer
      Plan - has the meaning set forth in Section 4001(a)(3) of
      ERISA.

     

    Net
      Orderly Liquidation Value– with respect to any item of Collateral in which
      Agent for its benefit and the benefit of Lender has a first perfected security
      interest (subject to Permitted Liens), the amount estimated to be recoverable
      in
      the orderly liquidation of such item of Collateral over a three month period
      with respect to Inventory or a six month period with respect to Equipment or
      any
      other item of such Collateral, net of liquidation expenses (as reasonably
      estimated by Agent), such amount to be determined by an appraisal of such item
      of Collateral (on a category or type basis) conducted by a qualified company
      selected by Agent in its reasonable discretion as provided in Section 2.10
      of
      the Agreement (or if such Collateral turns over in the ordinary course of
      business, based upon the assumptions derived from the most recent such appraisal
      of Collateral similar in type) or as determined by Agent in the reasonable
      exercise of its discretion.

     

    New
      Mortgages - as defined in Section 5.6 of the Agreement.

     

    New
      Term Loan– as defined in Section 1.6 of the Agreement.

     

    Non-Restructuring
      Capital Expenditure– any Capital Expenditure that is not a Restructuring
      Capital Expenditure.

     

    
      
        
        

      

      
        A-24

        
          

        

      

      
        
        

      

    

     

    Notes -
      the Revolving Notes and the Term Notes.

     

    Obligation
      Currency– has the meaning set forth in Section 1.5(a).

     

    Obligations -
      all Loans, all LC Amounts, LC Guaranties, LC Obligations and all other advances,
      debts, liabilities, obligations, covenants and duties, together with all
      interest, fees and other charges thereon, owing, arising, due or payable from
      each Borrower to Agent, Canadian Agent or U.K. Agent, for its own benefit,
      from
      each Borrower to Agent, Canadian Agent or U.K. Agent, for the benefit of any
      Lender, Canadian Participant or U.K. Participant, from each Borrower to any
      Lender, Canadian Participant or U.K. Participant or from each Borrower to Bank
      or any other Affiliate of Agent, Canadian Agent or U.K. Agent, of any kind
      or
      nature, present or future, whether or not evidenced by any note, guaranty or
      other instrument, arising under the Agreement or any of the other Loan
      Documents, whether direct or indirect (including those acquired by assignment),
      absolute or contingent, primary or secondary, due or to become due, now existing
      or hereafter arising and however acquired, including without limitation any
      Product Obligations owing to Agent, Canadian Agent, U.K. Agent, any Lender,
      Bank
      or any Affiliate of Bank, Agent, Canadian Agent, U.K. Agent or any
      Lender.

     

    Organizational
      I.D. Number - with respect to any Person, the organizational
      identification number assigned to such Person by the applicable governmental
      unit or agency of the jurisdiction of organization of such Person.

     

    Organizational
      Documents – the documents (including Bylaws, if applicable) pursuant to
      which a Person that is a corporation, partnership, trust or limited liability
      company is organized.

     

    Original
      Loan Agreement– as defined in the first WHEREAS clause of the
      Agreement.

     

    Other
      Agreements - any and all agreements, instruments and documents (other
      than the Agreement and the Security Documents), heretofore, now or hereafter
      executed by Borrower, any Subsidiary of Borrower or any other third party and
      delivered to Agent, Canadian Agent or U.K. Agent or any Lender in respect of
      the
      transactions contemplated by the Agreement or with respect to any Product
      Obligations.

     

    Overadvance -
      as defined in subsection 1.1.2 of the Agreement.

     

    Parent –
      KKTY Holding Company, L.L.C., a Delaware limited liability company.

     

    Parent
      Designated Member – as of any date of determination, (i) any
      member of the Governing Body of Katy who shall have been designated by Parent
      and elected at the 2001 annual meeting of Katy’s shareholders to serve until the
      annual meeting of Katy’s shareholders to be held in 2003 and (ii) their
      successors whose nomination for election or whose appointment to such Governing
      Body shall have been designated or approved by Parent and by a majority of
      such
      members described in clause (i) or their successors who shall have been so
      elected or appointed.

     

    Parent
      Funds – Kohlberg Investors IV, L.P., Kohlberg TE Investors IV, L.P.,
      Kohlberg Offshore Investors, IV, L.P., Kohlberg Partners IV, L.P and any other
      Affiliated investment fund advised by the same advisors as any of the foregoing
      under common control with any of the foregoing.

     

    
      
        
        

      

      
        A-25

        
          

        

      

      
        
        

      

    

     

    Parent
      Member Agreement – that certain Members’ Agreement by and among the
      members of Parent named therein dated as of May 26, 2001, as such agreement
      is in effect on the Closing Date and as such agreement may be amended from
      time
      to time thereafter to the extent permitted under subsection 7.2.19 of the
      Agreement.

     

    Participation
      Fees– as defined in Section 2.6.

     

    Participating
      Interest– with respect to each Lender other than Canadian Lender and U.K.
      Lender, such Lender’s, Canadian Participant’s or U.K. Participant’s, Canadian
      Participating Interest and U.K. Participating Interest, as
      applicable.

     

    Participating
      Member State– any member state which adopts the euro unit of the single
      currency pursuant to the Treaty.

     

    Patent
      Security Agreement – the Patent and License Security Agreements
      executed by Katy and all or certain of the other U.S. Loan Parties on or after
      January 31, 2003 in favor of Agent for its benefit and the benefit of Lenders
      and by which Katy or the applicable U.S. Loan Party assigned to Agent for its
      benefit and the benefit of Lenders and granted to Agent for its benefit and
      the
      benefit of Lenders a security interest in, as security for the Obligations,
      all
      of Katy’s or such U.S. Loan Party’s right, title and interest in and to all of
      Katy’s or such U.S. Loan Party’s patents and other assets described therein as
      the same may be amended or modified from time to time.

     

    PAYE
      Reserve– a reserve of funds maintained for the purpose of meeting any claims
      in respect of preferential debts of a U.K. Loan Party or an Applicable Loan
      Party with assets located in the United Kingdom as such debts are defined
      pursuant to or in accordance with the provisions of Section 386 and
      Schedule 6 of the Insolvency Act of 1986.

     

    Pension
      Plan – any Plan, other than a “multiemployer plan” as defined in
      Section 3(37) of ERISA, which is subject to Section 412 of the
      Internal Revenue Code or Section 302 of ERISA.

     

    Permitted
      Acquisition(s)– means any acquisition(s) by a Loan Party of all or
      substantially all of the assets or outstanding capital stock or other ownership
      interests of a Person, or an operating division of a Person or a merger of
      a
      Person with a Loan Party, which in either case, constitutes a business unit
      so
      long as each of the following conditions precedent (collectively, the
“Acquisition Conditions”) have been fulfilled to the satisfaction of
      Agent:  (i) no Default or Event of Default shall have occurred and be
      continuing at the time of such acquisition or would occur as a result thereof;
      (ii) the business unit being acquired (the “Target”) is primarily located
      in the United States of America, Canada or the United Kingdom and is in the
      same
      or related line of business as a Loan Party; (iii) if the acquisition in
      question is not an asset acquisition, Katy shall require Target to comply with
      the provisions of Section 7.1.7, or if the acquisition in question is an asset
      acquisition, the applicable Loan Party shall have executed such financing
      statements and other collateral documents as reasonably requested by the
      applicable Agent to grant to the applicable Agent a perfected security interest
      subject only to Permitted Liens in substantially all of the acquired assets;
      and
      (iv) Availability on an average pro forma basis after giving effect to the
      acquisition in question for the 90 days immediately prior to the closing date
      of
      such acquisition equals or exceeds $10,000,000 with respect to acquisitions
      consummated after November 30, 2007.  No Account or Inventory acquired
      in a Permitted Acquisition shall be included within Eligible Accounts or
      Eligible Inventory until Agent has conducted an audit of such Accounts or
      Inventory and the results of such audit are satisfactory to Agent in its
      reasonable discretion.

     

    
      
        
        

      

      
        A-26

        
          

        

      

      
        
        

      

    

     

    Permitted
      Discretion – Agent’s good faith and commercially reasonable judgment
      based upon any factor which it believes in good faith:  (i) will
      or could adversely affect the value of any Collateral, the enforceability or
      priority of Agent’s Liens thereon or the amount which Agent and Lenders would be
      likely to receive (after giving consideration to delays in payment and costs
      of
      enforcement) in the liquidation of such Collateral; (ii) suggests that any
      collateral report or financial information delivered to Agent by any Person
      on
      behalf of any Loan Party is incomplete, inaccurate or misleading in any material
      respect; (iii) materially increases the likelihood of a bankruptcy,
      reorganization or other insolvency proceeding involving Parent, Borrower or
      any
      of its Subsidiaries or any of the Collateral; or (iv) creates or reasonably
      could be expected to create a Default or Event of Default.  In
      exercising such judgment, Agent may consider such factors already included
      in or
      tested by the definition of Eligible Accounts or Eligible Inventory as well
      as
      any of the following:  (i) the financial and business climate of
      any Loan Party’s industry and general macroeconomic conditions,
      (ii) changes in collection history and dilution with respect to Loan
      Parties’ Accounts, (iii) changes in demand for, and pricing of, Loan
      Parties’ Inventory, (iv) changes in any concentration of risk with respect
      to such Accounts or Inventory, and (v) any other factors that change the
      credit risk of lending to Borrower on the security of such Accounts or
      Inventory.  The burden of establishing lack of good faith shall be on
      Borrower.

     

    Permitted
      Disposition – any sale or other disposition of any asset of Borrower or
      any other Loan Party of the type described in clauses (i) – (x) of subsection
      7.2.9 of the Agreement.

     

    Permitted
      Liens - any Lien of a kind specified in subsection 7.2.5 of the
      Agreement.

     

    Permitted
      Purchase Money Indebtedness - Purchase Money Indebtedness of a Borrower
      or a Subsidiary thereof incurred after the date hereof which is secured by
      a
      Purchase Money Lien and the principal amount of which, when aggregated with
      the
      principal amount of all other such Indebtedness and Capitalized Lease
      Obligations of Borrowers and their Subsidiaries at the time outstanding, does
      not exceed $1,000,000.  For the purposes of this definition, the
      principal amount of any Purchase Money Indebtedness consisting of capitalized
      leases (as opposed to operating leases) shall be computed as a Capitalized
      Lease
      Obligation.

     

    Person -
      an individual, partnership, corporation, limited liability company, joint stock
      company, land trust, business trust, or unincorporated organization, or a
      government or agency or political subdivision thereof.

     

    Plan -
      an employee benefit plan now or hereafter maintained for employees of Borrower
      or any of its Subsidiaries that is covered by Title IV of ERISA.

     

    
      
        
        

      

      
        A-27

        
          

        

      

      
        
        

      

    

     

    PPSA–
      means the Personal Property Security Act in force in the Province of Ontario;
      provided, that in the event that, by reason of mandatory provisions of
      law, the validity, perfection and effect of perfection or non-perfection of
      a
      security interest or other applicable Lien is governed by other personal
      property security laws, the term “PPSA” means such other personal property
      security laws.

     

    Preferential
      Creditors– means, as to U.K. Borrower, holders of “preferential debts” as
      interpreted in Section 386 of the Insolvency Act 1986 of England and Wales
      and listed in Schedule 6 of that Act.

