Document:

Exhibit 10.1

SECOND
AMENDMENT TO LONE STAR TECHNOLOGIES, INC. SECOND

AMENDED AND RESTATED DEFERRED COMPENSATION PLAN

This SECOND
AMENDMENT (this “Amendment”) to the Lone Star Technologies, Inc. Second Amended
and Restated Deferred Compensation Plan, as amended (the “Plan”), is adopted by
the Board of Directors of Lone Star Technologies, Inc., a Delaware corporation
(the “Company”) on the 14th day of December, 2006. Unless otherwise clearly
required by the context, capitalized terms used but not defined herein shall
have the meanings ascribed to them in the Plan.

W I T N E S S E T H:

WHEREAS, the Board
of Directors of the Company (the “Board”) desires to amend the Plan to provide
that the Company will pay amounts attributable to post-2006 deferrals if such
amounts are not paid when due by a Participant’s Employer; and

WHEREAS, the Board
desires to amend the Plan to provide for the acceleration of vesting and
distribution of all Accounts in the event of a change in control of the
Company; and

WHEREAS, the Board
of Directors of the Company desires to amend the withdrawal and distribution provisions
of the Plan to conform with the requirements of Section 409A of the Internal
Revenue Code of 1986.

NOW, THEREFORE,
the Plan is amended as follows:

1.             The first sentence of Section 3.5
of the Plan (relating to Account payments) is amended, effective January 1,
2005, in the following respects:  insert “or”
before (B); and delete the following: “or (C) the date after such Participant’s
Retirement which is specified by the Committee in its discretion as the date
such Account shall become distributable,”.

2.             Section 3.7 of the Plan (relating
to hardship distributions) is amended in its entirety to read as follows, effective
as of January 1, 2005:

“Withdrawals
for Unforeseeable Emergencies.  Subject to Section 409A
of the Code, the Committee, acting in its discretion, may allow a Participant
to withdrawal all or part of the amounts credited to his or her Accounts if and
to the extent the amount of such withdrawal is reasonably necessary to satisfy
an unforeseeable emergency need (which may include amounts necessary to pay any
Federal, state, or local income taxes or penalties reasonably anticipated to
result from the withdrawal). For this purpose, an unforeseeable emergency is a
severe financial hardship resulting from an illness or accident of the
Participant, the Participant’s spouse and/or the Participant’s dependent(s),
loss of the Participant’s property due to casualty, or other similar
extraordinary and unforeseeable circumstances arising as a result of events
beyond the control of the Participant. The determination whether a Participant
is faced with an unforeseeable

 1
 

 

emergency for the
purposes of this Section 3.7 will be made on the basis of the relevant facts
and circumstances, with regard to the extent to which the emergency may be
relieved through insurance or otherwise, by liquidation of the Participant’s
assets (to the extent such liquidation of assets would not cause sever
financial hardship) or by cessation of deferrals under the Plan. In no event shall a distribution be made
pursuant to this Section 3.7 with respect to any Matching Account
established for a Plan Year commencing on or after January 1, 2003 if such
distribution would be on a date that is prior to the beginning of the third
Plan Year commencing after the end of the Plan Year to which such Matching
Account relates.”

3.             Section 3.8 of the Plan (relating
to elective withdrawals) is deleted in its entirety, effective as of January 1,
2005.

4.             The following new Section 3.8 is
added to the Plan, effective as of January 1, 2007:

“Change in Control.  Notwithstanding anything to the contrary
contained herein, the balances of all outstanding Accounts (whether or not
previously vested) will be distributed in full in a lump sum cash payments to
the Participants (or beneficiaries) for whom such Accounts are maintained in
the event and immediately prior to the occurrence of a change in the ownership
or effective control of the Company or a change in the ownership of a
substantial portion of the assets of the Company, in each case within the
meaning and for the purposes of Section 409A of the Code.”

5.             The following new Section 3.9 is
added to the Plan, effective as of January 1, 2007:

“Company
Payment of Employer Obligations. The Company will be secondarily responsible
for the payment of any amount payable to a Participant or beneficiary under the
Plan if and to the extent such amount is not paid by a participating Employer
(other than the Company) as and when such payment is due under and in
accordance with the Plan; provided, however, that the Company’s secondary
responsibility shall extend solely to post-2006 deferrals and credits other
than post-2006 income credits with respect to pre-2007 Account balances; and
provided further that this Section 3.9 will apply only with respect to amounts
payable by an Employer in which the Company has a “controlling interest” (within
the meaning of Treasury Regulation Section 1.414(c)-2(b)(2), but substituting “50
percent” for “80 percent”).”

6.             The following new Section 5.6 is
added to the Plan, effective as of January 1, 2005:

 2
 

 

“Compliance
with Section 409A of the Code. The Plan is intended to comply with
Section 409A of the Code and shall be interpreted and administered accordingly.
Toward that end, unless permitted sooner by Section 409A of the Code, if a
Participant is a “Specified Employee” as of the date of the Participant’s “Separation
from Service” (as such terms are defined for purposes of Section 409A), payments
that would otherwise be due under the Plan during the six-month period
following a Participant’s Separation from Service will be deferred until and
become payable on the first day of the seventh month following such Separation
from Service. If any other payments under the Plan would result in the
imposition of an additional tax under Section 409A of the Code, the Company may
modify the timing of such payments or otherwise restructure the manner in which
such payments will be made as and to the extent appropriate in order to avoid such
imposition of additional tax.”

 3Exhibit
10.2

SECOND AMENDED AND RESTATED

FINANCING AGREEMENT

The
CIT Group/Business Credit, Inc.

(As
Agent and Lender)

The
Lenders Party Hereto,

Lone
Star Technologies, Inc.,

Lone Star Steel Company, L.P., Fintube Technologies, Inc.,

Lone Star Logistics, Inc., Star Tubular Services, Inc., 

Texas & Northern Railway Company, Fintube Canada, Inc.,

Bellville Tube Company, L.P., Wheeling Machine Products, L.P.,

Star Capital Funding, Inc., Delta Tubular Processing, L.P. and

Delta Tubular International, L.P.

(As
Companies)

and

Environmental
Holdings, Inc., Zinklahoma, Inc., 

Lone Star Steel International, L.P., Lone Star Steel Sales Company,

Rotac, Inc., Lone Star ST Holdings, Inc., Bellville Tube General, LLC,

Lone Star Nevada Holdings, LLC, Star Tubular Technologies, Inc.,

Wheeling Machine Products General, LLC,

Delta Tubular Processing General, LLC,

Delta Tubular International General, LLC,

Star Tubular Technologies (Youngstown), Inc.,

Star Energy Group, LLC, Lone Star Steel Mexico, LLC,

Lone Star Steel International Limited, LLC, 

Lone Star Steel International General, LLC, 

Lone Star Steel Company General, LLC, 

Lone Star Steel Company Limited, LLC,

Star TC Holdings, LLC,

Star Brazil US, LLC 1 and

Star Brazil US, LLC 2

(As
Guarantors)

Dated:
December 14, 2006

 

TABLE OF CONTENTS

	
  SECTION 1.

  	
   

  	
  Definitions

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.

  	
   

  	
  Conditions
  Precedent

  	
   

  	
  27

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.1

  	
   

  	
  Conditions Precedent to Initial Revolving Loan

  	
   

  	
  27

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.2

  	
   

  	
  Conditions to Each Request for Extension of Credit

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.

  	
   

  	
  Revolving Loans;
  Swingline Loans

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.1

  	
   

  	
  Revolving Loans

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.2

  	
   

  	
  Swingline Loans

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.3

  	
   

  	
  Settlement Date

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.4

  	
   

  	
  Borrowing Base Report

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.5

  	
   

  	
  Representations and Warranties as to Borrowing Base
  Accounts and Inventory

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.6

  	
   

  	
  Cash Management

  	
   

  	
  34

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.7

  	
   

  	
  Credits on Accounts Following an Event of Default

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.8

  	
   

  	
  Maintenance of Revolving Loan Accounts

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.9

  	
   

  	
  Revolving Loan Account Statements

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.10

  	
   

  	
  Repayment of Excess Advances

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.11

  	
   

  	
  Increase in Revolving Line of Credit

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 4.

  	
   

  	
  Acquisition
  Facility Loans and Permitted Acquisitions

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.1

  	
   

  	
  Permitted Acquisitions

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.2

  	
   

  	
  Acquisition Deliverables before Closing a Material
  Acquisition

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.3

  	
   

  	
  Acquisition Criteria

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.4

  	
   

  	
  Acquisition Deliverables at its Closing

  	
   

  	
  39

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.5

  	
   

  	
  Acquisition Loan Documents

  	
   

  	
  39

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5.

  	
   

  	
  Letters of
  Credit

  	
   

  	
  40

  

 

 

 

	
  5.1

  	
   

  	
  Requests for Letters of Credit

  	
   

  	
  40

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.2

  	
   

  	
  Right to Charge Revolving Loan Accounts

  	
   

  	
  40

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.3

  	
   

  	
  Indemnification

  	
   

  	
  41

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.4

  	
   

  	
  Disclaimer of Liability

  	
   

  	
  41

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.5

  	
   

  	
  Standard of Conduct for Agent and Lenders

  	
   

  	
  41

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.6

  	
   

  	
  Limitation on Companies’ Actions

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.7

  	
   

  	
  Maintenance of Leases

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.8

  	
   

  	
  Subrogation Rights

  	
   

  	
  43

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.9

  	
   

  	
  Rights Against Issuing Bank

  	
   

  	
  43

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.

  	
   

  	
  Collateral

  	
   

  	
  43

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.1

  	
   

  	
  Grant of Security Interest

  	
   

  	
  43

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.2

  	
   

  	
  Illustration of Scope of Security Interest

  	
   

  	
  43

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.3

  	
   

  	
  Maintenance of Inventory

  	
   

  	
  44

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.4

  	
   

  	
  Maintenance of Equipment

  	
   

  	
  45

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.5

  	
   

  	
  Survival of Security Interest

  	
   

  	
  45

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.6

  	
   

  	
  No Requirement to Marshal Collateral

  	
   

  	
  46

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.7

  	
   

  	
  Right to Charge Revolving Loan Account, Etc.

  	
   

  	
  46

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.8

  	
   

  	
  Further Assurances

  	
   

  	
  46

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 7.

  	
   

  	
  Representations,
  Warranties and Covenants

  	
   

  	
  47

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.1

  	
   

  	
  Solvency, Company Information, First Priority Lien,
  Etc.

  	
   

  	
  47

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.2

  	
   

  	
  Maintenance and Inspection of Books

  	
   

  	
  47

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.3

  	
   

  	
  Reports on Collateral

  	
   

  	
  48

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.4

  	
   

  	
  Further Assurances

  	
   

  	
  48

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.5

  	
   

  	
  Insurance

  	
   

  	
  48

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.6

  	
   

  	
  Payment of Taxes

  	
   

  	
  51

  

 

 

 

	
  7.7

  	
   

  	
  Compliance With Laws

  	
   

  	
  51

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.8

  	
   

  	
  Financial Reporting

  	
   

  	
  52

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.9

  	
   

  	
  Anti-Money Laundering and Terrorism Regulations

  	
   

  	
  53

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.10

  	
   

  	
  Negative Covenants

  	
   

  	
  53

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.11

  	
   

  	
  Fixed Charge Coverage Ratio

  	
   

  	
  55

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.12

  	
   

  	
  Capital Leases

  	
   

  	
  55

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.13

  	
   

  	
  Notices

  	
   

  	
  55

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.14

  	
   

  	
  Indemnification Regarding Depository Accounts

  	
   

  	
  56

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.15

  	
   

  	
  Representations and Warranties

  	
   

  	
  56

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 8.

  	
   

  	
  Interest, Fees
  and Expenses

  	
   

  	
  60

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.1

  	
   

  	
  Applicable Rate for Chase Bank Rate Loans

  	
   

  	
  60

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.2

  	
   

  	
  Letter of Credit Guaranty Fee

  	
   

  	
  61

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.3

  	
   

  	
  Reimbursement of Letter of Credit Charges

  	
   

  	
  61

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.4

  	
   

  	
  Reimbursement of Certain Charges

  	
   

  	
  61

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.5

  	
   

  	
  Line of Credit Fee

  	
   

  	
  61

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.6

  	
   

  	
  Loan Facility Fee and Syndication Fee

  	
   

  	
  61

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.7

  	
   

  	
  Collateral Management Fee

  	
   

  	
  62

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.8

  	
   

  	
  Audit Fees

  	
   

  	
  62

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.9

  	
   

  	
  Authorization to Charge Revolving Loan Accounts

  	
   

  	
  62

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.10

  	
   

  	
  Additional Costs from Capital Adequacy Requirements

  	
   

  	
  62

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.11

  	
   

  	
  Payment of Additional Taxes and Fees from Making
  LIBOR Loans

  	
   

  	
  63

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.12

  	
   

  	
  LIBOR Conversion Options

  	
   

  	
  64

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.13

  	
   

  	
  Applicable Rate for LIBOR Loans

  	
   

  	
  65

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.14

  	
   

  	
  Computation and Payment of Interest

  	
   

  	
  65

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.15

  	
   

  	
  Inability to Determine Interest Rate

  	
   

  	
  65

  

 

 

 

	
  8.16

  	
   

  	
  Payments

  	
   

  	
  66

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.17

  	
   

  	
  Illegality

  	
   

  	
  66

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.18

  	
   

  	
  Indemnity

  	
   

  	
  66

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.19

  	
   

  	
  LIBOR Provisions

  	
   

  	
  66

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.20

  	
   

  	
  Application

  	
   

  	
  67

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 9.

  	
   

  	
  Powers

  	
   

  	
  67

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 10.

  	
   

  	
  Events of
  Default and Remedies

  	
   

  	
  68

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.1

  	
   

  	
  Events of Default

  	
   

  	
  68

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.2

  	
   

  	
  Acceleration, Default Rate of Interest and
  Termination upon an Event of Default

  	
   

  	
  70

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.3

  	
   

  	
  Other Remedies

  	
   

  	
  70

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11.

  	
   

  	
  Termination

  	
   

  	
  72

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 12.

  	
   

  	
  Miscellaneous

  	
   

  	
  72

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.1

  	
   

  	
  Waivers

  	
   

  	
  72

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.2

  	
   

  	
  Final Agreement

  	
   

  	
  73

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.3

  	
   

  	
  Usury Saving Clause

  	
   

  	
  73

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.4

  	
   

  	
  Severability; Section Headings; Counterparts

  	
   

  	
  74

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.5

  	
   

  	
  WAIVER OF JURY TRIAL

  	
   

  	
  74

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.6

  	
   

  	
  Notices

  	
   

  	
  74

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.7

  	
   

  	
  CHOICE OF LAW

  	
   

  	
  75

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.8

  	
   

  	
  Amendment and Restatement

  	
   

  	
  76

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 13.

  	
   

  	
  Agreement among
  the Lenders

  	
   

  	
  76

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.1

  	
   

  	
  Advances to and Notification by Agent

  	
   

  	
  76

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.2

  	
   

  	
  Settlement Date Payments

  	
   

  	
  76

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.3

  	
   

  	
  Account Statement

  	
   

  	
  76

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.4

  	
   

  	
  Distribution of Fees

  	
   

  	
  77

  

 

 

 

	
  13.5

  	
   

  	
  Participations and Disclosure of Information

  	
   

  	
  77

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.6

  	
   

  	
  Several Nature of Obligation to Fund Advances

  	
   

  	
  77

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.7

  	
   

  	
  Sharing of Certain Costs

  	
   

  	
  78

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.8

  	
   

  	
  Receipt of Collateral Proceeds

  	
   

  	
  78

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.9

  	
   

  	
  Assignments

  	
   

  	
  78

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 14.