     

    Prior
      Claims– means all Liens created by applicable law (in contrast with Liens
      voluntarily granted) which rank or are capable of ranking prior to
paripassu with Agent’s, Canadian Agent’s or U.K. Agent’s, as
      applicable, Lien (or the applicable equivalent of such Liens) against all or
      part of the Collateral, including for amounts owing for vacation pay, employee
      deductions and contributions, goods and services taxes, sales taxes, realty
      taxes, business taxes, workers’ compensation, pension plan or fund obligations
      and overdue rents (to the extent, in the case of rents, that such rents are
      not
      already the subject of a reserve).

     

    Product
      Obligations– every obligation of Borrowers under and in respect of any one
      or more of the following types of services or facilities extended to any
      Borrower by Bank, Agent, Canadian Agent, U.K. Agent, any Lender or any Affiliate
      of Bank or Agent, Canadian Agent, U.K. Agent or any
      Lender:  (i) credit cards, (ii) cash management or related
      services including the automatic clearing house transfer of funds for the
      account of any Borrower pursuant to agreement or overdraft, (iii) cash
      management, including controlled disbursement services and “E-Payables” or
      comparable services and (iv) Derivative Obligations.

     

    Projections –
      Katy’s forecasted Consolidated and consolidating (i) balance sheets,
      (ii) profit and loss statements, (iii) cash flow statements, and
      (iv) capitalization statements, all prepared on a consistent basis with the
      historical financial statements of Katy and its Subsidiaries, together with
      appropriate supporting details and a statement of underlying
      assumptions.

     

    Property -
      any interest in any kind of property or asset, whether real, personal or mixed,
      or tangible or intangible.

     

    Purchase
      Money Indebtedness - means and includes (i) Indebtedness (other
      than the Obligations) for the payment of all or any part of the purchase price
      of any fixed assets, (ii) any Indebtedness (other than the Obligations)
      incurred at the time of or within 10 days prior to or after the acquisition
      of
      any fixed assets for the purpose of financing all or any part of the purchase
      price thereof, and (iii) any renewals, extensions or refinancings thereof,
      but not any increases in the principal amounts thereof outstanding at the
      time.

     

    Purchase
      Money Lien - a Lien upon fixed assets which secures Purchase Money
      Indebtedness, but only if such Lien shall at all times be confined solely to
      the
      fixed assets the purchase price of which was financed through the incurrence
      of
      the Purchase Money Indebtedness secured by such Lien.

     

    
      
        
        

      

      
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    Reference
      Banks– with respect to LIBOR, the principal London offices of Barclays Bank
      PLC, The Royal Bank of Scotland and HSBC or such other banks as may be appointed
      by Bank of America (acting on the instructions of the Majority Lenders) in
      consultation with the Borrower Representative.

     

    Related
      Agreements– the Borrower Organizational Documents (including the Preferred
      Stock Certificate of Designation), the Parent Member Agreement, the Rights
      Agreement, the Management Agreement, and all other agreements and instruments
      delivered pursuant to or in connection with any of the foregoing, including
      any
      purchase agreement or registration rights agreement.

     

    Rentals -
      as defined in subsection 8.2.18 of the Agreement.

     

    Rent
      Reserves– as defined in clause (c) of the definition of Eligible
      Inventory.

     

    Reportable
      Event - any of the events set forth in Section 4043(c) of
      ERISA.

     

    Requirement
      of Law– (a) the certificates or articles of incorporation, by-laws or other
      organizational or governing documents of a Person or (b) any law, treaty, rule,
      regulation or determination of an arbitrator or other Governmental
      Authority.

     

    Reserve
      Percentage – the reserve percentage (expressed as a decimal, rounded
      upward to the nearest 1/8th of 1%)
      applicable
      to member banks under regulations issued from time to time by the Board of
      Governors of the Federal Reserve System for determining the maximum reserve
      requirement (including any emergency, supplemental or other marginal reserve
      requirement) with respect to Eurocurrency funding (currently referred to as
      “Eurocurrency liabilities”).

     

    Restricted
      Investment - any investment made in cash or by delivery of Property to
      any Person, whether by acquisition of stock, Indebtedness or other obligation
      or
      Security, or by loan, advance or capital contribution, or otherwise, or in
      any
      Property except the following:

     

    (i)  investments
      by Katy, the extent existing on the Closing Date, in one or more Subsidiaries
      of
      Katy, investments by Katy in one or more Subsidiaries of Katy to be formed
      after
      the Closing Date and listed and described on Exhibit 7.2.12 hereto,
      or if consented to in writing by Agent, investments by Katy in one or more
      Subsidiaries of Katy to be formed after the Closing Date if, in any case, any
      such Subsidiary complies with subsection 7.1.7 of the Agreement;

     

    (ii)  Property
      to be used in the ordinary course of business;

     

    (iii)  Current
      Assets arising from the sale of goods and services in the ordinary course of
      business of Katy or any of its Subsidiaries;

     

    (iv)  investments
      in direct obligations of the United States of America, or any agency thereof
      or
      obligations guaranteed by the United States of America; provided that
      such obligations mature within one year from the date of acquisition
      thereof;

     

    
      
        
        

      

      
        A-29

        
          

        

      

      
        
        

      

    

     

    (v)  investments
      in certificates of deposit maturing within one year from the date of acquisition
      and fully insured by the Federal Deposit Insurance Corporation;

     

    (vi)  investments
      in commercial paper given the highest rating by a national credit rating agency
      and maturing not more than 270 days from the date of creation
      thereof;

     

    (vii)  investments
      in money market, mutual or similar funds having assets in excess of $100,000,000
      and the investments of which are limited to investment grade
      securities;

     

    (viii)  intercompany
      loans permitted under subsections 7.2.2(v), (vi) and (vii) of the
      Agreement;

     

    (ix)  investments
      existing on the date hereof and listed on Exhibit 7.2.12 hereto;
      and

     

    (x)  investments
      otherwise expressly permitted pursuant to the Agreement.

     

    Restructuring
      Capital Expenditures – Capital Expenditures (x) made by Katy or
      any of its Subsidiaries in connection with its corporate and operational
      restructuring and reorganization, and (y) are identified as Restructuring
      Capital Expenditures on Projections submitted to Agent by Borrowers and are
      not
      disallowed as such by Agent in its reasonable discretion.  Any Capital
      Expenditure that does not meet the criteria described in clauses (x) and (y)
      above may only be classified as a Restructuring Capital Expenditure with Agent’s
      consent to be given or refused in Agent’s sole discretion.

     

    Revolving
      Credit Loan - a Loan made by any Lender pursuant to Section 1.1 of
      the Agreement.

     

    Revolving
      Credit Maximum Amount - $40,000,000, as such amount may be reduced from
      time to time pursuant to the terms of the Agreement.

     

    Revolving
      Loan Commitment - with respect to all Lenders, $40,000,000, and with
      respect to any Lender, such Lender’s Revolving Loan Commitment (including such
      Lender’s or its Affiliate’s Canadian Participating Interest and U.K.
      Participating Interest), as initially set forth on the signature page of
      the Agreement or any Assignment and Acceptance Agreement executed by such
      Lender, in each case, as adjusted from time to time in accordance with the
      Agreement.

     

    Revolving
      Loan Payment Reserve– a reserve established by Agent against the applicable
      U.S., U.K. or Canadian Borrowing Base in an amount equal to the aggregate of
      all
      amounts applied by Agent to repay Revolving Credit Loans pursuant to subsection
      3.3.1 or subsection 5.4.2 of the Agreement pending reinvestment by a
      Borrower of such sale, insurance or condemnation proceeds in repaired or
      replacement assets.

     

    Revolving
      Loan Percentage - with respect to each Lender, the percentage equal to
      the quotient of such Lender’s Revolving Loan Commitment dividedby
      the aggregate of all Revolving Loan Commitments.

     

    Revolving
      Notes - the Canadian Revolving Notes, the U.K. Revolving Notes and the
      U.S. Revolving Notes.

     

    
      
        
        

      

      
        A-30

        
          

        

      

      
        
        

      

    

     

    Rights
      Agreement– that certain Rights Agreement by and between Borrower and LaSalle
      National Bank, as Rights Agent, dated as of January 13, 1995, as such
      agreement has been amended by the First Amendment thereto, the Second Amendment
      thereto, the Third Amendment thereto and the Fourth Amendment thereto and is
      in
      effect on the Closing Date and as such agreement may be from time to time
      thereafter to the extent permitted under subsection 7.2.19.

     

    Security -
      all shares of stock, partnership interests, membership interests, membership
      units or other ownership interests in any other Person and all warrants, options
      or other rights to acquire the same.

     

    Security
      Agreement - means the Security Agreement executed by Borrower and each other
      Loan Party on or about January 31, 2003, in form and substance acceptance to
      Agent, as such Security Agreement may thereafter be amended, supplemented or
      modified from time to time.

     

    Security
      Documents - the Guaranty Agreements, the Mortgages, the New Mortgages,
      the Patent Security Agreement, the Domestic Pledge Agreement, the Foreign Pledge
      Agreement, the Security Agreement, the Trademark Security Agreement and all
      other instruments and agreements now or at any time hereafter securing the
      whole
      or any part of the Obligations.

     

    SESCO
      Note – that certain promissory note dated as of
      April 29, 2002 by Savannah Energy Systems Company in favor of the
      Resource Recovery Development Authority for the City of Savannah.

     

    Solvent -
      as to any Person, that such Person (i) owns Property whose fair saleable
      value is greater than the amount required to pay all of such Person’s
      Indebtedness (including contingent debts), (ii) is able to pay all of its
      Indebtedness as such Indebtedness matures and (iii) has capital sufficient
      to carry on its business and transactions and all business and transactions
      in
      which it is about to engage.

     

    Sterling–
      means the lawful currency of Great Britain.

     

    Sterling
      Equivalent– the amount of Sterling as of any date of determination into
      which Dollars can be converted, as determined in accordance with
      Section 1.4 of the Agreement.

     

    Subordinated
      Debt - Indebtedness of any Borrower or any Subsidiary of any Borrower
      that is subordinated to the Obligations in a manner satisfactory to Agent,
      and
      contains terms, including without limitation, payment terms, satisfactory to
      Agent.

     

    Subsidiary -
      any Person of which another Person owns, directly or indirectly through one
      or
      more intermediaries, more than 50% of the Voting Stock at the time of
      determination.

     

    Swingline
      Loans - as defined in subsection 1.1.4 of the
      Agreement.

     

    Tax
      Liability – as defined in Section 2.12 of the
      Agreement.

     

    Term -
      as defined in Section 4.1 of the Agreement.

     

    
      
        
        

      

      
        A-31

        
          

        

      

      
        
        

      

    

     

    Term
      Loan - the Loan described in subsection 1.6 of the Agreement,
      which Term Loan shall be in the initial aggregate principal amount of
      $10,6000,000.

     

    Term
      Loan Commitment - with respect to any Lender, the amount of such
      Lender’s Term Loan Commitment pursuant to subsection 1.6 of the Agreement,
      as set forth below such Lender’s name on the signature pages hereof or any
      Assignment and Acceptance Agreement executed by such Lender, minus all
      Term Loan payments paid to such Lender.

     

    Term
      Loan Notes - the Secured Promissory Notes to be executed by Borrower on
      or about the Closing Date in favor of each applicable Lender to evidence its
      Term Loan, which shall be in the form of Exhibit 1.6 to the
      Agreement, together with any replacement or successor notes
      therefor.

     

    Term
      Loan Percentage - with respect to each Lender, the percentage equal to
      the quotient of such Lender’s Term Loan Commitment divided by the
      aggregate of all Term Loan Commitments.

     

    Total
      Credit Facility - $50,600,000, as reduced from time to time pursuant to
      the terms of the Agreement.

     

    Trademark/Security
      Agreement – the Trademark and License Security Agreements executed by
      Katy and all or certain of the U.S. Loan Parties on or after January 31, 2003
      in
      favor of Agent for its benefit and the benefit of Lenders and by which Katy
      or
      the applicable U.S. Loan Party assigned to Agent, and granted to Agent for
      its
      benefit and the benefit of Lenders, a security interest in, as security for
      the
      Obligations all of Katy’s or such U.S. Loan Party’s right, title and interest in
      and to all of Katy’s or such U.S. Loan Party’s trademarks or other assets as
      described therein, as the same may be amended or modified from time to
      time.

     

    Treaty –
      the Treating establishing the European Community being the Treaty of name as
      amended from time to time.

     

    Type
      of Organization - with respect to any Person, the kind or type of
      entity by which such Person is organized, such as a corporation or limited
      liability company.

     

    UCC -
      the Uniform Commercial Code as in effect in the State of Illinois on the date
      of
      this Agreement, as it may be amended or otherwise modified.

     

    U.K.
      Agent– Bank of America, in its capacity as U.K. Agent for itself, the
      Lenders and Canadian Agent under the Agreement and any successor in that
      capacity appointed pursuant to the Agreement.

     

    U.K.
      Availability– the amount of additional money which U.K. Borrower
      is  entitled to borrow from time to time as Revolving Credit Loans,
      such amount being the lesser of (i) the U.K. Sublimit minus the
      outstanding balance of the Dollar Equivalent of U.K. Revolving Credit Loans
      and
      the U.K. LC Obligations and (ii) the difference derived when the sum of the
      principal amount of the Dollar Equivalent of the Revolving Credit Loans to
      U.K.
      Borrower then outstanding (including any amounts which Agent or any Lender
      may
      have paid for the account of U.K. Borrower pursuant to any of the Loan Documents
      and which have not been reimbursed by U.K. Borrower) and the Dollar Equivalent
      of the U.K. LC Obligations is subtracted from the U.K. Borrowing
      Base.  If the outstanding U.K. Obligations are equal to or greater
      than the U.K. Sublimit or the U.K. Borrowing Base, U.K. Borrowing Availability
      is 0.

     

    
      
        
        

      

      
        A-32

        
          

        

      

      
        
        

      

    

     

    U.K.
      Borrower– CEH Limited, a private company incorporated under the laws of
      England and Wales.

     

    U.K.
      Borrowing Base - as at any date of determination thereof, an amount equal to
      the lesser of:

     

    (i)           the
      U.K. Sublimit, or

     

    (ii)           an
      amount equal to:

     

    (a)           85%
      of the net amount of Eligible Accounts of U.K. Loan Parties outstanding at
      such
      date; plus

     

    (b)           85%
      of the Net Orderly Liquidation Value of Eligible Inventory of U.K. Loan Parties
      at such date, minus (subtract from the sum of (a)and (b) above);
      plus

     

    (c)           to
      the extent not included in the Canadian Borrowing Base as evidenced by a
      Borrowing Base Certificate, 85% of the net amount of Eligible Accounts of
      Canadian Loan Parties outstanding at such date; plus

     

    (d)           to
      the extent not included in the Canadian Borrowing Base as evidenced by a
      Borrowing Base Certificate, 85% of the Net Orderly Liquidation Value of Eligible
      Inventory of Canadian Loan Parties at such date; minus

     

    (e)           the
      sum of (1) the Hedge Reserve applicable to U.K. Loan Parties, (2) Dilution
      Reserves applicable to U.K. Loan Parties, (3) Rent Reserves applicable to U.K.
      Loan Parties, (4) the Revolving Loan Repayment Reserve applicable to U.K. Loan
      Parties, (5) the PAYE Reserve, (6) the aggregate amount of other reserves
      applicable to U.K. Loan Parties, if any, established by Agent in the exercise
      of
      its Permitted Discretion against Eligible Accounts and Eligible Inventory and
      (7) any reserve established by Canadian Agent in its Permitted Discretion for
      prior claims (to the extent Eligible Accounts and Eligible Inventory of Canadian
      Loan Parties are included in the U.K. Borrowing Base).

     

    provided
      that Agent, in the exercise of its Permitted Discretion, may (a) increase or
      decrease reserves against Eligible Accounts Receivable and Eligible Inventory
      and (b) reduce the advance rates provided in this definition, or restore such
      advance rates to any level equal to or below the advance rates in effect as
      of
      the Closing Date.

     

    For
      purposes hereof, (1) the net amount of Eligible Accounts at any time shall
      be
      the face amount of such Eligible Accounts, less any and all returns, rebates,
      discounts (which may, at Agent’s option, be calculated on shortest terms),
      credits allowance or excise taxes of any nature at any time issued, owing,
      claimed by Account Debtors, granted, outstanding or payable in connection with
      such accounts at such time and (2) the amount of Eligible Inventory shall be
      determined on a first-in, first-out, lower of cost or market basis in accordance
      with GAAP, with costs adjusted for differences between standard and actual
      costs.  

     

    
      
        
        

      

      
        A-33

        
          

        

      

      
        
        

      

       

      In
        addition, Borrowers acknowledge that no Accounts or Inventory of CML shall
        be
        included within Eligible Accounts or Eligible Inventory of U.K. Loan Parties
        until such time as Agent has conducted its due diligence on such assets to
        Agent’s satisfaction in its Permitted Discretion and such assets satisfy all of
        the criteria of Eligible Accounts and Eligible Inventory, including, without
        limitation, that Agent has a valid and perfected First Priority Lien on such
        assets.

    

     

    U.K.
      Collateral– all of U.K. Borrower’s and each other U.K. Loan Party’s right,
      title and interest in (i) the Property and interests in Property described
      in the Security Documents, and (ii) all other Property and interests in
      Property that now or hereafter secure the payment and performance of any of
      the
      Obligations.

     

    U.K.
      Effective Date– shall have the meaning contained in the last paragraph of
      Section 8 of the Agreement.

     

    U.K.
      LC Amount– at any time, the Dollar Equivalent of the aggregate undrawn
      available amount of all U.K. Letters of Credit and U.K. LC Guaranties (without
      duplication) then outstanding.

     

    U.K.
      LC Guaranty– any guaranty pursuant to which U.K. Agent or any Affiliate of
      U.K. Agent shall guaranty the payment or performance by U.K. Borrower or any
      other U.K. Loan Party of their reimbursement obligations under any letter of
      credit.

     

    U.K.
      LC Obligations– Any U.K. LC Amount plus any Obligations that arise
      from any draw against any U.K. Letter of Credit or against any letter of credit
      supported by a U.K. LC Guaranty.

     

    U.K.
      Lender– Bank of America, N.A., London branch, in either case, in its
      capacity as the Person obligated to make U.K. Revolving Credit Loans to U.K.
      Borrower hereunder and to issue U.K. Letters of Credit and U.K. LC Guaranties,
      together with its successors and permitted assigns.

     

    U.K.
      Letter of Credit– any standby or documentary letter of credit or guaranties
      or bonds issued by Bank or any Affiliate of Bank for the account of U.K.
      Borrower or any other U.K. Loan Party.

     

    U.K.
      Loan Parties– CEH Limited.

     

    U.K.
      Obligations– means the outstanding principal balance of the U.K. Revolving
      Credit Loans made to U.K. Borrower and the U.K. LC Obligations and all accrued
      interest, fees and expenses (other than taxes that are not Tax Liabilities)
      with
      respect thereto.

     

    
      
        
        

      

      
        A-34

        
          

        

      

      
        
        

      

    

     

    U.K.
      Participant– means each Lender (including, without limitation, Bank in its
      capacity as a Lender) or any Affiliate thereof (which Affiliate shall be a
      resident of the United Kingdom) as set forth on the execution pages to this
      Agreement or the relevant Assignment and Acceptance Agreement.  U.K.
      Participant shall not include the Agents.

     

    U.K.
      Participating Interest– with respect to each Lender other than Agents, such
      Lender’s obligation to fund a participating interest in the U.K. Revolving
      Credit Loans and U.K. LC Amount as set forth in Section 3.14 of the
      Agreement.

     

    U.K.
      Revolving Credit Loan– as defined in subsection 1.1.1(b) of the
      Agreement.

     

    U.K.
      Revolving Notes– the Secured Promissory Notes to be executed by U.K.
      Borrower on or about the Closing Date in favor of each U.K. Lender to evidence
      the U.K. Revolving Credit Loans, which shall be in the form of
Exhibit 1.1 to the Agreement, together with any replacement or
      successor notes therefor.

     

    U.K.
      Security Trustee– means the U.K. Agent, acting as “Security Trustee” under
      the Security Documents governing U.K. Borrowers.

     

    U.K.
      Sublimit– with respect to all Lenders, initially, the Dollar Equivalent of
      $0 and with respect to any Lender, such Lender’s (or its Affiliate’s) commitment
      to purchase U.K. Revolving Credit Loans and thereafter to fund U.K. Revolving
      Credit Loans in Sterling or Euros to U.K. Borrower, expressed in Dollar
      Equivalents (including such Lender’s or its Affiliate’s U.K. Participating
      Interest and deducting all such U.K. Participating Interests from U.K. Lender’s
      commitment), as initially set forth on the signature page of the Agreement
      or any Assignment and Acceptance Agreement executed by such Lender, in each
      case
      as adjusted from time to time in accordance with subsection 1.1.1(e) of the
      Agreement.

     

    U.K.
      Subsidiary– a Subsidiary organized under the laws of the United Kingdom or
      Republic of Ireland.

     

    Unused
      Line Fee - as defined in Section 2.5 of the
      Agreement.

     

    U.S.
      Availability– the amount of additional money which U.S. Borrower is entitled
      to borrow from time to time as Revolving Credit Loans, such amount being the
      lesser of (i) the U.S. Revolving Loan Commitment minus the outstanding
      balance of the U.S. Revolving Credit Loans and the U.S. LC Obligations and
      (ii) the difference derived when the sum of the Dollar Equivalent of the
      principal amount of Revolving Credit Loans to U.S. Borrower then outstanding
      (including any amounts which Agent or any Lender may have paid for the account
      of U.S. Borrower pursuant to any of the Loan Documents and which have not been
      reimbursed by U.S. Borrower), the Dollar Equivalent of the U.S. LC Obligations
      is subtracted from the U.S. Borrowing Base.  If the outstanding U.S.
      Obligations are equal to or greater than the U.S. Revolving Loan Commitment
      or
      the U.S. Borrowing Base, U.S. Borrowing Availability is 0.

     

    U.S.
      Borrower– Katy Industries, Inc.

     

    U.S.
      Borrowing Base - as at any date of determination thereof, an amount equal to
      the lesser of:

     

    
      
        
        

      

      
        A-35

        
          

        

      

      
        
        

      

    

     

    
      	
               

            	
              (i)

            	
              the
                U.S. Revolving Loan Commitment, or

            

    

     

    
      	
               

            	
              (ii)

            	
              an
                amount equal to:

            

    

     

    (a)           85%
      of the net amount of Eligible Accounts of U.S. Loan Parties (as defined below)
      outstanding at such date; plus

     

    (b)           85%
      of the value of the Net Orderly Liquidation Value of Eligible Inventory of
      U.S.
      Loan Parties at such date; plus

     

    (c)           to
      the extent not included in the U.K. Borrowing Base or the Canadian Borrowing
      Base as evidenced by a Borrowing Base Certificate, 85% of the net amount of
      Eligible Accounts of U.K. Loan Parties outstanding at such date;
      plus

     

    (d)           to
      the extent not included in the U.K. Borrowing Base or the Canadian Borrowing
      Base as evidenced by a Borrowing Base Certificate, 85% of the Net Orderly
      Liquidation Value of Eligible Inventory of U.K. Loan Parties at such date;
      minus

     

    (e)           the
      sum of (1) the Hedge Reserve applicable to U.S. Loan Parties, (2) Dilution
      Reserves applicable to U.S. Loan Parties, (3) Rent Reserves applicable to U.S.
      Loan Parties, (4) the Revolving Loan Repayment Reserve applicable to U.S. Loan
      Parties, (5) the PAYE Reserve (to the extent Eligible Accounts and Eligible
      Inventory of U.K. Loan Parties are included in the U.S. Borrowing Base), (6)
      the
      aggregate amount of other reserves applicable to U.S. Loan Parties, if any,
      established by Agent in the exercise of its Permitted Discretion against
      Eligible Accounts and Eligible Inventory and (7) the Availability
      Block.