  	
   

  	
  Agency

  	
   

  	
  79

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.1

  	
   

  	
  Appointment of Agent

  	
   

  	
  79

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.2

  	
   

  	
  Use of Other Agents

  	
   

  	
  79

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.3

  	
   

  	
  Limitation of Liability

  	
   

  	
  79

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.4

  	
   

  	
  Reliance by Agent

  	
   

  	
  79

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.5

  	
   

  	
  Agent’s Knowledge

  	
   

  	
  80

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.6

  	
   

  	
  No Reliance upon Agent

  	
   

  	
  80

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.7

  	
   

  	
  Indemnification and Limitation of Liability of Agent

  	
   

  	
  80

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.8

  	
   

  	
  Other Business Relationships with Obligors

  	
   

  	
  81

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.9

  	
   

  	
  Resignation

  	
   

  	
  81

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.10

  	
   

  	
  Consent Required for Certain Amendments

  	
   

  	
  81

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.11

  	
   

  	
  Deemed Consent

  	
   

  	
  82

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.12

  	
   

  	
  Termination of Revolving Line of Credit and
  Financing Agreement

  	
   

  	
  82

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.13

  	
   

  	
  Rescission of Payment

  	
   

  	
  82

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.14

  	
   

  	
  Confidentiality

  	
   

  	
  83

  

 

 

 

	
  EXHIBIT

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Exhibit A - Form of Assignment and Transfer
  Agreement

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULES

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Schedule 1 - Existing Liens

  	
   

  	
   

  
	
   

  	
   

  	
  Schedule 2 – List of Eligible Rack Transfer Sales to
  Customers

  	
   

  	
   

  
	
   

  	
   

  	
  Schedule 7.1 – Company Information

  	
   

  	
   

  
	
   

  	
   

  	
  Schedule 7.5(a) – Insurance Coverage

  	
   

  	
   

  
	
   

  	
   

  	
  Schedule 7.15(e) – Other Lending Agreements

  	
   

  	
   

  
	
   

  	
   

  	
  Schedule 7.15(f) – Real Property Owned and
  Leased/Collateral Locations

  	
   

  	
   

  
	
   

  	
   

  	
  Schedule 7.15(g) – Litigation

  	
   

  	
   

  
	
   

  	
   

  	
  Schedule 7.15(l) – Environmental Matters

  	
   

  	
   

  
	
   

  	
   

  	
  Schedule 7.15(o) – Subsidiaries and Joint Ventures

  	
   

  	
   

  
	
   

  	
   

  	
  Schedule 7.15(p) – Intellectual Property

  	
   

  	
   

  
							

 

 

THE CIT GROUP/BUSINESS CREDIT, INC., a New
York corporation, (hereinafter “CITBC”)
with offices located at Two Lincoln Centre, 5420 LBJ Freeway, Suite 200, Dallas
Texas 75240, as agent for the Lenders (the “Agent”) and CITBC as a Lender (as defined below), WELLS FARGO FOOTHILL, LLC, a Delaware
limited liability company, with offices located at 2450 Colorado Ave., Suite
3000 West, Santa Monica, California 90404 (“Wells Fargo”) as a Lender, LASALLE BANK NATIONAL ASSOCIATION, a national banking
association with offices located at 135 S. LaSalle Street, Chicago, Illinois
60603 (“LaSalle Bank”) as a
Lender, and WACHOVIA BANK, NATIONAL
ASSOCIATION, a national banking association with offices located at
5001 LBJ Freeway, Suite 1050, Dallas, Texas 
75244 (“Wachovia Bank”),
as a Lender (CITBC in its capacity as a Lender, Wells Fargo, LaSalle Bank and
Wachovia Bank being hereinafter referred to as the “Existing Lenders”) and JPMORGAN CHASE BANK, N.A., a national
banking association with offices located at 2200 Ross Avenue, Floor 6, Dallas,
Texas  75201-2787 (“JP Morgan” or “Additional Lender”) and any other party which now or hereafter
becomes a lender hereunder pursuant to Section 13 hereof (and
together with the Swingline Lender, individually, a “Lender” and collectively, the “Lenders”) are pleased to confirm the
terms and conditions under which the Agent on behalf of the Lenders and the
Lenders shall make revolving loans and other financial accommodations to Lone Star Technologies, Inc.  (herein “Parent”),
a Delaware corporation, Lone Star Steel
Company, L.P. (herein “LSSC”),
a Delaware limited partnership, as successor in interest by the conversion of
Lone Star Steel Company with and into Lone Star Steel Company, L.P., Fintube Technologies, Inc. (herein “FTI”), an Oklahoma corporation, Lone Star Logistics, Inc., a Texas
corporation (“Logistics”), Star Tubular Services, Inc., formerly known
as T&N Lone Star Warehouse Co., a Texas corporation (“Star Tubular”), Texas & Northern Railway Company, a
Texas corporation (“T&N Railway”),
Fintube Canada, Inc., a Delaware
corporation (“FCI”), Bellville Tube Company, L.P. (“BTCLP”), a Texas limited partnership,
successor in interest by conversion to Bellville Tube Corporation, a Texas
corporation, Wheeling Machine Products, L.P.
(“Wheeling”), a Texas
limited partnership, successor in interest by conversion to Wheeling Machine
Products, Inc., formerly known as Wheeling Acquisition Corporation and Star
Tubular Technologies (Houston), Inc., Star
Capital Funding, Inc. (“Star
Capital”), a Delaware corporation, Delta Tubular Processing, L.P. (“Delta Processing”), a Texas limited partnership, successor
in interest by conversion to Delta Tubular Processing, Inc., formerly known as
Delta Lone Star Acquisition, Inc. and Delta
Tubular International, L.P. (“Delta
International”), a Texas limited partnership, successor in
interest by conversion to Delta Tubular International, Inc., formerly known as
Star Tubular International, Inc., each with its chief executive office at 15660
N. Dallas Parkway, Suite 500, Dallas, Texas 75248 (herein Parent, LSSC, FTI,
Logistics, Star Tubular, T&N Railway, FCI, BTCLP, Wheeling, Star Capital,
Delta Processing and Delta International, each individually a “Company” and collectively the “Companies”), supported by the guaranties
of Environmental  Holdings, Inc., a Delaware corporation (“EHI”), Zinklahoma, Inc., a Delaware corporation (“Zinklahoma”), Lone Star Steel International, L.P., a
Delaware limited partnership (“Steel
International”), successor in interest by conversion to Lone
Star Steel International, Inc., Lone Star
Steel Sales Company, a Delaware corporation (“Steel Sales”), Rotac, Inc., a Texas corporation (“Rotac”), Lone Star ST Holdings, Inc., a Delaware corporation (“ST Holdings”), Bellville Tube General, LLC, a Nevada
limited liability company (“BTG”),
Lone Star Nevada Holdings, LLC, a
Nevada limited liability company (“Nevada
Holdings”), formerly known as Bellville Tube Limited, LLC, Star Tubular Technologies, Inc., a Delaware
corporation

 1
 

 

(“STT”), Wheeling Machine Products General, LLC, a
Nevada limited liability company (“Wheeling
General”), Delta Tubular
Processing General, LLC, a Nevada limited liability company (“Delta Processing General”), Delta Tubular International General, LLC, a
Nevada limited liability company (“Delta
International General”), Star
Tubular Technologies (Youngstown), Inc., an Ohio corporation (“STT Ohio”), Star Energy Group, LLC, a Delaware limited liability company (“SEG”), Lone Star Steel Mexico, LLC, a Texas limited liability company
(“LSSM”), Lone Star Steel International Limited, LLC,
a Nevada limited liability company (“Steel
International Limited”), Lone
Star Steel International General, LLC, a Nevada limited liability
company (“Steel International General”),
Lone Star Steel Company General, LLC,
a Nevada limited liability company (“LSS
General”), Lone Star Steel
Company Limited, LLC, a Nevada limited liability company (“LSS Limited”), Star TC Holdings, LLC, a Texas limited
liability company (“Star Holdings”),
Star Brazil US, LLC 1, a
Texas limited liability company (“Brazil 1”),
and Star Brazil US, LLC 2, a
Texas limited liability company (“Brazil 2”)
(herein EHI, Zinklahoma, Steel International, Steel Sales, Rotac, ST Holdings,
BTG, Nevada Holdings, STT, Wheeling General, Delta Processing General, Delta
International General, STT Ohio, SEG, LSSM, Steel International Limited, Steel
International General, LSS General, LSS Limited, Star Holdings, Brazil 1 and
Brazil 2, each individually as “Guarantor”
and collectively, the “Guarantors”),
each with its chief executive office at 15660 North Dallas Parkway, Suite 500,
Dallas, Texas 75248.

RECITALS

A.                                   CITBC
as Agent and Lender, and certain of the Companies and Guarantors entered into
that certain Financing Agreement, dated March 12, 1999 (as amended from time to
time until execution of the Existing Financing Agreement (as defined below),
the “Original Financing Agreement”).

B.                                     CITBC
as Agent and Lender, and certain of the Companies and Guarantors entered into
that certain Amended and Restated Financing Agreement dated October 8,
2001, which amended and restated the Original Financing Agreement (as amended
from time to time, the “Existing Financing
Agreement”).

C.                                     Agent,
Existing Lenders, Companies and Guarantors are the current parties to the
Existing Financing Agreement.

D.                                    Subject
to the terms and conditions of this Financing Agreement, Agent, Lenders,
Companies and Guarantors have agreed to amend and restate the Existing
Financing Agreement to, among other things:

(i)                                      Provide
for the assignment by Existing Lenders to Additional Lender and otherwise
provide for the extension by all Lenders of the amounts necessary for all
Lenders to hold their respective Pro Rata Share (as defined below) of the
Commitments (as defined below), it being the intention of Companies,
Guarantors, Agent and all Lenders that the Revolving Loans (as defined below)
and Letters of Credit (as defined below) existing under the Existing Financing
Agreement as of the Closing

 2
 

 

Date shall continue, remain outstanding and not be
repaid on the Closing Date, but shall be assigned and reallocated among the
Lenders, as provided in this Financing Agreement, and accordingly the loans and
Commitments are not in novation or discharge thereof; and

(ii)                                   Amend
certain terms and provisions of the credit facility provided for in the
Existing Financing Agreement.

E.                                      The
parties hereto desire to amend, restate and modify, but not extinguish, the
Existing Financing Agreement in its entirety as hereinafter set forth.

NOW,
THEREFORE, in consideration of the premises and the mutual covenants herein
contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties, intending to be
legally bound, agree as follows:

SECTION 1.                 Definitions

Accounts
shall mean all of the Obligors’ now existing and future:  (a) accounts (as defined in the UCC),
and any and all other receivables (whether or not specifically listed on
schedules furnished to the Agent), including, without limitation, all accounts created
by or arising from all of the Obligors’ sales, leases, rentals of goods or
renditions of services to each Obligors’ customers, and all accounts arising
from sales, leases, rentals of goods or renditions of services made under any
of the Obligors’ trade names or styles, or through any of the Obligors’
divisions; (b) any and all instruments, documents, contract rights and
chattel paper, all as defined in the UCC; (c) unpaid seller’s or lessor’s
rights (including rescission, replevin, reclamation, repossession and stoppage
in transit) relating to the foregoing or arising therefrom; (d) rights to
any goods represented by any of the foregoing, including rights to returned,
reclaimed or repossessed goods; (e) deposit accounts, reserves and credit
balances arising in connection with or pursuant hereto; (f) guarantees,
supporting obligations, payment intangibles and letter of credit rights (all as
defined in the UCC) or collateral for any of the foregoing; (g) insurance
policies or rights relating to any of the foregoing; (h) General
Intangibles (including all rights to payment, including those arising in
connection with bank and non-bank credit cards) pertaining to any and all of
the foregoing; (i) notes, deposits or property of account debtors securing
the obligations of any such account debtors to the Obligors; and (j) cash
and non-cash proceeds of any and all of the foregoing.

Acquisition
shall mean the purchase or other acquisition (including merger or
consolidation) of any or all of the following: 
(a) more than 50% of the Capital Stock of any Person; and
(b) all or a part of the assets of, or all or any part of a division of,
any Person.

Acquisition
Agreements shall have the meaning assigned to such term
in Section 4.2 hereof.

Acquisition
Facility Loans shall have the meaning assigned to such
term in Section 4 hereof.

Adjustment
Date shall mean the first day of the calendar month
following the applicable Financial Statement Delivery Date.

 3
 

 

Affiliate
shall mean, as applied to any Person, any other Person who, directly or
indirectly, controls, is controlled by, or is under common control with, such
Person.  For purposes of this definition,
“control” means the possession, directly or indirectly, of the power to direct
the management and policies of a Person, whether through the ownership of
Capital Stock, by contract, or otherwise; provided,
however, that, if (a) any Person which owns directly or indirectly
50% or more of the securities having ordinary voting power for the election of
directors or other members of the governing body of a Person or 50% or more of
the partnership or other ownership interests of a Person (other than as a
limited partner of such Person) shall be deemed to control such Person, and (b)
each director (or comparable manager) of a Person described in the preceding
clause (a) shall be deemed to be an Affiliate of such Person.

Anniversary
Date  shall mean December 31, 2010, and the same date in
every year thereafter.

Apolo
Transaction shall mean Parent’s acquisition on or about
November 30, 2006 for approximately $42,000,000 cash (with $24,000,000 being
paid at closing and the remainder being paid over the next eighteen (18)
months) of fifty percent (50%) of the Capital Stock of Apolo Tubulars S.A.,
which was formerly known as Apolo Mecanica e Estruturas LTDA, with the
remaining Capital Stock being held by Apolo Tubos e Equipamentos S.A., an
affiliate of Grupo Peixoto de Castro.

Applicable
Margin  shall mean, with respect to any amount outstanding
made under any LIBOR Loans or Chase Bank Rate Loans, as the case may be, the
rate of interest per annum determined as set forth below:

(a)           during
the period from the Closing Date through the Adjustment Date immediately
following the Financial Statement Delivery Date (as defined below) for the
Fiscal Year ending on December 31, 2006:

	
  As to

  Chase Bank Rate Loans

  	
   

  	
  As to

  LIBOR Loans

  	
   

  
	
  0.00%

  	
   

  	
  1.00%

  	
   

  

 

(b)           for
any new Margin Period (as defined below) occurring after December 31, 2006, the
rate determined by reference to the pricing grid below based on the Companies’
Fixed Charge Coverage Ratio (on the last day of the Fiscal Year most recently
ended prior to the commencement of such Margin Period):

	
  Fixed Charge

  Coverage Ratio

  	
   

  	
  As to 

  Chase Bank Rate Loans

  	
   

  	
  As to

  LIBOR Loans

  	
   

  
	
  Less than 1.10 to 1.0

  	
   

  	
  0.50%

  	
   

  	
  2.00%

  	
   

  
	
  Greater than or equal to 1.10 to 1.0 but less than
  1.6 to 1.0

  	
   

  	
  0.25%

  	
   

  	
  1.75%

  	
   

  
	
  Greater than or equal to 1.6 to 1.0 but less than
  2.10 to 1.0

  	
   

  	
  0.00%

  	
   

  	
  1.50%

  	
   

  
	
  Greater than or equal to 2.10 to 1.0 but less than
  2.60 to 1.0

  	
   

  	
  0.00%

  	
   

  	
  1.25%

  	
   

  
	
  Greater than or
  equal to 2.60 to 1.0

  	
   

  	
  0.00%

  	
   

  	
  1.00%

  	
   

  

 

 4
 

 

As
used herein, “Financial Statement Delivery
Date” shall mean
the earlier of (a) the last day on which the annual financial statements
of the Companies are to be delivered to Agent pursuant to Section 7.8
hereof, or (b) the date upon which such financial statements actually are
delivered to Agent.  As used herein, “Margin Period” means a period
commencing on the most recent Adjustment Date and ending on the next Adjustment
Date.  Each change in the Applicable
Margin shall become effective on the Adjustment Date for all Chase Bank Rate
Loans.  There will be no change in the
Applicable Margin for any LIBOR Loans which became a LIBOR Loan prior to the
subject Adjustment Date until such time as such LIBOR Loan’s Interest Period
expires.

If, as
a result of any restatement of or other adjustment to the financial statements
of an Obligor or for any other reason, Agent determines that (a) the Fixed
Charge Coverage Ratio as calculated by the Obligors as of any applicable date
was inaccurate and (b) a proper calculation of the Fixed Charge Coverage Ratio
would have resulted in different pricing for any period, then (i) if the proper
calculation of the Fixed Charge Coverage Ratio would have resulted in higher
pricing for such period, the Companies shall automatically and retroactively be
obligated to pay to Agent, for the benefit of the Lenders, promptly on demand
by Agent, an amount equal to the excess of the amount of interest and fees that
should have been paid for such period over the amount of interest and fees
actually paid for such period; and (ii) if the proper calculation of the Fixed
Charge Coverage Ratio would have resulted in lower pricing for such period,
neither Agent nor any Lender shall have any obligation to repay any interest or
fees to the Companies; provided that if, as a result of any restatement
or other event a proper calculation of the Fixed Charge Coverage Ratio would
have resulted in higher pricing for one or more periods and lower pricing for
one or more other periods (due to the shifting of income or expenses form one
period to another period or any similar reason), then the amount payable by the
Companies pursuant to clause (i) above shall be based upon the excess, if any,
of the amount of interest and fees that should have been paid for all
applicable periods over the amount of interest and fees paid for all such
periods.