     

    provided
      that Agent, in the exercise of its Permitted Discretion, may (a) increase or
      decrease reserves against Eligible Accounts Receivable and Eligible Inventory
      and (b) reduce the advance rates provided in this definition, or restore
      such advance rates to any level equal to or below the advance rates in effect
      as
      of the Closing Date.

     

    For
      purposes hereof, (1) the net amount of Eligible Accounts at any time shall
      be
      the face amount of such Eligible Accounts, less any and all returns, rebates,
      discounts (which may, at Agent’s option, be calculated on shortest terms),
      credits allowance or excise taxes of any nature at any time issued, owing,
      claimed by Account Debtors, granted, outstanding or payable in connection with
      such accounts at such time and (2) the amount of Eligible Inventory shall be
      determined on a first-in, first-out, lower of cost or market basis in accordance
      with GAAP, with costs adjusted for differences between standard and actual
      costs.

     

    U.S.
      Collateral– all of U.S. Borrower’s and each other U.S. Loan Party’s right,
      title and interest in (i) the Property and interests in Property described
      in the Security Documents, and (ii) all other Property and interests in
      Property that now or hereafter secure the payment and performance of any of
      the
      Obligations.

     

    
      
        
        

      

      
        A-36

        
          

        

      

      
        
        

      

    

     

    U.S.
      LC Amount– at any time, the Dollar Equivalent of the aggregate undrawn
      available amount of all U.S. Letters of Credit and U.S. LC Guaranties (without
      duplication) then outstanding.

     

    U.S.
      LC Guaranty– any guaranty pursuant to which Agent or any Affiliate of Agent
      shall guaranty the payment or performance by U.S. Borrower or any other U.S.
      Loan Party of their reimbursement obligations under any letter of
      credit.

     

    U.S.
      LC Obligations– Any U.S. LC Amount plus any Obligations that arise
      from any draw against any U.S. Letter of Credit or against any letter of credit
      supported by a U.S. LC Guaranty.

     

    U.S.
      Lender– each Lender other than the Canadian Lender and the U.K.
      Lender.

     

    U.S.
      Letter of Credit– any standby or documentary letter of credit issued by
      Agent or any Affiliate of Agent for the account of U.S. Borrower or any other
      U.S. Loan Party.

     

    U.S.
      Loan Parties– U.S. Borrower and any Domestic Active Subsidiary.

     

    U.S.
      Obligations– means the outstanding principal balance of the U.S. Revolving
      Credit Loans made to U.S. Borrowers, the Term Loan and the U.S. LC Obligations
      and all accrued interest, fees and expenses (other than taxes that are not
      Tax
      Liabilities) with respect thereto.

     

    U.S.
      Revolving Credit Loan– as defined in subsection 1.1.1(a) of the
      Agreement.

     

    U.S.
      Revolving Loan Commitment– (x) with respect to all Lenders, initially,
      $40,000,000, (subject to adjustment in accordance with the Agreement)
minus, as of any date of determination, the sum of (a) the Dollar
      Equivalent of the outstanding balances of the Canadian Revolving Credit Loan
      and
      the U.K. Revolving Credit Loan and (b) the Canadian LC Obligations and the
      U.K. LC Obligations and (y) with respect to any Lender, such Lender’s
      commitment to provide U.S. Revolving Credit Loans in Dollars to U.S. Borrowers,
      as initially set forth on the signature page of the Agreement or any
      Assignment and Acceptance Agreement executed by such Lender minus such
      Lender’s Revolving Loan Percentage of the sum of the Dollar Equivalent of
      Canadian Revolving Credit Loan, Canadian LC Amount, U.K. Revolving Credit Loan,
      U.K. LC Amount.

     

    U.S.
      Revolving Notes– the Secured Promissory Notes to be executed by U.S.
      Borrower on or about the Closing Date in favor of each Lender (other than the
      U.K. Lender and the Canadian Lender) to evidence the U.S. Revolving Credit
      Loans, which shall be in the form of Exhibit 1.1 to the Agreement,
      together with any replacement or successor notes therefor.

     

    Voting
      Stock - Securities of any class or classes of a corporation, limited
      partnership or limited liability company or any other entity the holders of
      which are ordinarily, in the absence of contingencies, entitled to vote with
      respect to the election of corporate directors (or Persons performing similar
      functions).

     

    Wilen
      Facility– as defined in subsection 7.2.9(ix).

     

    
      
        
        

      

      
        A-37

        
          

        

      

      
        
        

      

    

     

    Wilen
      Sale and Leaseback – as defined in
      subsection 7.2.9(ix).

     

    Wilen
      Sale and Leaseback Documents – as defined in
      subsection 7.2.9(ix).

     

    Woods
      Purchase Agreement– as defined in subsection 7.2.9(x).

     

    Other
      Terms.  All other terms contained in the Agreement shall
      have, when the context so indicates, the meanings provided for by the UCC to
      the
      extent the same are used or defined therein.

     

    Certain
      Matters of Construction.  The terms “herein”, “hereof”
and “hereunder” and other words of similar import refer to the Agreement as a
      whole and not to any particular section, paragraph or
      subdivision.  Any pronoun used shall be deemed to cover all
      genders.  The section titles, table of contents and list of exhibits
      appear as a matter of convenience only and shall not affect the interpretation
      of the Agreement.  All references to statutes and related regulations
      shall include any amendments of same and any successor statutes and
      regulations.  All references to any of the Loan Documents shall
      include any and all modifications thereto and any and all extensions or renewals
      thereof.  The phrases “to Borrowers’ knowledge” or “to any Borrower’s
      knowledge” and any other phrase of similar import refer to the actual knowledge
      of the executive or senior officers of Loan Parties or to the knowledge that
      any
      such officer should have obtained in the prudent and diligent exercise of his
      duties as an officer of Loan Parties.

     

    
      
              

          
            	 	              

                                 

                  	 

          
      

                  
    

        
        

      

      
        A-38

        
          

        

      

      
        
        

      

    

    LIST
      OF EXHIBITS  AND SCHEDULES

     

    
      	
              Exhibit 1.1(a)

            	
              Form
                of U.S. Revolving Credit Note

            
	
              Exhibit 1.1(b)

            	
              Form
                of U.K. Revolving Credit Note

            
	
              Exhibit 1.1(c)

            	
              Form
                of Canadian Revolving Credit Note

            
	
              Exhibit 1.6

            	
              Form
                of Term Loan Note

            
	
              Exhibit 5.1.1

            	
              Business
                Locations

            
	
              Exhibit 6.1.1

            	
              Jurisdictions
                in which Borrower and each Subsidiary is Authorized to do
                Business

            
	
              Exhibit 6.1.4

            	
              Capital
                Structure of Borrower and each Subsidiary

            
	
              Exhibit 6.1.5

            	
              Names;
                Organization

            
	
              Exhibit 6.1.13

            	
              Surety
                Obligations

            
	
              Exhibit 6.1.14

            	
              Tax
                Identification Numbers of Katy Subsidiaries

            
	
              Exhibit 6.1.15

            	
              Brokers’
                Fees

            
	
              Exhibit 6.1.16

            	
              Patents,
                Trademarks, Copyrights and Licenses

            
	
              Exhibit 6.1.19

            	
              Contracts
                Restricting Right to Incur Debts

            
	
              Exhibit 6.1.20

            	
              Litigation

            
	
              Exhibit 6.1.22

            	
              Capitalized
                and Operating Leases

            
	
              Exhibit 6.1.23

            	
              Pension
                Plans

            
	
              Exhibit 6.1.25

            	
              Labor
                Relations

            
	
              Exhibit 7.1.3

            	
              Form
                of Compliance Certificate

            
	
              Exhibit 7.1.4

            	
              Form
                of Borrowing Base Certificate

            
	
              Exhibit 7.2.3

            	
              Existing
                Indebtedness

            
	
              Exhibit 7.2.5

            	
              Permitted
                Liens

            
	
              Exhibit 7.2.12

            	
              Permitted
                Investments

            
	
              Exhibit 8.1

            	
              U.K.
                Conditions Precedent

            
	
              Schedule A

            	
              Mandatory
                Costs

            
	
              Schedule B

            	
              Appraised
                Values

            

    

    

    
      
              

          
            	 	              

                                    List
                      of Exhibits and
                      Schedules              
            	 

          
      

                    
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT 1.1(a)

     

    FORM
      OF AMENDED AND RESTATED

    U.S.
      REVOLVING CREDIT NOTE

    SECURED
      PROMISSORY NOTE

     

    
      	
              $______________

            	
              Amended
                and Restated as of

              November
                __, 2007

              Chicago,
                Illinois

               

            

    

    

    FOR
      VALUE RECEIVED, the undersigned (“U.S. Borrower”)
promises to pay to the order of _________________________
      (“Lender”), at the principal office of Bank of America, N.A.,
      as agent for said Lender, or at such other place in the United States of America
      as the holder of this Note may designate from time to time in writing, in lawful
      money of the United States of America or such other currency as provided in
      the
      Loan Agreement referred to below and in immediately available funds, the
      principal amount of the Dollar Equivalent of __________________________________
      Dollars ($___________) or such lesser principal amount as may be
      outstanding pursuant to the Loan Agreement (as hereinafter defined) with respect
      to the U.S. Revolving Credit Loans, together with interest on the unpaid
      principal amount of this Note outstanding from time to time.

     

    This
      Revolving Note (the “Note”) is one of the Revolving Notes
      referred to in, and is issued pursuant to, that certain Second Amended and
      Restated Loan Agreement among the borrower signatories thereto (including U.S.
      Borrower), the lender signatories thereto (including Lender) and Bank of
      America, N.A. (“Bank of America”) as agent for such lenders (Bank of America, in
      such capacity, “Agent”) dated as of November 30, 2007 (hereinafter, as amended
      from time to time, the “Loan Agreement”), and is entitled to
      all of the benefits and security of the Loan Agreement.  All of the
      terms, covenants and conditions of the Loan Agreement and the other Loan
      Documents are hereby made a part of this Note and are deemed incorporated herein
      in full.  All capitalized terms used herein, unless otherwise
      specifically defined in this Note, shall have the meanings ascribed to them
      in
      the Loan Agreement.

     

    The
      rate
      of interest in effect hereunder shall be calculated with reference to the Base
      Rate or LIBOR, as applicable, as more specifically provided in the Loan
      Agreement.  The interest due shall be computed in the manner provided
      in the Loan Agreement.