Assignment and Transfer Agreement shall
mean an Assignment and Transfer Agreement in the form of Exhibit A hereto.

Attributable Debt in respect of a sale
and leaseback transaction shall mean, at the time of determination, the present
value of the obligation of the lessee for net rental payments during the
remaining term of the lease included in such sale and leaseback transaction
including any period for which such lease has been extended or may, at the
option of the lessor, be extended. Such present value shall be calculated using
a discount rate equal to the rate of interest implicit in such transaction,
determined in accordance with GAAP.

 5
 

 

Availability shall mean as to any
Company at any time the positive difference between: (a) such Company’s
Borrowing Base, and (b) the sum of (i) the outstanding aggregate
amount of all Obligations of such Company, including without limitation, all
Obligations of such Company with respect to Revolving Loans, but excluding the
Letters of Credit, and (ii) the Availability Reserve.

Availability Reserve
shall mean an amount equal to the sum of (without duplication):

(a)           any reserve which Agent may establish
from time to time pursuant to the express terms of this Financing Agreement;
plus

(b)           (i) three (3) months’ rental
payments or similar charges for each Company’s leased premises where its
corporate books and records or accounting system is maintained for which a
Company has not delivered to Agent a landlord’s waiver in form and substance
reasonably satisfactory to Agent, and (ii) three (3) months’ estimated
payments (plus any other fees or charges owing by a Company) to any applicable warehousemen
or third party processor (as determined by Agent in the exercise of its
reasonable business judgment), provided that any of the foregoing
amounts shall be adjusted from time to time hereafter upon (x) delivery to
Agent of any such acceptable waiver, (y) the opening or closing of a
Collateral location where a Company’s corporate books and records or accounting
system is maintained and/or (z) any change in the amount of rental,
storage or processor payments or similar charges; plus

(c)           a monthly reserve for accrued
interest on LIBOR Loans having an Interest Period of more than thirty (30)
days; plus

(d)           such other reserves against
Availability as Agent deems necessary in the exercise of its reasonable
business judgment as a result of (i) negative forecasts and/or trends in a
Company’s business, industry, prospects, profits, operations or financial
condition or (ii) other issues, circumstances or facts that could
otherwise negatively impact a Company or its business, prospects, profits,
operations, industry, financial condition or assets.

Beneficial
Owner shall have the meaning assigned to such term in
Rule 13d-3 and Rule 13d-5 under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”),
except that in calculating the beneficial ownership of any particular “person”
(as that term is used in Section 13(d)(3) of the Exchange Act), such “person”
will be deemed to have beneficial ownership of all securities that such “person”
has the right to acquire by conversion or exercise of other securities, whether
such right is currently exercisable or is exercisable only upon the occurrence
of a subsequent condition.

Borrowing
Base shall mean as to any Company the sum of
(a) eighty five percent (85%) of such Company’s outstanding Eligible
Accounts Receivable, plus (b) seventy percent (70%) of the value of
such Company’s Eligible Inventory, valued at the lower of cost on a first-in,
first-out basis or market value; provided, however, the aggregate
amount advanced hereunder to all of Companies against Eligible Inventory shall
not exceed an aggregate amount equal to the Inventory Loan Cap.

 6
 

 

Business
Day shall mean any day on which the Agent is open for
business in New York, New York, which is not (a) a Saturday, Sunday or
legal holiday in the state of New York or (b) a day on which banking
institutions chartered by the State of New York, the State of Texas or the
United States are legally required to close.

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

CERCLA
shall have the meaning set forth in the definition of “Environmental Laws”.

Canadian
Acquisition shall mean the Acquisition (a) with
respect to a Person, of a Person formed under the laws of Canada or any
province thereof, and (b) with respect to assets, of assets located in
Canada.

Canadian
Subsidiary shall mean a direct or indirect Subsidiary of
a Company, which is organized under Canadian law, and 65% of the Capital Stock
of which is pledged to the Agent.

Capital
Expenditures for any period shall mean the aggregate of
all expenditures of the Obligors during such period that, in conformity with
GAAP, are required to be included in or reflected by the property, plant or
equipment or similar fixed asset account reflected in the balance sheets of the
Obligors.  Notwithstanding the foregoing,
the term “Capital Expenditures” shall not include capital expenditures
consisting of the expenditure of Insurance Proceeds for the purpose specified
in, and in accordance with the provisions of, Section 7.5(b).

Capital
Lease shall mean any lease of property (whether real,
personal or mixed) which, in conformity with GAAP, is accounted for as a
capital lease or a Capital Expenditure on the balance sheets of the Companies.

Capital
Stock shall mean, with respect to any Person, any and all
shares, interests, rights to purchase, warrants, options, participations or
other equivalents (however designated) of such Person’s equity, including all
common stock and preferred stock, any limited or general partnership interest
and any limited liability company membership interest.

Cash
Management Obligations shall mean all obligations,
liabilities, contingent reimbursement obligations, fees, and expenses owing by
a Company to a Lender, and that relates to any service or facility extended to
a Company, including: (a) credit cards, (b) credit card processing
services, (c) debit cards, (d) purchase cards, as well as any other
services or facilities from time to time specified by a Lender, whether direct
or indirect, absolute or contingent, due or to become due, and whether existing
now or in the future, and (e) treasury
management services (including, without limitation, controlled disbursement,
automated clearinghouse transactions, return items, overdrafts, interstate
depository network services and Financial Hedges), as well as any other
services or facilities from time to time specified by a Lender, whether direct
or indirect, absolute or contingent, due or to become due, and whether existing
now or in the future.

 7
 

 

Change
of Control shall mean the occurrence of any of the
following events: (a) the direct or indirect sale, transfer, conveyance or
other disposition (other than by way of merger or consolidation), in one or a
series of related transactions, of all or substantially all of the properties
or assets of the Obligors taken as a whole to any “person” (as that term is
used in Section 13(d)(3) of the Exchange Act); (b) the adoption of a plan
relating to the liquidation or dissolution of the Parent; (c) the consummation
of any transaction (including, without limitation, any merger or consolidation)
the result of which is that any “person” (as that term is used in Section
13(d)(3) of the Exchange Act) becomes the Beneficial Owner, directly or
indirectly, of more than 50% of the Voting Stock of the Parent, measured by
voting power rather than number of shares; and (d) the first day on which a
majority of the members of the Board of Directors of the Parent are not
Continuing Directors.

Chase
Bank Rate shall mean the rate of interest per annum
announced by JPMorgan Chase Bank, N.A. (or any successor thereof), from time to
time, as its prime rate in effect at its principal office in New York
City.  (The prime rate is not intended to
be the lowest rate of interest charged by JPMorgan Chase Bank, N.A. (or any
successor thereof) to its borrowers).

Chase
Bank Rate Loans shall mean any loans or advances pursuant
to this Financ­ing Agreement made or maintained at a rate of interest based
upon the Chase Bank Rate.

Closing
Date shall mean the date that this Financing Agreement
has been duly executed by the parties hereto and delivered to the Agent.

Code
shall mean the Internal Revenue Code of 1986, as amended.

Collateral
shall mean all present and future Accounts, Equipment, Inventory, Documents of
Title, General Intangibles and Other Collateral of the Obligors.

Collateral
Management Fee shall mean the sum paid to the Agent in
accordance with Section 8.7 of this Financing Agreement to offset
the costs (excluding Out-of-Pocket expenses) of the Agent’s personnel in
connection with record keeping, periodic examinations, analyzing and evaluating
the Collateral.

Commitment
shall mean (a) as to each Lender other than the Swingline Lender, each Lender’s
commitment in accordance with this Financing Agreement to make Revolving Loans
(the “Revolving Credit Commitment”),
in the amount of their respective Pro Rata Share, as set forth herein (as
modified by each Assignment and Transfer Agreement delivered by such Lender as
an assignor),or in the Assignment and Transfer Agreement (as modified by each
Assignment and Transfer Agreement delivered by such Lender as an assignor),
executed by each such Lender which becomes a Lender after the Closing Date and
(b) as to the Swingline Lender, the Swingline Lender’s Swingline Commitment.

Company
Group  shall mean each of (a) LSSC and its
consolidated subsidiaries, (b) FTI and its consolidated subsidiaries and
(c) BTCLP and its consolidated subsidiaries.

 8
 

 

Consolidated
Balance Sheet  shall mean a consolidated or compiled, as
applicable, balance sheet for the Companies and their consolidated
subsidiaries, eliminating all inter-company transactions and prepared in
accordance with GAAP.

Consolidating
Balance Sheet  shall mean a Consolidated Balance Sheet
plus consolidating balance sheets for each Company Group, showing all
eliminations of inter-company transactions and prepared in accordance with
GAAP, and including a balance sheet for each Company Group exclusively.

Continuing
Directors shall mean, as of any date of determination,
any member of the Board of Directors of Parent (a) who was a member of such
Board of Directors on the Closing Date (each being a “Current Director”), or (b) who was
nominated for election or elected to such Board of Directors with the approval
of a majority of the Current Directors who were members of such Board of
Directors at the time of such nomination or election and other members of such
Board of Directors (each being an “Approved
Director”) whose nomination or election was approved by a
majority of the directors who were either Current Directors or successor or
additional directors whose nomination or election was approved by a majority of
the Current Directors and Approved Directors.

Copyrights
shall mean all of the Obligors’ present and hereafter acquired copyrights,
registrations, recordings, applications, designs, styles, licenses, marks,
prints and labels bearing any of the foregoing, goodwill, general intangible,
intellectual property and copyright rights and all royalties, cash and non-cash
proceeds thereof.

Default
shall mean any event specified in Section 10.1 hereof which has
occurred and is continuing, whether or not any requirement for the giving of
notice, the lapse of time, or both, or any other condition, event or act, has
been satisfied.

Default
Rate of Interest shall mean a rate of interest per annum
on any Obligations hereunder, equal to the lesser of (a) the Maximum Legal
Rate or (b) the sum of (i) two percent (2%), (ii) the Applicable
Margin for Chase Bank Rate Loans and (iii) the Chase Bank Rate, which the
Agent shall be entitled to charge the Companies on all Obligations due the
Agent and the Lenders by the Companies, as further set forth in Section 10.2
of this Financing Agreement.

Depository
Accounts shall mean the collection accounts, which are
subject to the Agent’s instructions, as specified in Section 3.6 of
this Financing Agreement.

Designated
Subsidiary shall mean any direct or indirect Subsidiary
of Parent formed under the laws of the United States, any state thereof or the
District of Columbia with respect to which Parent sends notice to the Agent
that such Subsidiary is a “Designated Subsidiary”.

Documentation
Fee shall mean subsequent to the Closing Date the Agent’s
standard fees intended to compensate Agent for the use of inside counsel for
matters relating to any and all modifications, waivers, releases, amendments or
additional collateral with respect to this Financing Agreement, the Collateral
and/or the Obligations.

 9
 

 

Documents
of Title shall mean all of the Obligors’ present and
future documents (as defined in the 
UCC), and any and all warehouse receipts, bills of lading, shipping
documents, chattel paper, instruments and similar documents, all whether
negotiable or not and all goods and Inventory relating thereto and all cash and
non-cash proceeds of the foregoing.

Domestic
Acquisition shall mean the Acquisition (a) with
respect to a Person, of a Person formed under the laws of the United States or
any state thereof, and (b) with respect to assets, of assets located in
the continental United States, Alaska or Hawaii and the acquisition of such
assets is made by a Domestic Subsidiary other than a Designated Subsidiary.

Domestic
Subsidiary shall mean a direct or indirect Subsidiary of
a Company formed under the laws of the United States, any state thereof or the
District of Columbia.

Early
Termination Date  shall mean the date on which the Parent
terminates this Financing Agreement or the Revolving Line of Credit which date
is prior to an Anniversary Date.

Early
Termination Fee  shall: (a) mean the fee the Agent on
behalf of the Lenders is entitled to charge the Companies if the Parent
terminates the Revolving Line of Credit or this Financing Agreement on a date
prior to an Anniversary Date (the period from the Early Termination Date to the
Anniversary Date being herein called the “Early
Termination Period”); and (b) be determined by multiplying
the Revolving Line of Credit by (x) one-half of one percent (0.50%) per
annum for the portion, if any, of the Early Termination Period occurring on or
before December 16, 2007, (y) three-eighths of one percent (0.375%)
per annum for the portion, if any, of the Early Termination Period occurring
after December 16, 2007, but on or before December 16, 2008; and
(z) one-quarter of one percent (0.25%) per annum for the portion, if any,
of the Early Termination Period occurring after December 16, 2008, but
prior to an Anniversary Date, in each case for partial years, prorated on the
basis of the number of days from the Early Termination Date to the end of such
partial year.

Early
Termination Period  shall have the meaning set forth in
the definition of “Early Termination Fee”.

EBITDA
shall mean, in any period, all consolidated earnings of the Obligors, before
all (a) interest and tax expenses, accrued or paid and whether or not
capitalized (including amortization of debt issuance costs and original issue
discount, non-cash interest payments, the interest component of any deferred
payment obligations, the interest component of all payments associated with Capital
Leases, imputed interest with respect to Attributable Debt, commissions,
discounts and other fees and charges incurred in respect of letter of credit or
bankers’ acceptance financings, and net of the effect of all payments made or
received pursuant to Financial Hedges), (b) depreciation and
(c) amortization (including amortization of goodwill and other
intangibles) and other non-cash expenses for said period, all determined in
accordance with GAAP on a consistent basis with the latest audited financial
statements of the Companies, but excluding the effect of extraordinary and/or
non-recurring  gains or losses for such
period.

Eligible
Accounts Receivable shall mean, as to any Company, the
gross amount of such Company’s Trade Accounts Receivable that are subject to a
valid, first priority and fully perfected security interest in favor of the
Agent on behalf of the Lenders, subject to Permitted

 10
 

 

Encumbrances which
conform to the warranties contained herein and at all times continue to be
acceptable to the Agent in the exercise of its reasonable business judgment,
less, without duplication, the sum of: (a) any returns, discounts, claims,
credits and allowances of any nature (whether issued, owing, granted, claimed
or outstanding), and (b) reserves for any such Trade Accounts Receivable
that arise from or are subject to or include: (i) sales to the United
States of America, any state or other governmental entity or to any agency,
department or division thereof, except for any such sales as to which such Company’s
has complied with the Assignment of Claims Act of 1940 or any other applicable
statute, rules or regulation, to the Agent’s satisfaction in the exercise of
its reasonable business judgment; (ii) foreign sales other than sales
(x) secured by letters of credit (in form and substance satisfactory to
the Agent) issued or confirmed by, and payable at, banks having a place of
business in the United States of America and payable in United States currency,
or (y) to customers residing in Canada provided such sales
otherwise comply with all of the other criteria for eligibility hereunder, are
payable in United States currency or not more than $7,500,000 in Canadian
currency and such accounts receivable do not exceed $7,500,000 in the aggregate
at any one time for all Companies; (iii) accounts that remain unpaid more
than sixty (60) days from the due date or ninety (90) days from invoice date;
(iv) contra accounts; (v) sales to any subsidiary, or to any company
affiliated with any of the Companies in any way; (vi) bill and hold
(deferred shipment) or consignment sales, except that Rack Transfer Sales to
those customers listed on Schedule 2 hereto (as such Schedule 2
may be supplemented from time to time hereafter by the Companies upon written
notice to Agent) shall be eligible; (vii) sales to any customer which is
(A) insolvent, (B) the debtor in any bankruptcy, insolvency,
arrangement, reorganization, receivership or similar proceedings under any
federal or state law, (C) negotiating, or has called a meeting of its
creditors for purposes of negotiating, a compromise of its debts or
(D) financially unacceptable to the Agent or has a credit rating
unacceptable to the Agent all as determined in Agent’s reasonable business
judgment; (viii) all sales to any customer if fifty percent (50%) or more
of either (y) all outstanding
invoices to such customer or (z) the aggregate dollar amount of all
outstanding invoices to such customer, are unpaid more than ninety (90) days
from invoice date; (ix)  pre-billed receivables and receivables arising
from progress billing; (x) an amount representing, historically, returns,
discounts, claims, credits and allowances, credit balances, cross aged
balances, and applicable terms; (xi) sales not payable in United States
currency (except up to $7,500,000 in the aggregate at any one time of accounts
receivable of all of the Companies payable in Canadian currency); and
(xii) any other reasons deemed necessary by the Agent in its reasonable
business judgment, including those which are customary either in the commercial
finance industry or in the lending practices of the Agent or the Lenders.

Eligible
Inventory  shall mean, as to any Company, the gross amount
of such Company’s Inventory that is subject to a valid, first priority and
fully perfected security interest in favor of the Agent on behalf of the
Lenders, subject to Permitted Encumbrances, and which conforms to the
warranties contained herein and which at all times continue to be acceptable to
the Agent in the exercise of its reasonable business judgment, excluding,
without duplication, any (a) materials and supplies (other than raw
materials), (b) goods not present in the United States of America other
than goods in Canada in which Agent on behalf of Lenders has a valid, first priority
perfected security interest, (c) goods returned or rejected by the
Companies’ customers (other than goods that are undamaged and resalable in the
normal course of business and goods to be returned to the Companies’
suppliers), (d) goods in transit to third parties (other than the

 11
 

 

goods in transit
to agents, warehouses, finishers and processors for the Companies for which
such warehouseman or third party finisher or processor has executed a notice of
security interest agreement (in form and substance reasonably satisfactory to
the Agent)), or Inventory in possession of a warehouseman, bailee, third party
processor or other third party, unless such warehouseman, bailee, processor or
other third party has executed a notice of security interest agreement (in form
and substance reasonably satisfactory to the Agent) and the Agent shall have a
first priority perfected security interest in such Inventory, and (e) any
reserves required by the Agent in its reasonable discretion determined in
accordance with Agent’s customary practices, including reserves for (i) any
Inventory purchased or sold to any affiliate of the Company, special order
goods, mill rejects, discontinued, slow-moving and obsolete Inventory, market
value declines, bill and hold (deferred shipment), consignment sales, shrinkage
and any applicable customs, freight, duties or taxes and (ii) any Inventory
located at Real Estate leased by any Obligor for which the Agent has not
received a landlord lien waiver acceptable to Agent.

Employee
Plan shall mean any employee benefit plan, program
or policy with respect to which each Company or any ERISA Affiliate may have
any liability or any obligation to contribute, other than a Plan or a
Multiemployer Plan.

Environmental
Laws shall
mean applicable federal, state or local laws, rules or regulations, and any
applicable judicial interpretations thereof, including any judicial or
administrative order, judgment, permit, approval decision or determination, in
each case pertaining to conservation or protection of the environment, in
effect at the time in question, including the Clean Air Act, the Comprehensive
Environmental Response, Compensation and Liability Act (“CERCLA”), the Federal Water Pollution
Control Act, the Occupational Safety and Health Act, the Resource Conservation
and Recovery Act, the Safe Drinking Water Act, the Toxic Substances Control
Act, the Superfund Amendments and Reauthorization Act of 1986, the Hazardous
Materials Transportation Act and analogous state and local laws as may be
amended from time to time thereby imposing either more or less stringent
requirements as relates to activity occurring after the date hereof of any such
amendments.

Equipment
shall mean all of the Obligors’ present and hereafter acquired equipment
(as defined in the UCC) including, without limitation, all machinery,
equipment, furnishings and fixtures, and all additions, substitutions and
replacements thereof, wherever located, together with all attachments,
components, parts, equipment and accessories installed thereon or affixed
thereto and all proceeds of whatever sort.

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

ERISA
Affiliate shall mean (a) any Person which, together with
any Obligor, is treated as a “single employer” under Section 414(b) or (c) of
the Code, or, for the purpose of Section 302 of ERISA and/or Section 412, 4971,
4977 and/ or each “applicable section” under Section 414(t)(2) of the Code,
under Section 414(b), (c), (m) or (o) of the Code.

Eurocurrency
Reserve Requirements for any day, as applied to a LIBOR
Loan, shall mean the aggregate (without duplication) of the rates (expressed as
a decimal fraction) of reserve requirements in effect with respect to the Agent
and/or any present or future Lender on such day

 12
 

 

(includ­ing,
without limitation, basic, supplemental, marginal and emergency reserves under
any regulations of the Board of Governors of the Federal Reserve System or
other governmental authority having jurisdiction with respect thereto, as now
and from time to time in effect), dealing with reserve requirements prescribed
for Eurocurrency funding (currently referred to as “Eurocurrency Liabilities”
in Regulation D of such Board) maintained by the Agent and/or any such Lenders
(such rate to be adjusted to the nearest one sixteenth of one percent (1/16 of
1%) or, if there is not a nearest one sixteenth of one percent (1/16 of 1%), to
the next higher one sixteenth of one percent (1/16 of 1%)).

Events
of Default shall have the meaning provided for in Section 10.1
of this Financing Agreement, and any of such Events of Default being an “Event of Default”.

Exchange
Act shall have the meaning set forth in the definition of
“Beneficial Owner”.

Excluded
Principal Payments shall mean (a) principal payments
and prepayments of the Obligations, (b) principal payments and prepayments
made with respect to the Indebtedness that is repaid in connection with a Permitted Refinancing, and
(c) prepayments, redemptions and/or purchases of Subordinated Debt by one
or more Obligors in an amount equal to the aggregate net proceeds of the sale
of Capital Stock to third parties made by one or more Obligors after the
Closing Date plus any additional amount as long as the aggregate Availability
of all Companies immediately after any such prepayments, redemptions and/or
purchases of Subordinated Debt is at least $30,000,000.

Existing
Financing Agreement  shall have the meaning set forth in
recitals hereof.

Fee
Letter shall mean that certain letter dated of the date
hereof from the Companies to Agent.

Financial
Hedge shall mean (a) a swap, collar, floor, cap or
other contract which is intended to reduce or eliminate the risk of
fluctuations in interest rates, (b) a foreign exchange, currency hedging,
commodity hedging or other contract which is intended to reduce or eliminate
the market risk of holding currency or a commodity in either the cash or future
markets, or (c) any contract or agreement involving a dollar-denominated
or cross-currency interest rate exchange, forward currency exchange, interest
rate cap, collar protection, rate swap, basis swap, commodity swap, commodity
option, equity or equity index swap, equity or equity index option, bond
option, floor, forward rate currency or interest rate options, puts and
warrants or any combination of any of the foregoing, which Financial Hedge is
entered into by any Obligors with any Person under the laws of a jurisdiction
in which such contracts are legal and enforceable (except as enforceability may be limited by the United States
Bankruptcy Code and all applicable similar laws affecting the rights of
creditors and general principles of equity); provided that, (i) all
documentation for Financial Hedges must substantially conform to ISDA standards
and (ii) each such Financial Hedge shall be or shall have been incurred in
the ordinary course of business of the Obligors.

Financing
Agreement shall mean this Second Amended and Restated
Financing Agreement (as same may be amended, modified or restated from time to
time).

 13

 

Financial
Statement Delivery Date shall have the meaning set forth
in the definition of “Applicable Margin”.

Fiscal
Quarter shall mean, with respect to the Companies, each
three (3) month period ending on March 31st, June 30th,
September 30th and December 31st of
each Fiscal Year.

Fiscal
Year shall mean each twelve (12) month period commencing
on January 1st of each year and ending on the following
December 31st.

Fixed
Charge Coverage Ratio shall mean, for the relevant
period, without duplication and on a consolidated basis, the ratio determined
by dividing (a) EBITDA less Capital Expenditures and cash taxes for such
period, by (b) the sum of the following (collectively, “Fixed Charges”) (i) all cash
interest expense, cash dividends and cash distributions for such period (other
than Permitted Intercompany Balances), and (ii) the amount of principal
repaid or scheduled to be repaid on the Indebtedness of the Obligors during
such period other than Excluded Principal Payments.  If an Obligor incurs, assumes, guarantees,
repays, repurchases or redeems any Indebtedness (other than ordinary working
capital borrowings) or issues, repurchases or redeems common or preferred stock
subsequent to the commencement of the period for which the Fixed Charge
Coverage Ratio is being calculated and on or prior to the date on which the
event for which the calculation of the Fixed Charge Coverage Ratio is made (the
“Calculation Date”), then
the Fixed Charge Coverage Ratio will be calculated giving pro forma effect to
such incurrence, assumption, guarantee, repayment, repurchase or redemption of
Indebtedness, or such issuance, repurchase or redemption of common or preferred
stock, and the use of the proceeds as if the same had occurred at the beginning
of the applicable measurement period.

In addition, for
purposes of calculating the Fixed Charge Coverage Ratio:

(1)           acquisitions that have been made by
an Obligor, including through mergers or consolidations and including any
related financing transactions, during the measurement period or subsequent to
such measurement period and on or prior to the Calculation Date will be given
pro forma effect as if they had occurred on the first day of the measurement
period and EBITDA for such measurement period will be calculated on a pro forma
basis in accordance with Regulation S-X under the Securities Act;

(2)           the EBITDA attributable to
discontinued operations, as determined in accordance with GAAP, and operations
or businesses disposed of prior to the Calculation Date, will be excluded; and

(3)           the Fixed Charges attributable to
discontinued operations, as determined in accordance with GAAP, and operations
or businesses disposed of prior to the Calculation Date, will be excluded, but
only to the extent that the obligations giving rise to such Fixed Charges will
not be obligations of the Companies following the Calculation Date.

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

 14
 

 

Foreign
Acquisition shall mean (a) with respect to a Person,
the Acquisition of a Person formed under laws other than of the United States
or Canada, and (b) with respect to assets, the Acquisition of assets not
located in the continental United States, Alaska, Hawaii or Canada.  A Canadian Acquisition shall also be deemed
to be a Foreign Acquisition unless Parent elects by notice in writing to the
Agent to include the Person acquired or the Subsidiary of Parent which acquires
the Canadian assets as an “Obligor” hereunder.

Foreign
Subsidiary shall mean a direct or indirect Subsidiary of
a Company which is not a Domestic Subsidiary or a Canadian Subsidiary.

GAAP
shall mean generally accepted accounting principles in the United States of
America as in effect from time to time and for the period as to which such
accounting principles are to apply, provided that if the Companies
modify their accounting principles and procedures as applied as of the Closing
Date, the Companies shall provide such statements of reconciliation as shall be
in form and substance reasonably acceptable to the Agent and the Required
Lenders.  If any changes in GAAP require
any changes in the accounting methods or results of the Companies, Agent will,
upon request by Parent, analyze the circumstances and the changes and make a
good-faith proposal to Parent and the other Lenders with respect to appropriate
adjustments to the financial covenants herein to take into account such GAAP
changes.

General
Intangibles shall mean all of the Obligors’ present and
hereafter acquired general intangibles (as defined in the UCC), and shall
include, without limitation, all present and future right, title and interest
in and to: (a) all Trademarks, tradenames, corporate names, business
names, fictitious business names, logos and any other designs or sources of
business identities, indicative of origin, (b) Patents, together with any
improvements on said Patents, utility models, industrial models, and designs,
(c) Copyrights, (d) trade secrets, (e) licenses, permits and
franchises, except to the extent the granting of a security interest therein by
any Obligor to Agent is prohibited by applicable law or by the terms and
provisions of the written agreement, document or instrument creating or
evidencing such licenses, permits or franchises (other than to the extent that
such prohibition, or the term or provision for such prohibition, is rendered
ineffective pursuant to Section 9-406(d) or Section 9-407(a) of the UCC or
other applicable law, including the United States Bankruptcy Code or principles
of equity); provided, however, that (i) immediately upon the
ineffectiveness, lapse or termination of any such prohibition or term or
provision providing for such prohibition, the Collateral shall include, and
such Obligor shall be deemed to have granted a security interest to Agent in, all
such licenses, permits or franchises as if such prohibition, or term or
provision providing for such prohibition, had never been in effect, and
(ii) in no event under any circumstances shall “accounts” (as such term is
defined in the UCC) or “inventory” (as such term is defined in the UCC) of any
Obligor or any contract rights or license agreements necessary for any Obligor
to sell, license or manufacture its Inventory or for Agent and Lenders to fully
realize on the Collateral upon the occurrence of an Event of Default be
excluded from Collateral, (f) all applications with respect to the
foregoing, (g) all right, title and interest in and to any and all
extensions and renewals, (h) goodwill with respect to any of the
foregoing, (i) any other forms of similar intellectual property, (j) all
Pledged Equity, and (k) all customer lists, distribution agreements,
supply agreements, indemnification rights and tax refunds, together with all
monies and claims for monies now or hereafter due and payable in connection
with any of the foregoing or otherwise, and all cash and non-cash
proceeds thereof,

 15
 

 

including, without
limitation, the proceeds or royalties of any licensing agreements between any
Obligor and any licensee of any of such Obligor’s General Intangibles.

Guaranties
shall mean the guaranty documents executed and delivered by the Guarantors
guaranteeing the Obligations.

Guarantors
shall mean (a) each of the Companies, (b) each of the Guarantors (as
defined in the first paragraph of this Financing Agreement), and (c) any
other Person who now or may hereafter guarantee payment or performance of all
or any part of the Obligations.

Indebtedness
shall mean, without duplication, all liabilities, contingent or otherwise,
which are any of the following: (a) obligations in respect of money
(borrowed or otherwise) or for the deferred purchase price of property,
services or assets, other than accounts payable included in current liabilities
and incurred in the ordinary course of business, or (b) lease obligations
which, in accordance with GAAP, have been, or which should be capitalized.

Insurance
Proceeds shall mean proceeds or payments from an
insurance carrier with respect to any loss, casualty or damage to Collateral.

Intercompany
Subordination Agreement  shall have the meaning set forth
in the definition of “Subordination Agreement”.

Interest Period shall mean:

(a)           initially (but subsequent to seven
days from the Closing Date), as the case may be a one month, two month, three
month or six month period commencing on the borrowing or conversion date with
respect to a LIBOR Loan and ending one, two, three or six months thereafter, as
applicable; and

(b)           thereafter, at the option of the
Companies, any one month, two month, three month or six month period commencing
on the last day of the immediately preceding Interest Period applicable to such
LIBOR Loan and ending one, two, three or six months thereafter, as applicable;

provided
that, the foregoing provisions relating to Interest Periods are subject to the
following:

(i)            if any Interest Period would
otherwise end on a day which is not a Working Day, that Interest Period shall
be extended to the next succeeding Working Day, unless the result of such
extension would extend such payment into another calendar month in which event
such Interest Period shall end on the immediately preceding Business Day;

(ii)           any Interest Period that begins on
the last Working Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month, at the end of such Interest
Period) shall end on the last Working Day of a calendar month; and

 16
 

 

(iii)          for purposes of determining the
availability of Interest Periods, such Interest Periods shall be deemed
available if (x) JPMorgan Chase Bank, N.A. (or any successor thereof)
quotes an applicable  rate to the Agent
or the Agent determines the LIBO Rate, as provided in the definition of LIBOR,
(y) the LIBO Rate determined by JPMorgan Chase Bank, N.A. (or any
successor thereof) or the Agent on the basis of such quote will adequately and
fairly reflect the cost of maintaining or funding its loans bearing interest at
LIBOR, for such Interest Period, and (z) such Interest Period will end on
or before the earlier of the Anniversary Date or the last day of the then
current term of this Financing Agreement. If a requested Interest Period shall
be unavailable in accordance with the foregoing sentence, the Companies shall
continue to pay interest on the Obligations at the applicable per annum rate
based upon the Chase Bank Rate.

Inventory
shall mean all of the Obligors’ present and hereafter acquired inventory (as
defined in the UCC) and including, without limitation, all oilfield products,
oil country tubular goods, specialty tubing, rolled steel tubular products, raw
steel, steel tubing, pipe, casing, line pipe, standard pipe, mechanical pipe,
coupling pipe, structural tubing and blooms, raw materials, including steel
slabs, coils and ingots, and all other merchandise, inventory and goods, and
all additions, substitutions and replacements thereof, wherever located,
together with all goods and materials used or usable in manufacturing,
processing, packaging or shipping same; in all stages of production -
from raw materials through work-in-process to finished goods -
and all proceeds thereof of whatever sort.

Inventory
Loan Cap shall mean an amount equal to $155,000,000.

Investment
Property shall mean all now owned or hereafter acquired
investment property (as defined in the UCC) and all proceeds thereof.

Issuing
Bank shall mean the bank issuing Letters of Credit for
the Companies.