     

    Except
      as
      otherwise expressly provided in the Loan Agreement, if any payment on this
      Note
      becomes due and payable on a day other than a Business Day, the maturity thereof
      shall be extended to the next succeeding Business Day, and with respect to
      payments of principal, interest thereon shall be payable at the then applicable
      rate during such extension.  Notwithstanding the foregoing, if any
      portion of the U.S. Revolving Credit Loans evidenced by this promissory note
      is
      subject to a LIBOR Option, and an extension of the maturity of any payment
      hereon would cause the maturity thereof to occur during the next calendar month,
      then such payment shall mature on the next preceding Business Day.

     

    
      
              

          
            	 	              

                                    Exhibit
                      1.1(a) – Page
                      1              
            	 

          
      

                                     
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    This
      Note
      shall be subject to mandatory prepayment in accordance with the provisions
      of
Section 3.3 of the Loan Agreement.  Borrower
      Representative may also terminate the Loan Agreement and, in connection with
      such termination, prepay this Note in the manner provided in
Section 4 of the Loan Agreement.

     

    Upon
      the
      occurrence and continuation of any one or more of the Events of Default
      specified in the Loan Agreement which have not been cured by Borrowers or waived
      by Lenders or Majority Lenders (as required by the Loan Agreement), Agent or
      Majority Lenders may declare all Obligations evidenced hereby to be immediately
      due and payable (except with respect to any Event of Default set forth in
subsection 9.1.8 of the Loan Agreement, in which case all
      Obligations evidenced hereby shall automatically become immediately due and
      payable without the necessity of any notice or other demand) without
      presentment, demand, protest or any other action or obligation of Majority
      Lenders or Agent.

     

    The
      right
      to receive principal of, and stated interest on, this Note may only be
      transferred in accordance with the provisions of the Loan
      Agreement.

     

    Time
      is
      of the essence of this Note.  U.S. Borrower hereby waives presentment,
      demand, protest and notice of any kind.  No failure to exercise, and
      no delay in exercising, any rights hereunder on the part of the holder hereof
      shall operate as a waiver of such rights.

     

    Wherever
      possible, each provision of this Note shall be interpreted in such manner as
      to
      be effective and valid under applicable law, but if any provision of this Note
      shall be prohibited or invalid under applicable law, such provision shall be
      ineffective to the extent of such prohibition or invalidity without invalidating
      the remainder of such provision or remaining provisions of this
      Note.  No delay or failure on the part of Agent or Lenders in the
      exercise of any right or remedy hereunder shall operate as a waiver thereof,
      nor
      as an acquiescence in any default, nor shall any single or partial exercise
      by
      Agent or Lenders of any right or remedy preclude any other right or
      remedy.  Agent and/or Lenders, at its or their option, may enforce its
      or their rights against any collateral securing this Note without enforcing
      its
      or their rights against U.S. Borrower, any guarantor of the indebtedness
      evidenced hereby or any other property or indebtedness due or to become due
      to
      U.S. Borrower.  U.S. Borrower agrees that, without releasing or
      impairing U.S. Borrower’s liability hereunder, Agent and/or Lenders may at any
      time release, surrender, substitute or exchange any collateral securing this
      Note and may at any time release any party primarily or secondarily liable
      for
      the indebtedness evidenced by this Note.

     

    
      
              

          
            	 	              

                                    Exhibit
                      1.1(a) – Page
                      2              
            	 

          
      

                            

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    The
      validity, interpretation and enforcement of this promissory note shall be
      governed by the internal laws of the State of Illinois without giving effect
      to
      the conflict of laws principles thereof.

     

    
      	 	
              U.S.
                BORROWER:

               

            
	 	
              KATY
                INDUSTRIES, INC.

               

              By:                                                                           

              Name:                                                                

              Title:                                                                           

            

    

    

    
      
              

          
            	 	              

                                    Exhibit
                      1.1(a) – Page
                      3               
            	 

          
      

                 
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT 1.1(b)

     

    FORM
      OF AMENDED AND RESTATED

    U.K.
      REVOLVING CREDIT NOTE

    SECURED
      PROMISSORY NOTE

     

    
      	
              $_____________

            	
              Amended
                and Restated as of

              November
                __, 2007

              Redruth
                Cornwall, England

               

            

    

    

    FOR
      VALUE RECEIVED, the undersigned (“U.K. Borrower”),
      jointly and severally, promises to pay to the order of Bank of America, N.A.,
      London Branch (“Lender”), at the principal office of Bank of
      America, N.A., London Branch, as agent for said Lender, or at such other place
      in the United Kingdom as the holder of this Note may designate from time to
      time
      in writing, in lawful money of the United Kingdom or such other currency as
      provided in the Loan Agreement referred to below and in immediately available
      funds, the principal amount of the Dollar Equivalent of ___________________
      Dollars ($_________) or such lesser principal amount as may be outstanding
      pursuant to the Loan Agreement (as hereinafter defined) with respect to the
      U.K.
      Revolving Credit Loans, together with interest on the unpaid principal amount
      of
      this Note outstanding from time to time.

     

    This
      Revolving Note (the “Note”) is one of the Revolving Notes
      referred to in, and is issued pursuant to, that certain Second Amended and
      Restated Loan Agreement among the borrower signatories thereto (including U.K.
      Borrower), the lender signatories thereto (including Lender) and Bank of
      America, N.A. (“Bank of America”), as agent for such lenders (Bank of America,
      in such capacity, “Agent”) dated as of November 30, 2007 (hereinafter, as
      amended from time to time, the “Loan Agreement”), and is
      entitled to all of the benefits and security of the Loan
      Agreement.  All of the terms, covenants and conditions of the Loan
      Agreement and the other Loan Documents are hereby made a part of this Note
      and
      are deemed incorporated herein in full.  All capitalized terms used
      herein, unless otherwise specifically defined in this Note, shall have the
      meanings ascribed to them in the Loan Agreement.

     

    The
      rate
      of interest in effect hereunder shall be calculated with reference to the Base
      Rate or LIBOR, as applicable, as more specifically provided in the Loan
      Agreement.  The interest due shall be computed in the manner provided
      in the Loan Agreement.

     

    Except
      as
      otherwise expressly provided in the Loan Agreement, if any payment on this
      Note
      becomes due and payable on a day other than a Business Day, the maturity thereof
      shall be extended to the next succeeding Business Day, and with respect to
      payments of principal, interest thereon shall be payable at the then applicable
      rate during such extension.  Notwithstanding the foregoing, if any
      portion of the U.K. Revolving Credit Loans evidenced by this promissory note
      is
      subject to a LIBOR Option, and an extension of the maturity of any payment
      hereon would cause the maturity thereof to occur during the next calendar month,
      then such payment shall mature on the next preceding Business Day.

     

    
      
              

          
            	 	              

                                    Exhibit
                      1.1(b) – Page
                      1               
            	 

          
      

                
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    This
      Note
      shall be subject to mandatory prepayment in accordance with the provisions
      of
Section 3.3 of the Loan Agreement.  Borrower
      Representative may also terminate the Loan Agreement and, in connection with
      such termination, prepay this Note in the manner provided in Section
      4 of the Loan Agreement.

     

    Upon
      the
      occurrence and continuation of any one or more of the Events of Default
      specified in the Loan Agreement which have not been cured by Borrowers or waived
      by Lenders or Majority Lenders (as required by the Loan Agreement), Agent or
      Majority Lenders may declare all Obligations evidenced hereby to be immediately
      due and payable (except with respect to any Event of Default set forth in
subsection 9.1.8 of the Loan Agreement, in which case all
      Obligations evidenced hereby shall automatically become immediately due and
      payable without the necessity of any notice or other demand) without
      presentment, demand, protest or any other action or obligation of Majority
      Lenders or Agent.

     

    The
      right
      to receive principal of, and stated interest on, this Note may only be
      transferred in accordance with the provisions of the Loan
      Agreement.

     

    Time
      is
      of the essence of this Note.  U.K. Borrower hereby waives presentment,
      demand, protest and notice of any kind.  No failure to exercise, and
      no delay in exercising, any rights hereunder on the part of the holder hereof
      shall operate as a waiver of such rights.

     

    Wherever
      possible, each provision of this Note shall be interpreted in such manner as
      to
      be effective and valid under applicable law, but if any provision of this Note
      shall be prohibited or invalid under applicable law, such provision shall be
      ineffective to the extent of such prohibition or invalidity without invalidating
      the remainder of such provision or remaining provisions of this
      Note.  No delay or failure on the part of Agent or Lenders in the
      exercise of any right or remedy hereunder shall operate as a waiver thereof,
      nor
      as an acquiescence in any default, nor shall any single or partial exercise
      by
      Agent or Lenders of any right or remedy preclude any other right or
      remedy.  Agent and/or Lenders, at its or their option, may enforce its
      or their rights against any collateral securing this Note without enforcing
      its
      or their rights against U.K. Borrower, any guarantor of the indebtedness
      evidenced hereby or any other property or indebtedness due or to become due
      to
      U.K. Borrower.  U.K. Borrower agrees that, without releasing or
      impairing U.K. Borrower’s liability hereunder, Agent and/or Lenders may at any
      time release, surrender, substitute or exchange any collateral securing this
      Note and may at any time release any party primarily or secondarily liable
      for
      the indebtedness evidenced by this Note.

     

    
      
              

          
            	 	              

                                    Exhibit
                      1.1(b) – Page
                      2              
            	 

          
      

                   
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    The
      validity, interpretation and enforcement of this promissory note shall be
      governed by the internal laws of the State of Illinois without giving effect
      to
      the conflict of laws principles thereof.

     

    
      	 	
              U.K.
                BORROWER:

               

            
	 	
              CEH
                LIMITED

               

              By:                                                                           

              Name:                                                                

              Title:      

                                                                                   

              and

               

              By:                                                                           

              Name:                                                                

              Title:                                                                           

            

    

    

    
      
              

          
            	 	              

                                    Exhibit
                      1.1(b) – Page
                      3              
            	 

          
      

                            
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT 1.1(c)

     

    FORM
      OF AMENDED AND RESTATED

    CANADIAN
      REVOLVING CREDIT NOTE

    SECURED
      PROMISSORY NOTE

     

    
      	
              $______________

            	
              Amended
                and Restated as of

              ______________ __,
                20__

              Toronto,
                Ontario

               

            

    

    

    FOR
      VALUE RECEIVED, the undersigned (“Canadian Borrower”)
      Canada promises to pay to the order of ______________________________
      (“Lender”), at the principal office of Bank of America, N.A.
      (acting through its Canadian branch) as agent for said Lender, or at such other
      place in Canada as the holder of this Note may designate from time to time
      in
      writing, in lawful money of Canada and in immediately available funds, the
      principal amount of the Dollar Equivalent of __________________________________
      Dollars ($___________) or such lesser principal amount as may be
      outstanding pursuant to the Loan Agreement (as hereinafter defined) with respect
      to the Canadian Revolving Credit Loans, together with interest on the unpaid
      principal amount of this Note outstanding from time to time.

     

    This
      Revolving Note (the “Note”) is one of the Revolving Notes
      referred to in, and is issued pursuant to, that certain Second Amended and
      Restated Loan Agreement among the borrower signatories thereto (including
      Canadian Borrower), the lender signatories thereto (including Lender) and Bank
      of America, N.A. (“Bank of America”) as agent for such lenders (Bank of America,
      in such capacity, “Agent”) dated as of November 30, 2007 (hereinafter, as
      amended from time to time, the “Loan Agreement”), and is
      entitled to all of the benefits and security of the Loan
      Agreement.  All of the terms, covenants and conditions of the Loan
      Agreement and the other Loan Documents are hereby made a part of this Note
      and
      are deemed incorporated herein in full.  All capitalized terms used
      herein, unless otherwise specifically defined in this Note, shall have the
      meanings ascribed to them in the Loan Agreement.