Letters
of Credit shall mean all letters of credit issued with
the assistance of the Agent in accordance with Section 5 hereof by
the Issuing Bank for or on behalf of any of the Companies.

Letter
of Credit Guaranty shall mean the guaranty delivered by
the Agent to the Issuing Bank of any Company’s reimbursement obligations under
the Issuing Bank’s reimbursement agreement, application for Letter of Credit or
other like document.

Letter
of Credit Guaranty Fee shall mean the fee the Agent may
charge the Companies under Section 8.3 of this Financing Agreement
for:  (a) issuing a Letter of Credit
Guaranty and/or (b) otherwise aiding the Companies in obtaining Letters of
Credit, all pursuant to Section 5 hereof.

Letter
of Credit Sub-Line shall mean the aggregate amount of
$75,000,000, consisting of a line for standby Letters of Credit and for
documentary Letters of Credit.

LIBO
Rate  shall have the meaning set forth in the definition
of “LIBOR”.

 17
 

 

LIBOR
shall mean at any time of determination, and subject to availability, for each
applicable Interest Period, a variable rate of interest (the “LIBOR Rate” or “LIBO Rate”) equal to: (a) at the
Agent’s election (i) the applicable LIBOR quoted to the Agent by JPMorgan
Chase Bank, N.A. (or any successor thereof), or (ii) the rate of interest
determined by the Agent at which deposits in U.S. Dollars are offered for the
relevant Interest Period based on information presented on Telerate Systems at
Page 3750 as of 11:00 a.m. (London time) on the day which is two (2) Business
Days prior to the first day of such interest period; provided that if at
least two such offered rates appear on the Telerate System at Page 3750 in
respect of such Interest Period, the arithmetic mean of all such rates (as
determined by the Agent) will be the rate used; divided by (b) a number
equal to 1.0 minus the aggregate (but without duplication) of the rates
(expressed as decimal fraction) of Eurocurrency Reserve Requirements in effect
on the day which is two (2) Business Days prior to the beginning of such
Interest Period.

LIBOR
Lending Office with respect to the Agent, shall mean the
office of JPMorgan Chase Bank, N.A. or any successor thereof maintained at 270
Park Avenue, New York, NY  10017.

LIBOR
Loan shall mean any loans made pursuant to this Financing
Agreement at such time as they are made and/or are being maintained at a rate
of interest based upon  LIBOR, provided
that (a) no Default or Event of Default has occurred hereunder, which has
not been waived in writing by the Required Lenders or any Default has occurred
which has not been cured to the satisfaction of Agent prior to becoming an
Event of Default, and (b) no LIBOR Loan shall be made with an Interest
Period that ends after the An­niversary Date or any other applicable Early
Termination Date.

LIBOR
Rate  shall have the meaning set forth in the definition
of “LIBOR”.

Line
of Credit Fee shall: (a) mean the fee due the Agent
at the end of each month for the Revolving Line of Credit, and (b) be
determined by multiplying the difference between (i) the Revolving Line of
Credit and (ii) the sum of (x) the average daily balance of Revolving
Loans and Swingline Loans of the Companies plus (y) the average daily
balance of Letters of Credit outstanding for said month, by 0.325% per annum
for the number of days in said month.

Loan
Documents shall mean this Financing Agreement, any
promissory notes, the other closing documents and any other ancillary loan and
security agreements executed from time to time by any Obligor in connection
with this Financing Agreement, all as may be renewed, amended, extended,
increased or supplemented from time to time.

Loan
Facility Fee shall mean the fee payable to the Agent and
the Lenders (as applicable) in accordance with, and pursuant to, the provisions
of Section 8.6 of this Financing Agreement.

Margin
Period  shall have the meaning set forth in the definition
of “Applicable Margin”.

Material
Acquisition shall mean a Permitted Acquisition for which
the aggregate amount of cash (whether cash on hand or cash provided for
Revolving Loans) and assumed debt consideration exceeds $10,000,000.

 18
 

 

Material
Adverse Effect shall mean, relative to any occurrence of
whatever nature (including any adverse determination in any litigation,
arbitration or governmental investigation or proceeding), (a) a material
adverse effect on the financial condition, business, operations, or assets of
the Obligors, taken as a whole, (b) a material impairment of the ability
of the Obligors, taken as a whole, to perform the obligations of the Obligors
under the Loan Documents or (c) an impairment of the validity or
enforceability of any Loan Document in any manner which materially affects the
collective material rights and/or material benefits intended to be bestowed on
the Agent and Lenders under the Loan Documents.

Material
Obligor shall mean each Obligor which has assets with a
book value of Five Hundred Thousand Dollars ($500,000) or more as of the
date in question or which had revenues of Five Hundred Thousand Dollars ($500,000)
or more for the calendar year preceding the date in question; provided
that an intermediate holding company shall not be deemed to be a Material
Obligor unless it has assets other than stock of Subsidiaries or revenues
independent of its Subsidiaries which meet the foregoing criteria.

Maximum
Legal Rate shall mean the maximum lawful interest rate
which may be contracted for, charged, taken, received or reserved under this
Financing Agreement by the Agent and/or the Lenders in accordance with applicable
state or federal law (whichever provides for the highest permitted rate),
taking into account all items contracted for, charged or received in connection
with the Obligations evidenced hereby which are treated as interest under the
applicable state or federal law, as such rate may change from time to
time.  To the extent that any of the
optional interest rate ceilings provided in Chapter 303 of the Texas Finance
Code, as amended from time to time (the “Texas
Finance Code”), apply and may be available for application to
any loan(s) or extension(s) of credit evidenced by this Financing Agreement
and/or any promissory notes delivered in connection with this Financing
Agreement for the purpose of determining the maximum allowable interest under
the Loan Documents pursuant to the Texas Finance Code, the applicable interest
rate ceiling shall be the “weekly ceiling” (as such term is defined in
Section 303.003 of the Texas Finance Code) from time to time in effect; provided,
however, that at any  time the “weekly
ceiling” shall be less that 18%, or more than 24%, per annum, the provisions of
Section 303.009(a), or Section 303.009(b), respectively, of the
Texas Finance Code shall control for purposes of such determination.

MPM
shall mean Hengyang Valin MPM Steel Tube Co. Ltd., a subsidiary of VTW.

Multiemployer
Plan shall
mean any plan which is a “multiemployer plan” (as such term is defined in
Section 4001(a)(3) of ERISA) to which each Company or any ERISA Affiliate
contributes or has any obligation or liability to make contributions, including
any withdrawal liability, contingent or otherwise.

Obligations
shall mean all loans, advances and extensions of credit made or to be made
by the Agent and/or the Lenders to the Companies, or any one of them, or to others
for any of the Companies’ account (including, without limitation, all Revolving
Loans, all Swingline Loans, Letter of Credit Guaranties and the Cash Management
Obligations) at the Companies’ request or as otherwise permitted under this
Financing Agreement; any and all indebtedness and obligations which may at any
time be owing by the Obligors, or any one of them, to the Agent and/or the

 19
 

 

Lenders under any
Loan Document, whether now in existence or incurred by any of the Obligors from
time to time hereafter while still a Subsidiary of Parent; whether secured by
pledge, lien upon or security interest in any of the Obligors’ Collateral,
assets or property or the assets or property of any other Person; whether such
indebtedness is absolute or contingent, joint or several, matured or unmatured,
direct or indirect and whether the Obligors, or any one of them, are liable to
the Agent and/or the Lenders for such indebtedness as principal, surety,
endorser, guarantor or otherwise.

Obligor
shall mean each Company and each Guarantor, and “Obligors” shall mean, collectively, all of the Companies
and all of the Guarantors.

Original
Financing Agreement  shall have the meaning set forth in
the recitals hereof.

Other
Collateral shall mean all of the Obligors’ now owned and
hereafter acquired lockbox, blocked account and any other deposit accounts
maintained with any bank or financial institutions into which the proceeds of
Collateral are or may be deposited and all other deposit accounts; all
Investment Property (including, without limitation, the Pledged Equity); all
cash and other monies and property in the possession or control of the Agent
and/or the Lenders; all books, records, ledger cards, disks and related data
processing software at any time evidencing or containing information relating
to any of the Collateral described herein or otherwise necessary or helpful in
the collection thereof or realization thereon; all investment property, and all
cash and non-cash proceeds of the foregoing.

Out-of-Pocket
Expenses shall mean all of the Agent’s (and the Lenders’
upon the occurrence and during the continuance of an Event of Default which is
not waived by the Required Lenders), reasonable, reasonably documented, present
and future expenses incurred relative to this Financing Agreement or any other
Loan Documents, whether incurred heretofore or hereafter, which expenses shall
include, without being limited to: the cost of record searches, all costs and
expenses incurred by the Agent in opening bank accounts, depositing checks, receiving
and transferring funds, and wire transfer charges, any charges imposed on the
Agent due to returned items and “insufficient funds” of deposited checks and
the Agent’s standard fee relating thereto, any amounts paid by the Agent,
incurred by or charged to the Agent and/or the Lenders by the Issuing Bank
under the Letter of Credit Guaranty or any of the Companies’ reimbursement
agreement, application for Letter of Credit or other like document which
pertains either directly or indirectly to such Letters of Credit, travel,
lodging and similar expenses of the Agent’s personnel in inspecting and
monitoring the Collateral from time to time hereunder, any applicable counsel
fees and disbursements, fees and taxes relative to the filing of financing
statements, and all expenses, costs and fees set forth in Section 10.3
of this Financing Agreement.

Patents
shall mean all of the Obligors’ present and hereafter acquired patents, patent
applications, registrations, any reissues or renewals thereof, licenses, any
inventions and improvements claimed thereunder, and all general intangible,
intellectual property and patent rights with respect thereto of the Obligors
and all income, royalties, cash and non-cash proceeds thereof.

 20
 

 

PBGC
shall mean Pension Benefit Guaranty Corporation, established pursuant to
Section 4002 of ERISA, or a successor thereto.

Permitted
Acquisition shall mean (a) an Acquisition of 90% or
more of the Capital Stock of a Person, or all or a part of the assets of, or
all or a part of a division of a Person, if the Person, assets and/or division
acquired are engaged primarily in a Qualified Business that meets the
conditions precedent and other criteria for an Acquisition Facility Loan set
forth in Section 4 of this Financing Agreement, whether or not the
proceeds of any Acquisition Facility Loan will be used in connection with such
Acquisition (provided, however, the criteria set forth in the
first sentence of Section 4.1(a) shall not be applicable if, in
connection with such Acquisition (i) the proceeds of an Acquisition Facility
Loan will not be used, (ii) Availability (which shall include the Letters of
Credit for purposes of this definition) exceeds $125,000,000 before and after
giving effect to such Acquisition, and (iii) no Indebtedness will be incurred
to finance or in contemplation of such Acquisition (each Acquisition satisfying
the criteria set forth in this proviso being an “Unfinanced Acquisition”)), (b) the creation of one or
more Domestic Subsidiaries engaged in a Qualified Business as long as any such
new Domestic Subsidiary other than a Designated Subsidiary executes such
documentation as if such Subsidiary was a Domestic Acquisition as required by Section 4.5
hereof, and (c) the creation of a Foreign Subsidiary engaged in a
Qualified Business, and provided, however, no more than
$10,000,000 in the aggregate of cash (whether as equity or loans), assumed debt
and assets may be used to invest in any Foreign Acquisitions, Foreign
Subsidiaries or Designated Subsidiaries during any Fiscal Year.

Permitted
Encumbrances shall mean: (a) liens existing on the
date hereof on specific items of Equipment and listed on Schedule 1
hereto and other liens expressly permitted, or consented to in writing by the
Agent and/or the Required Lenders; (b) Purchase Money Liens;
(c) liens of local or state authorities for franchise or other like taxes,
provided that the aggregate amounts of such liens shall not exceed
$250,000 in the aggregate at any one time; (d) statutory and contractual
liens of landlords and of mortgagees of landlords and liens of carriers,
warehousemen, mechanics, materialmen and other like liens imposed by law or
otherwise, created in the ordinary course of business and for amounts not yet
due (or which are being disputed or contested in good faith, by appropriate
proceedings or other appropriate actions which are sufficient to prevent
imminent foreclosure of such liens) and with respect to which adequate reserves
or other appropriate provisions are being maintained by each of the Obligors,
as applicable, in accordance with GAAP; (e) deposits made (and the liens
thereon) in the ordinary course of business of any of the Obligors (including,
without limitation, security deposits for leases, indemnity bonds, surety bonds
and performance and appeal bonds and letters of credit serving such purposes)
in connection with workers’ compensation, unemployment insurance and other
types of social security benefits or to secure the performance of tenders,
bids, contracts (other than for the repayment or guarantee of borrowed money or
purchase money obligations), statutory obligations and other similar
obligations; (f) easements (including, without limitation, reciprocal
easement agreements and utility agreements), zoning restrictions,
encroachments, minor defects or irregularities in title, variation and other
restrictions, charges or encumbrances (whether or not recorded) affecting the
Real Estate, if applicable, and which in the aggregate (A) do not
materially interfere with the occupation, use or enjoyment by the Obligors in
their business of the property so encumbered and (B) in the reasonable
business judgment of

 21
 

 

the Agent do not
materially and adversely affect the value of such Real Estate; and
(g) liens granted the Agent by the Obligors or any one of them;
(h) liens of judgment creditors provided such liens do not exceed,
in the aggregate, at any time, $250,000 (other than liens bonded or insured to
the reasonable satisfaction of the Agent); (i) liens for taxes not yet due
and payable; (j) liens for taxes which are being diligently disputed or
contested in good faith by the Obligors by appropriate proceedings and which
liens are not (y) senior to the liens of the Agent or (z) for taxes
due the United States of America or any state thereof having similar priority
statutes, as further set forth in Section 7.6 hereof;
(k) without duplication of any of the foregoing, statutory, common law and
contractual warranty claims in favor of purchasers of the Obligors’ Inventory;
and (l) liens on assets acquired in a Permitted Acquisition that secure
only indebtedness permitted to be assumed in such Permitted Acquisition.

Permitted Financial Investments shall
mean the following kinds of investments:

(a)           investments in certificates of
deposit in United States dollars maturing within one year from the date of
issuance thereof, and overnight investments, (i) issued by a bank or trust
organized under the laws of the United States or any state thereof, having
capital, surplus and undivided profits aggregating at least $500,000,000, or
(ii) which are fully insured by the Federal Deposit Insurance Corporation;

(b)           commercial paper maturing in one year
or less from the date of issuance and which is, at the time of acquisition
thereof, rated A-1 or better by Standard & Poor’s Rating Services, a
division of The McGraw-Hill Companies, Inc. or P-1 or better by Moody’s
Investors Service, Inc.;

(c)           debt instruments of a domestic issuer
which matures in one year or less and which are, at the time of acquisition
thereof, rated A-1 or better by Standard & Poor’s Ratings Services, a
division of The McGraw-Hill Companies, Inc. of P-1 or better by Moody’s
Investors Service, Inc.;

(d)           marketable direct obligations issued
or unconditionally guaranteed by the United States government or issued by any
agency thereof and backed by the full faith and credit of the United States, as
the case may be, in each case maturing no later than one year from the date of
acquisition;

(e)           money market, mutual or similar funds
that invest in obligations referred to in clauses (a) through (d)
of this definition, in each case having assets in excess of $500,000,000;

(f)            demand deposit accounts which are
maintained in the ordinary course of business; and

(g)           Repurchase obligations of any
Qualified Commercial Bank with a term of not more than seven days for
underlying securities of the types described in subparagraphs (a), (b), (c),
and (d) above.

 22
 

 

Permitted
Indebtedness  shall mean: (a) current Indebtedness
maturing in less than one year and incurred in the ordinary course of business
for raw materials, supplies, equipment, services, taxes or labor; (b) the
Indebtedness secured by Purchase Money Liens; (c) Subordinated Debt;
(d) Indebtedness arising under the Letters of Credit and this Financing
Agreement; (e) deferred taxes and other expenses incurred in the ordinary
course of business; (f) Permitted Refinancings; (g) Permitted
Intercompany Balances; (h) Indebtedness of a Target acquired pursuant to an
Unfinanced Acquisition so long as such Indebtedness existed before the consummation
of such Unfinanced Acquisition and was not incurred in contemplated thereof;
and (i) other Indebtedness existing on the date of execution of this
Financing Agreement and listed in the most recent financial statement delivered
to the Agent and/or the Lenders or otherwise disclosed to the Agent and/or the
Lenders in writing prior to the Closing Date.