     

    The
      rate
      of interest in effect hereunder shall be calculated with reference to the Base
      Rate or the Canadian BA Rate, as applicable, as more specifically provided
      in
      the Loan Agreement.  The interest due shall be computed in the manner
      provided in the Loan Agreement.

     

    Except
      as
      otherwise expressly provided in the Loan Agreement, if any payment on this
      Note
      becomes due and payable on a day other than a Business Day, the maturity thereof
      shall be extended to the next succeeding Business Day, and with respect to
      payments of principal, interest thereon shall be payable at the then applicable
      rate during such extension.  Notwithstanding the foregoing, if any
      portion of the Canadian Revolving Credit Loans evidenced by this promissory
      note
      is subject to a LIBOR Option, and an extension of the maturity of any payment
      hereon would cause the maturity thereof to occur during the next calendar month,
      then such payment shall mature on the next preceding Business Day.

    

    
      
        
                

            
              	 	              

                                      Exhibit
                        1.1(c) – Page
                        1               
            	 

            
      

                  
    

          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

          
      This Note shall be subject to mandatory prepayment in accordance with the
      provisions of Section 3.3 of the Loan
      Agreement.  Borrower Representative may also terminate the Loan
      Agreement and, in connection with such termination, prepay this Note in the
      manner provided in Section 4 of the Loan
      Agreement.

     

    Upon
      the
      occurrence and continuation of any one or more of the Events of Default
      specified in the Loan Agreement which have not been cured by Borrowers or waived
      by Lenders or Majority Lenders (as required by the Loan Agreement), Agent or
      Majority Lenders may declare all Obligations evidenced hereby to be immediately
      due and payable (except with respect to any Event of Default set forth in
subsection 9.1.8 of the Loan Agreement, in which case all
      Obligations evidenced hereby shall automatically become immediately due and
      payable without the necessity of any notice or other demand) without
      presentment, demand, protest or any other action or obligation of Majority
      Lenders or Agent.

     

    The
      right
      to receive principal of, and stated interest on, this Note may only be
      transferred in accordance with the provisions of the Loan
      Agreement.

     

    Time
      is
      of the essence of this Note.  Canadian Borrower hereby waives
      presentment, demand, protest and notice of any kind.  No failure to
      exercise, and no delay in exercising, any rights hereunder on the part of the
      holder hereof shall operate as a waiver of such rights.

     

    Wherever
      possible, each provision of this Note shall be interpreted in such manner as
      to
      be effective and valid under applicable law, but if any provision of this Note
      shall be prohibited or invalid under applicable law, such provision shall be
      ineffective to the extent of such prohibition or invalidity without invalidating
      the remainder of such provision or remaining provisions of this
      Note.  No delay or failure on the part of Canadian Agent or Canadian
      Lenders in the exercise of any right or remedy hereunder shall operate as a
      waiver thereof, nor as an acquiescence in any default, nor shall any single
      or
      partial exercise by Canadian Agent or Canadian Lenders of any right or remedy
      preclude any other right or remedy.  Canadian Agent and/or Canadian
      Lenders, at its or their option, may enforce its or their rights against any
      collateral securing this Note without enforcing its or their rights against
      Canadian Borrower, any guarantor of the indebtedness evidenced hereby or any
      other property or indebtedness due or to become due to Canadian
      Borrower.  Canadian Borrower agrees that, without releasing or
      impairing Canadian Borrower’s liability hereunder, Canadian Agent and/or
      Canadian Lenders may at any time release, surrender, substitute or exchange
      any
      collateral securing this Note and may at any time release any party primarily
      or
      secondarily liable for the indebtedness evidenced by this Note.

     

    
      
              

          
            	 	              

                                    Exhibit
                      1.1(c) – Page
                      2              
            	 

          
      

                                 
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    The
      validity, interpretation and enforcement of this promissory note shall be
      governed by the internal laws of the State of Illinois without giving effect
      to
      the conflict of laws principles thereof.

     

    
      	 	
              CANADIAN
                BORROWER:

               

            
	 	
              GLIT/GEMTEX,
                LTD.

               

              By:                                                                           

              Name:                                                                

              Title:                                                                           

            

    

    

    
      
              

          
            	 	              

                                    Exhibit
                      1.1(c) – Page
                      3              
            	 

          
      

                                      
   

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      1.6

     

    FORM
      OF AMENDED AND RESTATED

    TERM
      LOAN NOTE

     

    (SECURED
      PROMISSORY NOTE)

     

    
      
        	
                $______________

              	
                Amended
                  and Restated as of

                November __,
                  2007

                Chicago,
                  Illinois

                 

              

      

       

    

    FOR
      VALUE RECEIVED, the undersigned (“U.S. Borrower”) hereby promises to
      pay to the order of Bank of America, N.A., a national banking association
      (hereinafter “Lender”), or its registered assigns at the office
      of Bank of America, N.A., as agent for such Lender, or at such other place
      in
      the United States of America as the holder of this Note may designate from
      time
      to time in writing, in lawful money of the United States, in immediately
      available funds, at the time of payment, the principal sum of
      ______________________ Dollars ($_____________), together with interest from
      and
      after the date hereof on the unpaid principal balance outstanding from time
      to
      time.

     

    This
      Secured Promissory Note (the “Note”) is one of the Term Loan
      Notes referred to in, and is issued pursuant to, that certain Second Amended
      and
      Restated Loan Agreement dated as of November 30, 2007, among the borrower
      signatories thereto (including U.S. Borrower), the lender signatories thereto
      (including Lender) and Bank of America, N.A. (“Bank of America”), as Agent for
      said lenders (Bank of America, in such capacity “Agent”)
      (hereinafter, as amended from time to time, the “Loan
      Agreement”), and is entitled to all of the benefits and security of the
      Loan Agreement.  All of the terms, covenants and conditions of the
      Loan Agreement and the Security Documents are hereby made a part of this Note
      and are deemed incorporated herein in full.  All capitalized terms
      used herein, unless otherwise specifically defined in this Note, shall have
      the
      meanings ascribed to them in the Loan Agreement.

     

    For
      so
      long as no Event of Default shall have occurred and be continuing, the principal
      amount and accrued interest of this Note shall be due and payable on the dates
      and in the manner hereinafter set forth:

     

    (a)           interest
      on the unpaid principal balance outstanding from time to time shall be paid
      at
      such interest rates and at such times as are specified in the Loan
      Agreement;

     

    (b)           principal
      shall be due and payable quarterly commencing on March 1, 2008 and continuing
      on
      each June 1, September 1, December 1 and March 1 thereafter to and including
      September 1, 2010 in installments equal to $________________;

     

    (c)           the
      entire remaining principal amount then outstanding, together with any and all
      other amounts due hereunder, shall be due and payable on November 29,
      2010.

     

    Notwithstanding
      the foregoing, the entire unpaid principal balance and accrued interest on
      this
      Note shall be due and payable immediately upon any termination of the Loan
      Agreement pursuant to Section4 thereof.

     

    
      
        
           

           Exhibit
            1.6 – Page 1  

           

        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    This
      Note
      shall be subject to mandatory prepayment in accordance with the provisions
      of
      Section 3.3 of the Loan Agreement.  Borrower may also prepay this Note
      in the manner provided in Section 4 of the Loan Agreement.

     

    Upon
      the
      occurrence, and during the continuation, of an Event of Default, this Note
      shall
      or may, as provided in the Loan Agreement, become or be declared immediately
      due
      and payable.

     

    The
      right
      to receive principal of, and stated interest on, this Note may only be
      transferred in accordance with the provisions of the Loan
      Agreement.

     

    Demand,
      presentment, protest and notice of nonpayment and protest are hereby waived
      by
      Borrower.

     

    This
      Note
      shall be governed by, and construed and enforced in accordance with, the laws
      of
      the State of Illinois.

     

    

    
      	 	
              U.S.
                BORROWER:

               

            
	 	
              KATY
                INDUSTRIES, INC.

               

              By:                                                                           

              Name:                                                        

              Title:                                                        

            

    

    

    
      
              

          
            	 	              

                                    Exhibit 1.6
                      -
                      Page 2              
            	 

          
      

           
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT 5.1.1

     

    BUSINESS
      LOCATIONS

     

    1.  Each
      Borrower currently has the following business locations, and no
      others:

     

    
      	
               

            	
              Chief
                Executive Office:

            

    

     

    
      	
               

            	
              Other
                Locations:

            

    

     

    2.  Each
      Borrower maintains its books and records relating to Accounts and General
      Intangibles at:

     

    3.  Each
      Borrower has had no office, place of business or agent for process located
      in
      any county other than as set forth above, except:

     

    4.  Each
      Subsidiary currently has the following business locations, and no
      others:

     

    Chief
      Executive Office:

     

    Other
      Locations:

     

    5.  Each
      Subsidiary maintains its books and records relating to Accounts and General
      Intangibles at:

     

    6.  Each
      Subsidiary has had no office, place of business or agent for process located
      in
      any county other than as set forth above, except:

     

    7.  The
      following bailees, warehouseman, similar parties and consignees hold Inventory
      of each Borrower or one of its Subsidiaries:

     

    
      	
              Name
                and Address of Party

            	
              Nature
                of Relationship

            	
              Amount
                of Inventory

            	
              Owner
                of Inventory

            
	 	 	 	 
	 	 	 	 

    

    

    
      	
              Name
                and Address of Party

            	
              Nature
                of Relationship

            	
              Amount
                of Inventory

            	
              Owner
                of Inventory

            
	 	 	 	 
	 	 	 	 

    

    

    
      
              

          
            	 	              

                                    Exhibit 5.1.1
                      -
                      Page 1              
            	 

          
      

               
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT 6.1.1

     

    JURISDICTIONS
      IN WHICH EACH BORROWER

    AND
      ITS
      SUBSIDIARIES

    ARE
      AUTHORIZED TO DO BUSINESS

     

    
      	
              Name
                of Entity

            	
              Jurisdiction

            

    

    

    
      
              

          
            	 	              

                                    Exhibit 6.1.1
                      - Page
                      1               
            	 

          
      

                                     
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT 6.1.4

     

    CAPITAL
      STRUCTURE

     

    
      	
              1.    
                 

            	
              The
                classes and the number of authorized and issued Securities of each
                Borrower and each of its Subsidiaries and the record owner of such
                Securities of each Borrower are as
                follows:

            

    

     

    Borrowers:

     

    
      	
              Class
                of Securities

            	
              Number
                of Securities Issued and Outstanding

            	
              Record
                Owners

            	
              Number
                of Securities Authorized but Unissued

            
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 

    

    

    Subsidiaries:

     

    
      	
              Class
                of Securities

            	
              Number
                of Securities Issued and Outstanding

            	
              Record
                Owners

            	
              Number
                of Securities Authorized but Unissued

            
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 

    

    

    2.  The
      number, nature and holder of all other outstanding Securities of each Borrower
      and each Subsidiary are as follows:

     

    3.  The
      correct name and jurisdiction of incorporation or organization of each
      Subsidiary of each Borrower and the percentage of its issued and outstanding
      Voting Stock owned by each Borrower are as follows:

     

    
      	
              Name

            	
              Jurisdiction
                of Incorporation/Organization

            	
              Percentage
                of Voting

              Stock
                Owned by

              the
                Applicable Borrower 

            
	 	 	 
	 	 	 
	 	 	 

    

    

    4.  The
      name
      of each of each Borrower’s and each Subsidiary’s corporate or joint venture
      Affiliates and the nature of the affiliation are as follows:

     

    5.  The
      agreements or instruments binding upon the partners, members or shareholders
      of
      each Borrower or any of its Subsidiaries and relating to the ownership of its
      Securities, are as follows:

     

    
      
              

          
            	 	              

                                    Exhibit 6.1.4
                      - Page
                      1               
            	 

          
      

                                        
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT 6.1.5

     

    NAMES;
      ORGANIZATION

     

    
      	
              1.

            	
              Each
                Borrower’s correct name, as registered with the Secretary of State of the
                State of ____________ is:

            

    

     

    
      	
              2.

            	
              In
                the conduct of its business, each Borrower has used the following
                names:

            

    

     

    
      	
              3.

            	
              Each
                Subsidiary’s correct name, as registered with the Secretary of State of
                the State of its incorporation or formation,
                is:

            

    

     

    
      	
              4.

            	
              In
                the conduct of its business, each Subsidiary has used the following
                names:

            

    

     

    
      	
              5.

            	
              Each
                Borrower’s Organizational I.D. Number
                is:

            

    

     

    
      	
              6.

            	
              Each
                Subsidiary’s Organizational I.D. Number
                is:

            

    

     

    
      	
              7.

            	
              Each
                Borrower’s Type of Organization is:

            

    

     

    
      	
              8.

            	
              Each
                Subsidiary’s Type of Organization
                is:

            

    

     

    
      	
              9.

            	
              No
                Borrower has been the surviving entity of a merger or consolidation
                nor
                has it acquired substantially all the assets of any
                person.

            

    

     

    
      	
              10.

            	
              No
                Subsidiary has been the surviving entity of a merger or consolidation
                nor
                has it acquired substantially all the assets of any
                person.

            

    

     

    
      
              

          
            	 	              

                                    Exhibit 6.1.5
                      -
                      Page 1              
            	 

          
      

                            

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      6.1.13

     

    SURETY
      OBLIGATIONS

     

    
      
              

          
            	 	              

                                    Exhibit 6.1.13
                      -
                      Page 1              
            	 

          
      

                                    
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT 6.1.14

     

    TAX
      IDENTIFICATION NUMBERS OF EACH SUBSIDIARY OF KATY

     

    
      	
              Subsidiary

               

            	
              Number

            

    

    

    
      
              

          
            	 	              

                                    Exhibit 6.1.14
                      - Page
                      1               
            	 

          
      

                                      
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT 6.1.15

     

    BROKER’S
      FEES

     

    
      
              

          
            	 	              

                                    Exhibit 6.1.15
                      -
                      Page 1              
            	 

          
      

                                  
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT 6.1.16

     

    PATENTS,
      TRADEMARKS, COPYRIGHTS AND LICENSES

     

    
      	
              1.   
                  

            	
              Each
                Borrower’s and its Subsidiaries’
patents:

            

    

     

    
      	
              Patent

            	
              Owner

            	
              Status
                in

              Patent
                Office 

            	
              Federal
                Registration Number

            	
              Registration Date 

            
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 

    

    

    2.  Each
      Borrower’s and its Subsidiaries’ trademarks:

     

    
      	
              Patent

            	
              Owner

            	
              Status
                in

              Patent
                Office 

            	
              Federal
                Registration Number

            	
              Registration Date 

            
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 

    

    

    3.  Each
      Borrower’s and its Subsidiaries’ copyrights:

     

    
      	
              Patent

            	
              Owner

            	
              Status
                in

              Patent
                Office 

            	
              Federal
                Registration Number

            	
              Registration Date 

            
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 

    

    

    4.  Each
      Borrower’s and its Subsidiaries’ licenses (other than routine business licenses,
      authorizing them to transact business in local jurisdictions):

     

    
      	
              Name
                of License

            	
              Nature
                of License

            	
              Licensor

            	
              Term
                of License

            
	 	 	 	 
	 	 	 	 
	 	 	 	 

    

    

    5.  Infringement
      Activities:

     

    6.  Unregistered
      material trademarks, service marks and copyrights:

     

    7.  Material
      license agreements that do not permit assignment or limit the use of license
      after default:

     

    
      
              

          
            	 	              

                                    Exhibit 6.1.16
                      -
                      Page 1              
            	 

          
      

                                
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT 6.1.19

     

    CONTRACTS
      RESTRICTING RIGHT TO INCUR DEBT

     

    Contracts
      that restrict the right of any Borrower or any of its Subsidiaries to incur
      Indebtedness:

     

    
      	
              Title
                of Contract

            	
              Identity
                of Parties

            	
              Nature
                of Restriction

            	
              Term
                of Contract

            
	 	 	 	 
	 	 	 	 
	 	 	 	 

    

    

    
      
              

          
            	 	              

                                    Exhibit 6.1.19
                      -
                      Page 1              
            	 

          
      

                                     
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT 6.1.20

     

    LITIGATION

     

    
      	
              1.   
                  

            	
              Actions,
                suits, proceedings and investigations pending against any Borrower
                or any
                Subsidiary:

            

    

     

    
      	
              Title
                of Action

            	
              Nature
                of Action

            	
              Complaining
                Parties

            	
              Jurisdiction
                or Tribunal

            
	 	 	 	 
	 	 	 	 
	 	 	 	 

    

    

    2.  The
      only
      threatened actions, suits, proceedings or investigations of which any Borrower
      or any Subsidiary is aware are as follows:

     

    
      
              

          
            	 	              

                                    Exhibit 6.1.20
                      - Page
                      1               
            	 

          
      

                            

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT 6.1.22

     

    CAPITALIZED
      AND OPERATING LEASES

     

    Each
      Borrower and its Subsidiaries have the following capitalized and operating
      leases:

     

    
      	
              Lessee

            	
              Lessor

            	
              Term
                of Lease

            	
              Property
                Covered

            
	 	 	 	 
	 	 	 	 
	 	 	 	 

    

    

    
      
              

          
            	 	              

                                    Exhibit 6.1.22
                      - Page
                      1               
            	 

          
      

                                     
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT 6.1.23

     

    PENSION
      PLANS

     

    Each
      Borrower and its Subsidiaries have the following Plans:

     

    
      	
              Party

            	
              Type
                of Plan

            
	
              Borrower

            	 
	 	 
	
              Subsidiaries

            	 
	 	 

    

    

    
      
              

          
            	 	              

                                    Exhibit 6.1.23
                      - Page
                      1               
            	 

          
      

                                       
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT 6.1.25

     

    COLLECTIVE
      BARGAINING AGREEMENTS; LABOR CONTROVERSIES

     

    
      	
              1.      

            	
              Each
                Borrower and its Subsidiaries are parties to the following collective
                bargaining agreements:

            

    

     

    
      	
              Type
                of Agreement

            	
              Parties

            	
              Term
                of Agreement

            
	 	 	 
	 	 	 
	 	 	 

    

    

    2.  Material
      grievances, disputes of controversies with employees of any Borrower or any
      of
      its Subsidiaries are as follows:

     

    
      	
              Parties
                Involved

            	
              Nature
                of Grievance, Dispute or Controversy

            
	 	 
	 	 
	 	 

    

    

    3.  Threatened
      strikes, work stoppages and asserted pending demands for collective bargaining
      with respect to any Borrower or any of its Subsidiaries are as
      follows:

     

    
      	
              Parties
                Involved

            	
              Nature
                of Matter

            
	 	 
	 	 
	 	 

    

    

    
      
              

          
            	 	              

                                    Exhibit 6.1.25
                      -
                      Page 1              
            	 

          
      

                  
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT 7.1.3

     

    COMPLIANCE
      CERTIFICATE

     

    [________________________]

     

                                                             __________________,
      ___

     

    Bank
      of
      America, N.A., as Agent

    231
      South
      LaSalle Street, 7th Floor

    Chicago,
      Illinois  60604

     

    The
      undersigned, the chief financial officer of Katy Industries, Inc. (“Katy”),
      gives this certificate to Bank of America, N.A., in its capacity as Agent
      (“Agent”) in accordance with the requirements of subsection 7.1.3 of that
      certain Second Amended and Restated Loan Agreement dated November 30, 2007
      among
      Katy and certain of its subsidiaries, Agent, and the Lenders party thereto
      (“Loan Agreement”).  Capitalized terms used in this Certificate,
      unless otherwise defined herein, shall have the meanings ascribed to them in
      the
      Loan Agreement.

     

    1.           Based
      upon my review of the balance sheets and statements of income of Katy and its
      Subsidiaries for the [__________] period ending _______________, ____, copies
      of
      which are attached hereto, I hereby certify that:

     

    Average
      Aggregate Availability for the most recently ended month was
      $___________;

     

    2.           No
      Default exists on the date hereof, other than: __________________
      ________________________________________________ [if none, so
      state]; and

     

    3.           No
      Event of Default exists on the date hereof, other than __________
      ____________________________________________________ [if none, so
      state].

     

                                                                                   
      Very truly yours,

    

                                                                                    _______________________________

                                                                                   
      Chief Financial Officer

    
      
              

          
            	 	              

                                    Exhibit 7.1.3
                      - Page
                      1               
            	 

          
      

                               
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT 7.1.4

     

    FORM
      OF
      BORROWING BASE CERTIFICATE

     

    [to
      come]

     

    
      
              

          
            	 	              

                                    Exhibit 7.1.4
                      -
                      Page 1              
            	 

          
      

                  
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT 7.2.3

     

    EXISTING
      INDEBTEDNESS

     

    
      	
              Borrower

            	
              Lender

            	
              Amount

            	
              Maturity

            
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 

    

    

    
      
              

          
            	 	              

                                    Exhibit 7.2.3
                      -
                      Page 1              
            	 

          
      

                   
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT 7.2.5

     

    PERMITTED
      LIENS

     

    
      	
              Secured
                Party

            	
              Nature
                of Lien

            
	 	 
	 	 
	 	 
	 	 

    

    

    
      
              

          
            	 	              

                                    Exhibit 7.2.5
                      - Page
                      1               
            	 

          
      

                        
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT 7.2.12

     

    PERMITTED
      INVESTMENTS

     

    
      
              

          
            	 	              

                                    Exhibit 7.2.12
                      -
                      Page 1              
            	 

          
      

                                  
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT 8.1

     

    U.K.
      Documentary Conditions Precedent

    (each
      to be in a form and substance satisfactory to U.K. Agent)

     

    
      	
              1.

            	
              Formalities
                Certificate(s):  a certificate (dated no earlier than the date
                the first Loan is drawn down or such other date as Agent may approve)
                from
                each U.K. Loan Party in the form approved by Agent, signed by an
                authorized director of each U.K. Loan Party, which in each case shall
                have
                attached to it the documents referred to in such certificate including,
                without limitation, the documents for each U.K. Loan Party referred
                to in
                paragraphs 2, 3, 4 and 5 below, all such documents to be in the agreed
                form and shall contain a confirmation that no borrowing, guaranteeing
                or
                similar limit binding on each U.K. Loan Party will be exceeded by
                its
                entry into and performance of the Loan Documents, to which it is
                a
                party;

            

    

     

    
      	
              2.

            	
              Constitutional
                Documents:  a copy of the certificate of incorporation, the
                certificate of incorporation on change of name, the memorandum and
                articles of association of each U.K. Loan
                Party;

            

    

     

    
      	
              3.