Permitted
Intercompany Balances shall mean loans, advances,
dividends, distributions, inter-company accounts, transfers and investments
(including, but not limited to, loans made pursuant to the concentrated cash
management system for collections of accounts receivable or disbursements to
trade creditors) by any Obligor in, with or to any other Obligor; provided
that the Company Group of which such lender and borrower (or transferor and
transferee, as the case may be) is a part is Solvent immediately before and
after giving effect thereto.

Permitted
Merger shall mean (a) the merger or consolidation of
any Guarantor with or into any other Guarantor, (b) the merger or
consolidation of any Guarantor with or into any Company as long as such Company
is the surviving Person, (c) the merger or consolidation of a Company into
another Company, (d) conversion of an Obligor into a different type of
entity, and (e) a merger or consolidation which is a Permitted
Acquisition.

Permitted
Refinancing  shall mean a refinancing of any Indebtedness
otherwise permitted hereunder (either with the same payees or different
financing sources), including a restructure or restatement of such existing
Indebtedness or a new loan to repay such existing Indebtedness, so long as
(a) the terms of the refinanced Indebtedness are not materially more
favorable to the payee(s) and are not materially less favorable to the Lenders
than the existing Indebtedness which was refinanced, (b) no Default or
Event of Default will exist immediately after the completion of such
refinancing, and (c) if the Indebtedness being refinanced is subordinated
in right of payment to the Obligations, such refinancing Indebtedness is
subordinated in right of payment to the Obligations at least to the same extent
as the Indebtedness being refinanced.

Person
shall mean any individual, partnership, joint venture, firm, corporation,
limited liability company or partnership, association, trust or other
enterprise or any government or political subdivision or any agency, department
or instrumentality thereof.

Plan shall mean any employee pension benefit
plan (as defined in Section 3(2) of ERISA), subject to Title IV of ERISA or
Section 412 of the Code, other than a Multiemployer Plan, with respect to
which Parent, its Subsidiaries or an ERISA Affiliate contributes or has an
obligation or liability to contribute, including any such plan that may have
been terminated.

Pledged
Equity shall mean the Capital Stock owned by the Obligors
(other than the Capital Stock issued by Parent), provided that only up
to 65% of the Capital Stock issued a Foreign Subsidiary will be included.

 23
 

 

Pro
Rata Share shall mean, as to each Lender at any time, a
fraction (expressed as a percentage), the numerator of which is the amount of
such Lender’s Commitment at such time and the denominator of which is the
aggregate amount of all Commitments at such time (or if the Commitments of the
Lenders hereunder have terminated, the numerator of which is the principal
amount of loans then owed to such Lender hereunder and the denominator of which
is the principal amount of loans then owed to all Lenders hereunder, as
reflected by CITBC’s records).

Purchase
Money Liens shall mean liens on any item of equipment
acquired after the date of this Financing Agreement, provided that
(a) each such lien shall attach only to the property to be acquired, and
additions and accessions thereto, (b) a description of the property so acquired
is furnished to the Agent, and (c) the debt incurred in connection with
such acquisitions shall not exceed in the aggregate $10,000,000 in any Fiscal
Year.

Qualified
Business shall mean any business that derives a majority
of its revenues from one or more of the types of businesses engaged in by the
Companies on the date of this Financing Agreement, and any business reasonably
related thereto.

Qualified
Commercial Bank shall mean a domestic commercial bank or
other domestic financial institution having a combined capital and surplus of
at least Five Hundred Million Dollars ($500,000,000).

Rack
Transfer Sales shall mean those certain sales of
Inventory by the Companies to their customers which are evidenced by invoices
on regular terms and although title thereto has transferred to such customers,
the Companies are requested by such customers to store such inventory at the
bonded warehouse of Star Tubular or at another bonded location other than their
customers’ premises.

Real
Estate shall mean the Obligors’ fee and/or leasehold
interests in the real property.

Required
Lenders shall mean the Lenders holding aggregate
Commitments (excluding the Swingline Commitment) under this Financing Agreement
in an amount of 66 2/3% or more, or if the Commitments have been
terminated, the Lenders holding at least 66 2/3% or more of the
outstanding principal amount of all loans hereunder (other than the Swingline
Loans).

Restricted
Payment shall mean (a) any dividend or other
distribution, direct or indirect, on account of any shares of any class of
Capital Stock of any of the Obligors now or hereafter outstanding, and
(b) any redemption, retirement, purchase or other acquisition, direct or
indirect, of any shares of any class of Capital Stock of any of the Obligors,
now or hereafter outstanding, or of any warrants, rights or options to acquire
any such shares, except to the extent that the consideration therefor consists
of shares of Capital Stock (including warrants, rights or options relating
thereto) of the Parent.

Revolving
Credit Commitment shall have the meaning set forth in the
definition of “Commitment.”

Revolving
Line of Credit shall mean the aggregate commitment of the
Lenders to make loans and advances pursuant to Section 3 of this
Financing Agreement and issue Letter of Credit

 24
 

 

Guaranties
pursuant to Section 5 hereof to the Companies, in the aggregate
amount of $225,000,000, subject to increase in accordance with Section 3.11
hereof.

Revolving
Loans shall mean the loans and advances made, from time
to time, to or for the account of the Companies, or any of them, by the Agent
on behalf of the Lenders (including the Swingline Lender) pursuant to Section 3
of this Financing Agreement.

Revolving
Loan Account shall have the meaning specified in Section 3.8
of this Financing Agreement.

Sales
Company  shall have the meaning set forth in the
definition of “VTW Transaction”.

Senior
Subordinated Notes Indenture shall mean that certain
Indenture dated as of May 29, 2001 between Parent and Wells Fargo Bank
Minnesota, National Association, as Trustee.

Settlement
Date shall mean (a) other than with respect to
Swingline Loans, the date, weekly, and more frequently, at the discretion of
the Agent, upon the occurrence of an Event of Default or a continuing decline
or increase of the Revolving Loans that the Agent and the Lenders shall settle
amongst themselves so that (i) the Agent shall not have, as the Agent, any
money at risk and (ii) on such Settlement Date the Lenders shall have
their respective Pro Rata Share of all outstanding Revolving Loans and Letters
of Credit, provided that each Settlement Date for a Lender shall be a
Business Day on which such Lender and its bank are open for business and
(b) with respect to Swingline Loans, any date specified by the Swingline
Lender upon notice (oral or written) to the Agent, so long as such date is a
Business Day on which a Lender and its bank are open for business.

Solvent
shall mean that, with respect to any Person, (a) the fair value of such
Person’s assets (including the value of rights of indemnification or
contribution which such Person may have from other Persons) exceeds the fair
value of such Person’s liabilities; (b) such Person is generally able to
pay its debts as they become due and payable; and (c) such Person does not
have unreasonably small capital to carry on its business as it is currently
conducted absent extraordinary and unforeseen circumstances.

Special
Acquisition shall mean, collectively, the VTW Transaction
and any other Permitted Acquisition that the Required Lenders have in their
sole discretion approved in writing for exclusion from the dollar limitation on
the amount of Permitted Acquisitions as more particularly set forth in Section 4.1(a)
of this Financing Agreement.

Subordinated
Debt shall mean any debt due a Subordinating Creditor
(and the note(s) evidencing such) which has been subordinated, by a
Subordination Agreement, to the prior payment and satisfaction of the
Obligations of each of the Obligors to the Agent and the Lenders (in form and
substance reasonably satisfactory to the Agent and the Required Lenders).  Subordination terms and provisions
substantially similar to those contained in the Senior Subordinated Notes
Indenture shall be deemed to be satisfactory to the Agent and the Lenders.

Subordinating
Creditor shall mean any party hereafter executing a
Subordination Agreement.

 25
 

 

Subordination
Agreement shall mean (a) any agreement among the
Obligors, a Subordinating Creditor and the Agent, or (b) any agreement
among all of the Obligors, as the Subordinating Creditor, and the Agent,
pursuant to which, in either case, Subordinated Debt is subordinated to the
prior payment and satisfaction of all of the Obligations to the Agent and the
Lenders (the “Intercompany Subordination
Agreement”), in form and substance satisfactory to the
Agent.  Except with respect to the
Intercompany Subordination Agreement, subordination terms and provisions
substantially similar to those contained in the Senior Subordinated Notes
Indenture, shall be deemed to be satisfactory to the Agent and the Lenders.

Subsidiary
shall mean any corporation or other entity of which a Person owns, directly
or indirectly, through one or more intermediaries, more than 50% of the Capital
Stock at the time of determination.

Swingline
Commitment shall mean the commitment of the Swingline
Lender to make Swingline Loans to the Companies pursuant to Section 3.2
of this Financing Agreement, not to exceed at any time the aggregate principal
amount of $25,000,000.

Swingline
Lender shall mean CITBC and its successors and assigns.

Swingline
Loan shall have the meaning given to such term in Section 3.2
hereof.

Target
shall have the meaning assigned to such term in Section 4.2 hereof.

Texas
Finance Code  shall have the meaning set forth in the
definition of “Maximum Legal Rate”.

Trade
Accounts Receivable shall mean that portion of each of
the Companies’ Accounts which arises from the sale of Inventory or the
rendition of services in the ordinary course of the Companies’ business.

Trademarks
shall mean all of the Obligors’ present and hereafter acquired trademarks,
trademark registrations, recordings, applications, tradenames, trade styles,
service marks, prints and labels (on which any of the foregoing may appear),
licenses, reissues, renewals, general intangibles, and intellectual property
and trademark rights pertaining to any of the foregoing, together with the
goodwill associated therewith, and all cash, income, royalties, and non-cash
proceeds thereof.

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

Unfinanced
Acquisition  shall have the meaning set forth in the
definition of “Permitted Acquisition”.

Voting
Stock of any Person as of any date shall mean the Capital
Stock of such Person that is at the time entitled to vote in the election of
the Board of Directors of such Person.

VTW
shall mean Hunan Valin Steel Tube & Wire Co.

 26
 

 

VTW
Transaction shall mean the following activities:  (a) acquisition by Parent for
approximately $132,000,000 cash of a forty percent (40%) equity interest in
MPM, (b) after such initial contribution, additional contributions to MPM
by Parent of approximately another $106,000,000 for an aggregate forty-seven
percent (47%) equity interest in MPM, and (c) after Parent’s initial
equity contribution to MPM, formation of a to be named entity (“Sales Company”) with VTW, with VTW and
Parent to each contribute approximately $15,000,000 in equity to Sales Company,
with Sales Company being organized to manage the North American marketing and
sales of tubular products produced by MPM, and Parent or another Company to
have exclusive marketing and sales rights in North America to a minimum of
200,000 tons annually of oilfield tubular products produced by MPM, as the
Parent and VTW sharing the profits generated by Sales Company from the sale of
oilfield tubular products on a predetermined schedule that provides Parent with
a preferential return until the recovery of full value of Parent’s investment
in MPM and Sales Company.

Working
Day shall mean any Business Day on which dealings in
foreign currencies and exchange between banks may be carried on in the place
where the Agent’s LIBOR Lending Office is located in New York, New York.

SECTION 2.                 Conditions Precedent

2.1          Conditions
Precedent to Initial Revolving Loan.  The obligation of the Agent and the Lenders
to make the initial loans hereunder is subject to the satisfaction of, or
waiver of, immediately prior to or concurrently with the making of such loans,
the following conditions precedent:

(a)           Lien
Searches - The Agent shall have received updated
tax, judgment and Uniform Commercial Code searches satisfactory to the Agent in
each Obligor’s state of formation and for all locations presently occupied or
used by the Obligors.

(b)           Casualty
Insurance — Each of the Obligors shall have delivered to
the Agent evidence satisfactory to the Agent that casualty insurance policies
listing the Agent on behalf of the Lenders as loss payee or mortgagee, as the
case may be, are in full force and effect, all as set forth in Section 7.5
of this Financing Agreement.

(c)           UCC
Filings - Any documents (including without
limitation, financing statements) required to be filed in order to create, in
favor of the Agent on behalf of the Lenders, a first perfected security
interest in the Collateral with respect to which a security interest may be
perfected by a filing under the UCC shall have been properly filed in each
office in each jurisdiction required in order to create in favor of the Agent a
perfected lien on the Collateral.  The Agent
shall have received acknowledgment copies of all such filings (or, in lieu
thereof, the Agent shall have received other evidence satisfactory to the Agent
that all such filings have been made); and the Agent shall have received
evidence that all necessary filing fees and all taxes or other expenses related
to such filings have been paid in full.

(d)           Board
Resolution - The Agent shall have received a copy
of the resolutions of the Board of Directors of each of the Companies and the
Guarantors (as the case may be) authorizing the execution, delivery and
performance of (i) this Financing Agreement,

 27
 

 

(ii) the
Guaranties, and (iii) any related agreements, in each case certified by
the Secretary or Assistant Secretary of each of the Companies and the Guarantors
(as the case may be) as of the date hereof, together with a certificate of the
Secretary or Assistant Secretary of each of the Companies and the Guarantors
(as the case may be) as to the incumbency and signature of the officers of the
Companies and/or the Guarantors executing such Loan Documents and any
certificate or other documents to be delivered by them pursuant hereto,
together with evidence of the incumbency of such Secretary or Assistant
Secretary.

(e)           Organization
- The Agent shall have received (i) a copy of the Certificate of
Incorporation or other applicable organizational document of each of the
Companies and the Guarantors certified by the Secretary of State of the states
of their organization, and (ii) a copy of the By-Laws or other
applicable governing regulations of each of the Companies and the Guarantors
certified by the Secretary or Assistant Secretary thereof, all as amended
through the date hereof.

(f)            Officer’s
Certificate - The Agent shall have received an
executed officer’s certificate of each of the Companies, satisfactory in form
and substance to the Agent, certifying that (i) the representations and
warranties contained herein are true and correct in all material respects on
and as of the date hereof; (ii) each of the Companies is in compliance
with all of the terms and provisions set forth herein; and (iii) no
Default or Event of Default has occurred and is continuing.

(g)           Opinions
- Counsel for the Companies and the Guarantors shall have delivered to
the Agent on behalf of the Lenders opinions satisfactory to the Agent opining
to such matters incident to the transactions covered by this Financing
Agreement and the other Loan Documents as Agent may require and the Companies
and Guarantors authorize and direct such counsel to deliver such opinions to
Agent.

(h)           Absence
of Default - No Default or Event of Default shall
have occurred and be continuing and no material adverse change shall have
occurred in the financial condition, business, prospects, profits, operations
or assets of the Companies taken as a whole.

(i)            Legal
Restraints/Litigation - As of the Closing Date,
there shall be no (x) litigation, investigation or proceeding (judicial or
administrative) pending or threatened against any of the Companies or the
Guarantors or their assets, by any agency, division or department of any
county, city, state or federal government arising out of this Financing
Agreement, (y) injunction, writ or restraining order restraining or
prohibiting the financing arrangements contemplated under this Financing
Agreement or (z) to the best knowledge of the Companies, suit, action,
investigation or proceeding (judicial or administrative) pending or threatened
against the Parent, any of the Companies or the Guarantors or their assets,
which, in the reasonable opinion of the Agent, if adversely determined could
reasonably be expected to have a material adverse effect on the business,
operation, assets, financial condition or Collateral of the Parent, or the
Companies taken as a whole.

(j)            Guaranties
- The Guarantors shall have executed and delivered to the Agent,
Guaranties, in form acceptable to the Agent, guaranteeing all present and
future obligations of the Companies to the Agent and the Lenders.

 28
 

 

(k)           Subordination
Agreement  - The
Subordinating Creditors, which shall include each Obligor in one Subordination
Agreement, shall have executed and delivered to the Agent on behalf of the
Lenders a Subordination Agreement subordinating the Subordinated Debt due the
Subordinated Creditors by any Obligor to the prior payment and satisfaction of
the Obligations to the Agent and the Lenders.

(l)            Cash
Budget Projections - The Agent shall have received,
reviewed and be satisfied with a 12-month financial plan and cash budget
projection prepared by the Companies in the form provided by the Agent.

(m)          Pledge
Agreement  - The Obligors shall have
(i) executed and delivered to the Agent on behalf of the Lenders a pledge
and security agreement pledging to the Agent on behalf of the Lenders as
additional collateral for the Obligations of the Companies not less than 100%
of the issued and outstanding Capital Stock of each of the Obligors (excluding
Parent) and (ii) delivered to the Agent on behalf of the Lenders the stock
certificates evidencing such stock together with duly executed stock powers
(undated and in-blank) with respect thereto.