            	
              Board
                Resolutions:  a copy of the resolutions of the board of
                directors (or equivalent) of each U.K. Loan
                Party:

            

    

     

    
      	
               

            	
              (a)

            	
              approving
                the terms of and transactions contemplated by the Loan Documents
                and
                resolving that it execute the Loan Documents to which it is a
                party;

            

    

     

    
      	
               

            	
              (b)

            	
              authorizing
                a specified person or persons to execute the Loan Documents to which
                it is
                a party on its behalf; and

            

    

     

    
      	
               

            	
              (c)

            	
              authorizing
                a specified person or persons on its behalf to sign and/or dispatch
                all
                other documents and notices to be signed and/or dispatched by it
                under or
                in connection with the Loan
                Documents;

            

    

     

    
      	
              4.

            	
              Specimen
                Signatures:  a specimen of the signature of each person
                authorized by each U.K. Loan Party to sign the Loan Documents to
                which it
                is a party;

            

    

     

    
      	
              5.

            	
              Security
                Documents:  each of the following documents in the agreed form
                duly executed and delivered by all parties
                thereto:

            

    

     

    
      	
               

            	
              (a)

            	
              a
                guarantee and debenture by each U.K. Loan
                Party;

            

    

     

    
      	
               

            	
              (b)

            	
              a
                share change to Continental Commercial Products, LLC with respect
                to 100%
                of the shares of capital stock of CEH Limited;
                and

            

    

     

    
      	
               

            	
              (c)

            	
              a
                share change by CEH Limited with respect to 100% of the shares of
                capital
                stock of Contico Europe Limited.

            

    

     

    
      
        
        

      

      
        
           

          Exhibit
            8.1 – Page 1

           

        

        
          
            

          

            

           

        

      

      
        
        

      

    

     

    
      	
              6.

            	
              Consents/Notices:  certified
                copies of all third party consents that are required in connection
                with
                the creation or registration of any Lien contained in any Security
                Document and all notices of assignment or charge required to be given
                under the terms of the Security Documents (subject to the specific
                provisions of the Security
                Documents).

            

    

     

    
      	
              7.

            	
              Legal
                Opinion:  a legal opinion of _____________________ as to matters
                of English law, in form and substance satisfactory to
                Agent.

            

    

     

    
      	
              8.

            	
              Property
                Searches:  official priority searches relating to the properties
                charged under the Security Documents, in favor of Fleet
                U.K. in respect of any registered or unregistered titles giving
                a
                sufficient period of priority and showing that no adverse entry
                exists.

            

    

     

    
      	
              9.

            	
              Deed
                of Release:  Deed of Release executed by each of Continental
                Commercial Products LLC and Contico Europe Limited with respect to
                the
                Debenture dated 3 February, 2003 in favor of Bank of America, N.A.,
                London
                U.K. Branch.

            

    

     

    
      
              
        

          
            	 	               

                        Exhibit
                      8.1 – Page
                      2                
              	 

          
      
      

                          
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE A

     

    Mandatory
      Costs Formulae

     

    
      	
              1.

            	
              The
                Mandatory Cost is an addition to the interest rate to compensate
                Lenders
                for the cost of compliance with (a) the requirements of the Bank of
                England and/or the Financial Services Authority (or, in either case,
                any
                other authority which replaces all or any of its functions) or
                (b) the requirements of the European Central
                Bank.

            

    

     

    
      	
              2.

            	
              On
                the first day of each Interest Period (or as soon as possible thereafter),
                Agent shall calculate, as a percentage rate, a rate (the “Additional Costs
                Rate”) for each Lender, in accordance with the paragraphs set out
                below.  The Mandatory Cost will be calculated by Agent as a
                weighted average of the Lenders’ Additional Costs Rates (weighted in
                proportion to the percentage participation of each Lender in the
                relevant
                Loan) and will be expressed as a percentage rate per
                annum.

            

    

     

    
      	
              3.

            	
              The
                Additional Costs Rate for any Lender lending from a facility office
                in a
                Participating Member State (as defined below) will be the percentage
                notified by that Lender to Agent.  This percentage will be
                certified by that Lender in its notice to Agent to be its reasonable
                determination of the cost (expressed as a percentage of that Lender’s
                participation in all advances made from that facility office) of
                complying
                with the minimum reserve requirements of the European Central Bank
                in
                respect of loans made from that facility
                office.

            

    

     

    
      	
              4.

            	
              The
                Additional Costs Rate for any Lender lending from a facility office
                in the
                United Kingdom will be calculated by Agent as
                follows:

            

    

     

    
      	
               

            	
              (a)

            	
              in
                relation to a Sterling Loan:

            

    

     

    AB
      +
      C(B–D) + E x 0.01 per cent. per annum

    100
–
      (A+C)

     

    
      	
               

            	
              (b)

            	
              in
                relation to a Loan in any currency other than
                Sterling:

            

    

     

    E
      x 0.01
      per cent. per annum

    300

     

    where:

     

    
      	
               

            	
              A

            	
              is
                the percentage of Eligible Liabilities (assuming these to be in excess
                of
                any stated minimum) which that Lender is from time to time required
                to
                maintain as an interest free cash ratio deposit with the Bank of
                England
                to comply with cash ratio
                requirements;

            

    

     

    
      	
               

            	
              B

            	
              is
                the percentage rate of interest (excluding the Applicable Margin
                and the
                Mandatory Cost and, if the Loan is an unpaid sum, the additional
                rate of
                interest specified in subsection 2.1.2 of the Agreement, payable
                for the
                relevant Interest Period on the
                Loan;

            

    

     

    
      
        
        

      

      
        
           

          Schedule
            A – Page 1     

                   

        

        
          

        

      

      
        
        

      

    

     

    
      	
               

            	
              C

            	
              is
                the percentage (if any) of Eligible Liabilities which that Lender
                is
                required from time to time to maintain as interest bearing Special
                Deposits with the Bank of England;

            

    

     

    
      	
               

            	
              D

            	
              is
                the percentage rate per annum payable by the Bank of England to Agent
                on
                interest-bearing Special Deposits;
                and

            

    

     

    
      	
               

            	
              E

            	
              is
                designed to compensate Lenders for amounts payable under the Fees
                Rules
                and is calculated by Agent as being the average of the most recent
                rates
                of charge supplied by the Reference Banks to Agent pursuant to paragraph
                8
                below and expressed in pounds per
£1,000,000.

            

    

     

    
      	
              5.

            	
              For
                the purposes of this Schedule:

            

    

     

    
      	
               

            	
              (a)

            	
              “Eligible
                Liabilities” and “Special Deposits” have the meanings given to them from
                time to time under or pursuant to the Bank of England Act 1998 or
                (as may
                be appropriate) by the Bank of
                England;

            

    

     

    
      	
               

            	
              (b)

            	
              “Fees
                Rules” means the rules on periodic fees contained in the FSA Supervision
                Manual or such other law or regulation as may be in force from time
                to
                time in respect of the payment of fees for the acceptance of
                deposits;

            

    

     

    
      	
               

            	
              (c)

            	
              “Fee
                Tariffs” means the fee tariffs specified in the Fees Rules under the
                activity group A.1 Deposit acceptors (ignoring any minimum fee or
                zero
                rated fee required pursuant to the Fees Rules but taking into account
                any
                applicable discount rate); and

            

    

     

    
      	
               

            	
              (d)

            	
              “Tariff
                Base” has the meaning given to it in, and will be calculated in accordance
                with, the Fees Rules.

            

    

     

    
      	
              6.

            	
              In
                application of the above formulae, A, B, C and D will be included
                in the
                formulae as percentages (i.e., 5 per cent. will be included in the
                formula
                as 5 and not as 0.05).  A negative result obtained by
                subtracting D from B shall be taken as zero.  The resulting
                figures shall be rounded up to four decimal
                places.

            

    

     

    
      	
              7.

            	
              If
                requested by Agent, each Reference Bank shall, as soon as practicable
                after publication by the Financial Services Authority, supply to
                Agent,
                the rate of charge payable by that Reference Bank to the Financial
                Services Authority pursuant to the Fees Rules in respect of the relevant
                financial year of the Financial Services Authority (calculated for
                this
                purpose by that Reference Bank as being the average of the Fee Tariffs
                applicable to that Reference Bank for that financial year) and expressed
                in pounds per £1,000,000 of the Tariff Base of that Reference
                Bank.

            

    

     

    
      	
              8.

            	
              Each
                Lender shall supply any information required by Agent for the purpose
                of
                calculating its Additional Costs Rate.  In particular, but
                without limitation, each Lender shall supply the following information
                in
                writing on or prior to the date on which it becomes a
                Lender:

            

    

     

    
      
        
        

      

      
        
           

          Schedule
            A – Page 2

                        

        

        
          

        

      

      
        
        

      

    

     

    
      	
               

            	
              (a)

            	
              its
                jurisdiction of incorporation and jurisdiction of its facility office;
                and

            

    

     

    
      	
               

            	
              (b)

            	
              any
                other information that Agent may reasonably require for such
                purpose.

            

    

     

    Each
      Lender shall promptly notify Agent in writing of any change to the information
      provided by it pursuant to this paragraph.

     

    
      	
              9.

            	
              The
                percentages of each Lender for the purpose of A and C above, and
                the rates
                of charge of each Reference Bank for the purpose of E above shall
                be
                determined by Agent, based upon the information supplied to it pursuant
                to
                paragraphs 7 and 8 above, and on the assumption that, unless a Lender
                notifies Agent to the contrary, each Lender’s obligations in relation to
                cash ratio deposits and Special Deposits are the same as those of
                a
                typical bank from its jurisdiction of incorporation with a facility
                office
                in the same jurisdiction as its facility
                office.

            

    

     

    
      	
              10.

            	
              Agent
                shall have no liability to any person if such determination results
                in an
                Additional Costs Rate which over- or under-compensates any Lender
                and
                shall be entitled to assume that the information provided by any
                Lender or
                Reference Bank pursuant to paragraphs 3, 7 and 8 above is true and
                correct
                in all respects.

            

    

     

    
      	
              11.

            	
              Agent
                shall distribute the additional amounts received as a result of the
                Mandatory Costs to the Lenders on the basis of the Additional Costs
                Rate
                for each Lender, based on the information provided by each Lender
                and each
                Reference Bank pursuant to paragraphs 3, 7 and 8
                above.

            

    

     

    
      	
              12.

            	
              Any
                determination by Agent pursuant to this Schedule in relation to a
                formula, the Mandatory Cost, an Additional Costs Rate or any amount
                payable to a Lender shall, in the absence of manifest error, be conclusive
                and binding on all parties to this
                Agreement.

            

    

     

    
      	
              13.

            	
              Agent
                may from time to time, after consultation (but without their consent)
                with
                the Borrower Representative and the Lenders, determine and notify
                to all
                parties to this Agreement any amendments that are required to be
                made to
                this Schedule in order to comply with any change in law, regulation
                or any requirements from time to time imposed by the Bank of England,
                the
                Financial Services Authority or the European Central Bank (or, in
                any
                case, any other authority which replaces all or any of its
                functions).  Any such determination shall, in the absence of
                manifest error, be conclusive and binding on all such
                parties.

            

    

     

    
      	
              14.

            	
              For
                the purposes of this Schedule ”Participating Member State” means any
                member state of the European Communities that adopts or has adopted
                the
                Euro as its lawful currency in accordance with legislation of the
                European
                Community relating to Economic and Monetary
                Union.

            

    

     

    
      
              

          
            	 	              

                                    Schedule
                      A –
                      Page 3              
            	 

          
      

                                     
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              SCHEDULE
                B

            

    

     

    
      	
               

            	
              Appraised
                Values

            

    

     

    
      	
               

            	
              Delivered
                – On File with Bank of America,
                N.A/

            

    

     

     

     

     

     

     

     

     

     

     

     

     

     

     Schedule
      B – Page 1

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