(n)           Intellectual
Property Security Agreements  — Each Obligor which owns
Patents or Trademarks shall have executed and delivered to Agent on behalf of
the Lenders a Patent and Trademark Security Agreement pledging to the Agent on
behalf of the Lenders as Collateral for the Obligations all of the Patents and
Trademarks owned by each such Obligor, all in form and substance satisfactory
to Agent.

(o)           Additional
Documents - Each of the Obligors shall have
executed and delivered to the Agent all Loan Documents necessary to consummate
the lending arrangement contemplated between the Obligors, the Agent and the
Lenders.

(p)           Disbursement
Authorization - The Companies shall have delivered to the
Agent all information necessary for the Agent and the Lenders to issue wire
transfer instructions on behalf of the Companies for the initial and subsequent
loans and/or advances to be made under this Financing Agreement including, but
not limited to, disbursement authorizations in form acceptable to the Agent.

(q)           Examination
& Verification - The Agent and the Lenders shall have
completed to the satisfaction of the Agent and the Lenders an examination and
verification of the Accounts, Inventory, books and records of the Companies and
the Guarantors, and which examination shall indicate that, after giving effect
to all Revolving Loans advances and extensions of credit to be made at closing,
the Companies shall have an opening additional Availability of at least $100,000,000,
as evidenced by a borrowing base certificate delivered by the Companies to the
Agent as of a date not more than ten (10) days before the Closing Date.  It is understood that such requirement
contemplates that all debts and obligations are current except to the extent
being contested or disputed in good faith, and that all payables are being
handled in the normal course of each of the Companies’ business and consistent
with its past practice.

(r)           Depository
Accounts  - Each of the Companies shall have established a
system of lockbox and bank accounts with respect to the collection of Accounts
and the deposit of proceeds of Inventory as shall be reasonably acceptable to
the Agent in accordance with

 29
 

 

Agent’s customary
practices.  Such accounts shall be subject
to three party agreements (between the Companies, the Agent and the depository
bank), which shall be in form and substance satisfactory to the Agent.

2.2          Conditions to Each Request for
Extension of Credit. 

Except
to the extent expressly set forth in this Financing Agreement, the Companies on
any date (including without limitation, the initial extension of credit) on
which they request any loan or extension of credit hereunder make the following
representations and warranties:

(a)           Representations
and Warranties - Each of the representations and
warranties made by each of the Obligors in or pursuant to this Financing
Agreement shall be true and correct in all material respects on and as of such
date as if made on and as of such date (except to the extent such
representations and warranties relate solely to an earlier date).

(b)           No
Default - No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to the extension
of credit requested to be made on such date.

(c)           Borrowing
Base - Except as may be otherwise agreed to from time to
time by the Agent and/or the Required Lenders and the Companies or any one of
them in writing, after giving effect to the extension of credit requested to be
made by any of the Companies on such date, (a) the aggregate outstanding
balance of the Revolving Loans and outstanding Letters of Credit owing by all
of the Companies will not exceed the Revolving Line of Credit, and the
(b) the aggregate outstanding balance of the Revolving Loans and
outstanding Letters of Credit owing solely by such Company shall not exceed
such Company’s Borrowing Base.

(d)           Additional
Matters - All corporate and other proceedings, and all
documents, instruments and other legal matters in connection with the transactions
contemplated by this Financing Agreement and the other Loan Documents shall be
reasonably satisfactory in form and substance to the Agent and/or the Required
Lenders and (to the extent that such proceedings documents, instruments and
other matters relate to the Collateral or the Agent) the Agent shall have
received such other documents and legal opinions in respect of any aspect or
consequence of the transactions contemplated hereby or thereby, as the Agent
shall reasonably request.

Each
borrowing by the Companies hereunder shall constitute a representation and
warranty by each of the Companies as of the date of such loan or advance that
each of the representations, warranties and covenants contained in this
Financing Agreement has been satisfied and is true and correct in all material
respects, except as the Companies and the Agent and/or the Required Lenders
shall otherwise agree herein or in a separate writing (except to the extent
such representations and warranties relate solely to an earlier date).

SECTION 3.                 Revolving Loans; Swingline Loans

3.1          Revolving
Loans(a).   On
the Closing Date, the “Revolving Loans” (as defined in the Existing Financing
Agreement) held by Lenders under the Existing Financing Agreement

 30
 

 

shall
automatically, and without any action on the part of any Person, be deemed to
be Revolving Loans under this Financing Agreement, and the Additional Lender
shall by assignments from the Existing Lenders (which assignments shall be
deemed to occur automatically, and without the requirement for additional
documentation on the Closing Date) acquire a portion of the Revolving Loans of
the Existing Lenders so designated in such amounts and the Lenders shall,
through the Agent, make such other adjustments among themselves as shall be necessary
so that after giving effect to such assignments and adjustments, the Lenders
shall hold Revolving Loans in an amount not greater than their respective Pro
Rata Share of the Revolving Credit Commitment. 
The Lenders agree, subject to the terms and conditions of this Financing
Agreement from time to time, and within the Availability but subject to the
Agent’s and the Lenders’ rights to make “Overadvances”, as further set forth in
this Financing Agreement, to make loans and advances to each Company on a revolving
basis (i.e., subject to the limitations set forth herein, each of the Companies
may borrow, repay and re-borrow Revolving Loans).  Such outstanding loans and advances and the
outstanding Letters of Credit for each Company shall not exceed such Company’s
Borrowing Base.  Such outstanding loans
and advances and outstanding Letters of Credit for all of the Companies shall
not in the aggregate exceed the Revolving Line of Credit.  Each request for an advance shall constitute
a representation and warranty by each Company that (i) after giving effect
to the requested advance, no Default or Event of Default has or will have
occurred and be continuing, and (ii) the proceeds of such Revolving Loan
shall be used solely for Permitted Acquisitions, to refinance current debt or
for working capital purposes.  All
requests for loans and advances must be received by an officer of the Agent no
later than 1:00 p.m., New York time, of the day on which such loans and
advances are required.  Subject to Section 14.10
hereof, should the Agent for any reason honor requests for advances in excess
of the limitations set forth herein, such advances shall be considered “Overadvances” and shall be made in the
Agent’s sole discretion, subject to any additional terms the Agent deems
necessary.

Whenever
the Companies desire the Agent, on behalf of the Lenders, to make a Revolving
Loan pursuant to this Section 3, it shall give the Agent notice in
writing or irrevocable telephonic notice confirmed promptly in writing,
specifying (A) the amount to be borrowed, and (B) the requested
borrowing date (which shall be a Business Day and shall be prior to: the
Anniversary Date, and if applicable, any Early Termination Date, or prior to
any effective termination date of this Financing Agreement, all as further set
forth herein), and (C) specify whether the requested Revolving Loan shall
bear interest at the Chase Bank Rate or at the LIBO Rate, as further set forth
herein.  All requests for loans and advances
must be received by an officer of the Agent no later than 1:00 p.m. New York
time on any borrowing date.  The
procedure for Revolving Loans to be made on a requested borrowing date may be
such other procedure as is mutually satisfactory to the Companies, the Agent
and the Lenders.  The Agent or the
Swingline Lender (as the case may be) shall make loans and advances to the
Depository Account (as hereinafter defined) of the Companies.

Subject
to Section 14.10 hereof, should the Agent, on behalf of the
Lenders, for any reason honor requests for advances in excess of the
limitations set forth herein, such advances shall be considered “Overadvances”
and shall be made in the Agent’s sole discretion, subject to any additional
terms the Agent or the Required Lenders deem necessary.  Requests for loans and advances shall be made
solely by the Companies and shall be directed solely to the Agent.

 31

 

3.2          Swingline
Loans.

(a)           The
Agent and the Lenders agree that in order to facilitate the administration of
the financing arrangement contemplated by this Financing Agreement, promptly
after the Companies request from the Agent a Revolving Loan hereunder, the
Swingline Lender may elect to have the terms of this Section 3.2 apply
to such borrowing request by advancing to the Companies, the amount of such
requested Revolving Loan on the applicable borrowing date (each such Revolving
Loan made by the Swingline Lender shall be referred to herein as a “Swingline Loan”), with settlement among
the Lenders as to the Swingline Loan to take place on a periodic basis as set
forth in Section 3.3.  Each
Swingline Loan shall be subject to all the terms and conditions applicable to
other Revolving Loans funded by the Lenders, except that (i) prior to any
settlement thereof among the Lenders, all payments thereon shall be payable to
the Swingline Lender solely for its own account, and (ii) no Swingline
Loan may be a LIBOR Loan.  The aggregate
amount of Swingline Loans outstanding at any time shall not exceed the
Swingline Commitment.  The Swingline
Lender shall not make any Swingline Loan if the requested Swingline Loan would
exceed the Availability immediately before giving effect to such Swingline Loan
(i.e., no Overadvance permitted by Section 14.10 hereof shall be
made as Swingline Loans). However, Swingline Loans may be made even if a
Default or Event of Default exists so long as the Required Lenders have not
terminated the Commitments pursuant to Section 10.2 hereof.

(b)           Upon
the making of a Swingline Loan (whether before or after the occurrence of a
Default or Event of a Default and regardless of whether settlement has been
requested with respect to such Swingline Loan), each Lender shall be deemed
without further action by any party hereto, to have unconditionally and
irrevocably purchased from the Swingline Lender, without recourse or warranty,
an undivided interest and participation in such Swingline Loan equal to such Lender’s
Pro Rata Share of the Revolving Loan Commitment times the amount of such
Swingline Loan.  The Swingline Lender may
at any time upon notice to the Agent, require that the Lenders immediately fund
their respective participations in the Swingline Loans on any Settlement
Date.  With respect to Swingline Loans
from and after the date, if any, on which any Lender has funded its
participation in any Swingline Loan purchased hereunder, the Agent shall
promptly distribute to such Lender such Lender’s Pro Rata Share of all payments
of principal and interest, and all proceeds of Collateral, received by the
Agent after such date in respect of such Swingline Loan.

3.3          Settlement
Date.  The Agent
shall on any Settlement Date, and upon notice given by the Agent no later than
2:00 p.m. New York time, request each Lender to make, and each Lender hereby
agrees to make, a Revolving Loan in an amount equal to such Lender’s Revolving
Credit Commitment percentage (calculated with respect to the aggregate
Revolving Credit Commitments then outstanding) of the aggregate amount of the
Revolving Loans (other than Swingline Loans) made by the Agent from the
preceding Settlement Date to the date of such notice.  On each Settlement Date, with respect to
Swingline Loans, each Lender shall remit to the Agent for the account of the
Companies, such Lender’s Pro Rata Share of the Swingline Loans outstanding as
of such date (which shall be equal to such Lender’s Pro Rata Share of the
Revolving Loan Commitment times the outstanding principal amount of the
Swingline Loans) and the Agent shall in turn remit such funds to Swingline
Lender for application against the

 32
 

 

Swingline Loans
then outstanding.  All payments made by
the Lenders on any Settlement Date with respect to Swingline Loans shall
constitute Revolving Loans to the Companies. 
Each Lender’s obligation to make the Revolving Loans referred to in Section
3.1 and to make the settlements pursuant to this Section 3.3 shall
be absolute and unconditional and shall not be affected by any circumstance,
including without limitation (i) any set-off, counterclaim, recoupment,
defense or other right which any such Lender or the Companies may have against
the Agent, the Companies, any other Lender or any other Person for any reason
whatsoever; (ii) the occurrence or continuance of a Default or an Event of
Default; (iii) any adverse change in the condition (financial or
otherwise) of the Companies; (iv) any breach of this Financing Agreement
or any other loan document by the Companies or any other Lender; or
(v) any other circumstance, happening or event whatsoever, whether or not
similar to any of the foregoing.  Without
limiting  the liability and obligation of
each Lender to make such advances, the Companies authorize the Agent to charge
the Companies’ account with the Agent to the extent amounts received from the
Lenders are not sufficient to repay in full the amount of any such deficiency.

3.4          Borrowing
Base Report.  Each
Company will deliver on a monthly basis to the Agent, in such form and manner
as the Agent may reasonably require, schedules of Accounts and Inventory
designating, identifying and describing the Accounts and Inventory of such
Company.  Subsequent to the occurrence of
an Event of Default, the Agent shall be entitled to request and receive more
frequent reporting as to Accounts and/or Inventory.  In addition, upon the Agent’s prior
reasonable request, each of the Companies shall make available for review and
copying by the Agent copies of agreements with, or purchase orders from, the
Companies’ customers, and copies of invoices to customers, proof of shipment or
delivery and such other documentation and information relating to said Accounts
and other collateral as the Agent may reasonably require.  Failure to provide the Agent with any of the
foregoing shall in no way affect, diminish, modify or otherwise limit the
security interests granted herein.  Each
of the Companies hereby authorizes the Agent to regard the Companies’ printed
name or rubber stamp signature on assignment schedules or invoices as the
equivalent of a manual signature by one of the Companies’ authorized officers
or agents.

3.5          Representations
and Warranties as to Borrowing Base Accounts and Inventory.  Each of the Companies hereby represents and
warrants that:  each Trade Account
Receivable that constitutes an Eligible Account Receivable is based on an
actual and bona fide sale and delivery of goods or rendition of services to
their respective customers, made by the Companies in the ordinary course of
their business; the goods and Inventory being sold and the Trade Accounts
Receivable created are the exclusive property of the Companies and are not and
shall not be subject to any lien, consignment arrangement, encumbrance,
security interest or financing statement whatsoever, other than the Permitted
Encumbrances; the invoices evidencing such Trade Accounts Receivable are in the
name of the respective Companies; and the customers of such Companies have
accepted the goods or services, owe and are obligated to pay the full amounts
stated in the invoices according to their terms, without dispute, offset,
defense, counterclaim or contra, except for disputes and other matters arising
in the ordinary course of business with respect to which the Companies have
complied with the requirements of Section 3.7.  Subject to Section 7.6 hereof,
each of the Companies confirms to the Agent that any and all taxes or fees
relating to its business, its sales, the Accounts or goods relating thereto,
are its sole

 33
 

 

responsibility and
that same will be paid by such Company when due and that none of said taxes or
fees represent a lien on or claim against the Accounts.  Each of the Companies hereby further
represents and warrants that each such Company owns its Inventory free and
clear of any security interest, encumbrances, liens or financing statements
whatsoever other than Permitted Encumbrances, and if it acquires any Inventory
on a consignment basis it shall so notify the Agent in writing on its monthly
Inventory statement and as further reasonably required by the Agent from time
to time with respect thereto, nor, except for Rack Transfer Sales, co-mingle
its Inventory with any of its customers or any other Person, including pursuant
to any bill and hold sale, consignment Inventory, or otherwise, and that its
Inventory is marketable to its customers in the ordinary course of its
business.  Each of the Companies also
warrants and represents that it is a duly and validly existing corporation and
is qualified in all states where the failure to so qualify would have a
Material Adverse Effect, provided that the Agent may exclude from
Eligible Accounts Receivable any Accounts due from customers residing in any
state where such Company’s failure to so qualify would adversely affect, in any
material way, the Company’s ability to enforce collection of such Account. Each
of the Companies agrees to maintain such books and records regarding Accounts
and Inventory as the Agent may reasonably require.  All of the books and records of the Companies
will be available to the Agent at normal business hours, including any records
handled or maintained for any of the Companies by any other Company or entity,
upon reasonable prior notice or at any time upon the occurrence of a Default or
Event of Default.

3.6          Cash
Management.  Until
the Agent has advised the Companies to the contrary after the occurrence of an
Event of Default, each of the Companies may and will enforce, collect and
receive all amounts owing on the Accounts for the Agent’s and Lenders’ benefit
and on the Agent’s behalf, but at the Companies’ joint and several expense;
such privilege shall terminate automatically upon the institution by or against
any of the Companies of any proceeding under any bankruptcy or insolvency law
(unless such proceeding is involuntary and stayed by the applicable Company
within thirty (30) days and the Agent consents thereto) or, at the election of
the Agent, upon the occurrence of any other Event of Default and until such
Event of Default is waived in writing by the Required Lenders or cured to the
Required Lenders’ satisfaction. Any checks, cash, credit card sales and
receipts, notes or other instruments or property received by the Companies with
respect to any Accounts shall be held by each of the Companies in trust for the
Agent, on behalf of the Lenders, separate from the Companies’ own property and
funds, and immediately turned over to the Agent with proper assignments or
endorsements by deposit to the special depository accounts in the Agent’s name
(whether lockbox accounts or otherwise) designated by the Agent for such
purposes (the “Depository Accounts”).  Each of the Companies shall: (i) direct
all of its account debtors to deposit any and all proceeds of Collateral into
the Depository Accounts; (ii) irrevocably authorize and direct any banks
which maintain the Companies’ initial receipt of cash, checks and other items
to promptly wire transfer all available funds to a Depository Account;
(iii) advise all such banks of the Agent’s security interest in such
funds; and (iv) indicate on all of its invoices that funds should be
delivered to and deposited in a Depository Account.  The Companies shall provide the Agent with
written notice of any and all deposit accounts opened or to be opened
subsequent to the Closing Date within ten (10) days after any such
opening.  All amounts received by the
Agent in payment of Accounts will be credited to such Company’s Revolving Loan
Account (as further set forth in Section 3.8 below) upon the Agent’s
receipt of “collected funds” at the Agent’s bank account in New York, New

 34
 

 

York on the
Business Day of receipt if received no later than 1:00 p.m. New York time or on
the next succeeding Business Day if received after 1:00 p.m. New York
time.  No checks, drafts or other
instrument received by the Agent shall constitute final payment to the Agent
and/or the Lenders unless and until such instruments have actually been
collected.  If any Company’s Revolving
Loan Account reflects a zero balance for fifteen consecutive Business Days and
there is then no Default or Event of Default and the outstanding Letters of
Credit do not exceed Availability for such Company, then the Agent shall upon
the written request of such Company instruct the banks in which Depository
Accounts are maintained to remit to such Company’s operating account or to such
other account, as such Company may designate in the United States of America
(other than any payroll account), any balances in such Depository Accounts; provided,
however, that upon the occurrence of a Default or Event of Default or if
at any time thereafter there is a Revolving Loan balance or the outstanding
Letters of Credit exceed Availability for such Company, the Agent shall have
the right to immediately instruct such banks to begin to remit any balances in
such Depository Accounts directly to the Agent.

3.7          Credits
on Accounts Following an Event of Default.  After the occurrence and during the
continuance of an Event of Default, Agent may notify the Companies that all
future credits or allowances are to be made only after the Agent’s prior
written approval.  At the Agent’s
election, upon the occurrence of an Event of Default and until such time as
such Event of Default is waived in writing by the Required Lenders or cured to
the Required Lenders’ satisfaction, and on notice from the Agent, the Companies
agree that all returned, reclaimed or repossessed merchandise or goods shall be
set aside by the Companies, marked with the Agent’s name (as secured party) and
held by the Companies for the Agent’s account.

3.8          Maintenance
of Revolving Loan Accounts.  Revolving Loans shall be made to each Company
based on such Company’s respective Borrowing Base; provided, however,
for ease of administration, all Revolving Loans shall be disbursed to an
account of Parent.  Parent shall
distribute the proceeds of each Revolving Loan to, or pursuant to the direction
of, the applicable Company.  The Agent
shall maintain a separate account on its books in such Company name (herein
each a “Revolving Loan Account”
and collectively the “Revolving Loan
Accounts”) in which each Company will be charged with loans and
advances made by the Agent to them or for their account, and with any other
Obligations, including any and all costs, expenses and reasonable attorney’s
fees which the Agent may incur in connection with the exercise by or for the
Agent of any of the rights or powers herein conferred upon the Agent, or in the
prosecution or defense of any action or proceeding to enforce or protect any
rights of the Agent in connection with this Financing Agreement or the
Collateral assigned hereunder, or any Obligations owing to the Agent and the
Lenders by such Company.  Each of the
Companies will be credited with all amounts received by the Agent and/or the
Lenders from them or from others for their account, including, as above set
forth, all amounts received by the Agent in payment of assigned Accounts and
such amounts will be applied to payment of the Obligations. In no event shall
prior recourse to any Accounts or other security granted to or by the Companies
be a prerequisite to the Agent’s right to demand payment of any
Obligation.  Further, it is understood
that the Agent and/or the Lenders shall have no obligation whatsoever to
perform in any respect any of the Companies’ contracts or obligations relating
to the Accounts.

 35
 

 

3.9          Revolving
Loan Account Statements. 
After the end of each month, the Agent shall promptly send the
Companies, or such Company as they may designate (as set forth in Section 3.8
hereof) a statement showing the accounting for the charges, loans, advances and
other transactions occurring between the Agent and the Companies during that
month.  The monthly statements shall be
deemed correct and binding upon the Companies and shall constitute an account
stated between the Companies and the Agent unless the Agent receives a written
statement of the exceptions within thirty (30) days of the date of the monthly
statement.

3.10        Repayment
of Excess Advances. 
If (a) any requested advance or Letter of Credit exceeds Availability,
(b) the sum of (i)(x) the outstanding balance of Revolving Loans and
(y) the face amount of the issued and outstanding Letters of Credit
exceeds the lesser of (ii)(x) aggregate the Borrowing Base for the
Companies, (y) the Revolving Line of Credit or (z) the applicable
amounts set forth in Sections 3 and 5 hereof or (c) the sum
of (i)(x) the outstanding balance of Revolving Loans allocated to a
Company and (y) the face amount of issued and outstanding Letters of
Credit on behalf of a Company exceeds (ii) the Borrowing Base for such Company
(herein the amount of any such excess shall be referred to as the “Excess”), then such Excess shall be due
and payable to the Agent on behalf of the Lenders immediately upon the Agent’s
demand therefor.

3.11        Increase
in Revolving Line of Credit.  The Revolving Line of Credit shall increase
from time to time up to an aggregate amount equal to $25,000,000 upon
satisfaction of the following conditions precedent:  (i) no Default or Event of Default shall
have occurred and be continuing at the time such increase is to become
effective, (ii) the then aggregate Commitments plus such increase shall
in no event exceed $250,000,000 in the aggregate, (iii) Agent shall have
received a Commitment from a Lender or an additional lender in the amount of
the increase on or before December 31, 2007, and if applicable, such additional
lender shall have become a party hereto and shall have agreed to provide a
Commitment equal to such increase (provided that Agent shall have no
liability under this Financing Agreement or otherwise if a Lender or an
additional lender does not provide such Commitment), and (iv) Companies
shall have paid to Agent, for the benefit of the lender providing the
Commitment for such increase, the Loan Facility Fee in the amount of 0.15% of
such increase.

SECTION 4.                 Acquisition Facility Loans and Permitted
Acquisitions

4.1          Permitted
Acquisitions.  The
Companies shall be permitted to borrow Revolving Loans for the purpose of
consummating Permitted Acquisitions (“Acquisition
Facility Loans”) subject to the following conditions:

(a)           Permitted
Acquisition Basket. 
The aggregate amount of cash (whether cash on hand or cash provided from
Revolving Loans) and assumed debt consideration used to make Permitted
Acquisitions (plus the aggregate amount of cash and assumed debt consideration
used to make the Apolo Transaction during the applicable Fiscal Year) shall not
exceed in any Fiscal Year the lesser of (i) $125,000,000, or (ii) an
amount equal to the EBITDA for the 12-month period ending on the last day
of the calendar month immediately preceding the earlier to occur of the funding
of the subject Acquisition Facility Loan or the consummation of the subject
Permitted Acquisition.  The aggregate
amount of cash (whether cash on hand or cash

 36
 

 

provided from
Revolving Loans) paid by Parent (i) in connection with Parent’s acquisition of
the Capital Stock in MPM and Sales Company pursuant to the VTW Transaction, or
(ii) in connection with any Special Acquisition, shall in each case not be
included in any determination as to whether Companies are in compliance with
the dollar limitation on Permitted Acquisitions for each Fiscal Year of
Companies set forth in the definition of Permitted Acquisition or in this Section 4.1(a);

(b)           Minimum
Cash on Hand.  If,
after giving effect to a Permitted Acquisition, the aggregate of the
Availability and the Companies’ cash on hand is or would be less than (i) in
the case of a Permitted Acquisition that will constitute an Unfinanced
Acquisition, $50,000,000 in cash on hand and (ii) in all other cases,
$60,000,000, then the acquiring Company must receive the prior written approval
of the Agent and the Required Lenders, which approval shall be given or not
given in the reasonable discretion of Agent and the Required Lenders; and

(c)           No
Default or Event of Default.  As of the closing of any such Permitted
Acquisition, no Default or Event of Default shall exist or occur as a result
of, or after giving effect to such Acquisition; provided that, if an
Obligor enters into a binding agreement to make a Permitted Acquisition (the “Subject Acquisition”) at a time when no
Default or Event of Default exists (and, on a pro forma basis, none would
result from the consummation of the Subject Acquisition), then such Obligor
shall be entitled to consummate the Subject Acquisition in order to avoid
material liability to the other parties to the relevant acquisition documents
even though a Default or Event of Default unrelated to the Subject Acquisition
exists at the time of the consummation of the Subject Acquisition; provided,
however, pursuant to Section 10.2 hereof, neither Agent nor
Lenders shall be obligated to make any loans or advances hereunder to
consummate the Subject Acquisition.

4.2          Acquisition
Deliverables before Closing a Material Acquisition.  In addition, the Companies’ ability to
consummate any Material Acquisition and to borrow Revolving Loans for the
purpose of consummating any Material Acquisition is subject to the Parent
providing to the Agent at least thirty (30) Business Days (except as otherwise
stated below or the context otherwise requires) prior to the consummation of
any Material Acquisition the following:

(a)           (i) in
the case of an acquisition of Capital Stock of a Person or all or substantially
all of the assets or a division of a Person, (A) the name of the Person
(the “Target”) which is to
be acquired or whose assets are to be acquired, and (B) a description of
the nature of the Target’s business;

(b)           copies
of the current drafts of documentation as and when prepared;

(c)           copies
of substantially final drafts of such documentation at least one (1) Business
Day prior to the earlier to occur of (i) the proposed funding date of the
Acquisition Facility Loan intended to effect the proposed acquisition or
(ii) the date such proposed acquisition is expected to be consummated (the
“Acquisition Agreements”);

(d)           a
summary of the terms and conditions of the proposed acquisition;

 37
 

 

(e)           a
certificate of the chief financial officer or chief executive officer of the
Parent dated on or within two (2) days prior to the earlier to occur of the
proposed funding date of the Acquisition Facility Loan or date such Permitted
Acquisition is expected to be consummated certifying that no Default or Event
of Default exists that is continuing or could reasonably be expected to occur
as a result of the proposed Acquisition (except to the extent the proviso of Section
4.1(c) hereof is applicable); and

(f)            any
other information the Agent may reasonably request from time to time prior to
such funding or date such Permitted Acquisition is expected to be consummated
that is available to Parent.

In addition, at
least three (3) Business Days prior to the date such proposed Material
Acquisition is expected to be consummated, the Parent must have been available
to the Agent and the Lenders to answer questions regarding the proposed
acquisition and the documentation related thereto.

4.3          Acquisition
Criteria.  In
addition, the Companies’ ability to consummate any Permitted Acquisition and to
borrow Revolving Loans for the purpose of consummating any Permitted
Acquisition is subject to the Parent providing the Agent with evidence of the
following, as applicable:

(a)           Parent
has completed due diligence on the Target and the assets to be acquired, as the
case may be, reasonably satisfactory to Parent, including, without limitation,
if applicable, a due diligence investigation as to the compliance with all
Environmental Laws by the Target and the assets to be acquired;

(b)           The
Target’s material business activities are in a Qualified Business;

(c)           Unless
the Agent otherwise consents in writing, (i) if the proposed Acquisition
is an acquisition of the Capital Stock of a Target, the acquisition will be
structured so that the Target will become a direct Subsidiary of one of the
Companies, and (ii) if the proposed Acquisition is an acquisition of
assets, one of the Companies or a wholly-owned subsidiary of one of the
Companies shall acquire the assets; provided, however, any Trade
Accounts Receivable or Inventory acquired in connection with any Permitted
Acquisition of assets by a Company will not be considered Eligible Accounts
Receivable or Eligible Inventory until such time as the Agent shall have
conducted an examination and verification of such Trade Accounts Receivable and
Inventory and the results thereof are reasonably satisfactory to Agent;

(d)           Neither
the Target nor its assets nor the acquired assets, as the case may be, shall be
subject to any contingent obligations (including contingent obligations arising
from any environmental liabilities), environmental liabilities, unsatisfied
judgments or any pending action, charge, claim, demand, suit, proceeding,
petition, governmental investigation or arbitration that (A) the Agent
reasonably determines could be expected to have a Material Adverse Effect, and
(B) are not subject to indemnification or adjustment to acquisition
consideration (or taken into account in the determination of acquisition
consideration) or other remedy reasonably satisfactory to the Agent; and

 38
 

 

(e)           The
Parent shall have provided to the Agent each of the following at least thirty
(30) days prior to the closing of any proposed Material Acquisition:
(A) copies of (x) the internally prepared financial statements of the
Target, for the twelve (12) month period prior to the closing of the proposed
Acquisition for which financial statements are available (which reflect
compliance with financial covenants contained in this Financing Agreement) and
(y) audited or reviewed financial statements to the extent they exist for
the two (2) most recently completed fiscal years of the Target, (B) a pro
forma financial projection of the Parent and its Subsidiaries (including the
Target) for the period following the date of the consummation of the proposed
Acquisition through the end of the next succeeding Fiscal Year which reflects
compliance with the financial covenants set forth in this Financing Agreement,
and (C) a business plan containing such information as the Agent may
reasonably request.

4.4          Acquisition
Deliverables at its Closing.  As soon as practicable following the earlier
to occur of the consummation of the proposed Acquisition or the funding of an
Acquisition Facility Loan: 
(a) Agent shall have received executed copies of the Acquisition
Agreements relating to the proposed Acquisition and shall, in the ordinary
course of business, have forwarded copies thereof to the Lenders; (b) the
Acquisition Agreements shall be in full force and effect and no material term
or condition thereof shall have been materially amended, modified, or waived
after the execution thereof (other than solely to extend the date by which the
proposed Acquisition is required to occur) except those for which prior written
notice was provided to Agent; (c) none of the parties to the Acquisition
Agreements shall have failed to substantially perform any material obligation
or covenant required by the Acquisition Agreements to be performed or complied
with by it on or before the date of the closing of the proposed Acquisition
unless waived with the consent of the Agent; and (d) Agent shall have
received a certificate from the acquiring Company’s chief executive officer or
chief financial officer to the effect set forth in clauses (a), (b) and, to his
knowledge, (c) above.

4.5          Acquisition
Loan Documents.  If
the proposed Acquisition is to be a Domestic Acquisition or Canadian
Acquisition (which does not also constitute a Foreign Acquisition) of the
Capital Stock of the Target, then, unless the Target is a Designated
Subsidiary: (i) the Target shall, upon consummation of such Acquisition,
become a “Company” or “Guarantor”, as determined by Agent and the Required
Lenders, for all purposes under the Loan Documents and shall execute and
deliver to Agent documentation reasonably required by the Agent in connection
therewith (including, without limitation, (1) documentation confirming
that such Person is or will be a Company or a Guarantor under the Loan
Documents, (2) documentation granting to Agent for the benefit of Lenders
a first, priority lien in all assets of the Person, other than Permitted
Encumbrances, (3) an agreement in writing (in form and substance
reasonably satisfactory to the Agent) providing for the subordination of
inter-company indebtedness to the Obligations owed to the Agent and the Lenders,
(4) documentation demonstrating such Person’s authority from its Board of
Directors or other appropriate governing body to execute all documentation with
or for the Lenders as Agent and the other Lenders, and (5) certificates of
insurance for and policy of insurance maintained by such Person which satisfy
the requirements of Section 7.5 hereof); (ii) the Obligors
shall execute and deliver to the Agent an amendment to the relevant Loan
Documents describing as collateral thereunder, the Capital Stock of the
acquired Person and other Collateral owned by such Person (together with
documents incident thereto); and (iii) the acquiring Obligor shall deliver
to the Agent the certificates representing

 39
 

 

100% of the
Capital Stock of such Person (or 65% of each new Canadian Subsidiary) together
with undated stock powers duly executed in blank. If the proposed Acquisition
is a Domestic Acquisition or a Canadian Acquisition (which does not also
constitute a Foreign Acquisition) of assets, the acquiring Company shall
execute and deliver the Agent such documentation requested by Agent to cause
the property acquired to be subject to a fully perfected lien and security
interest in favor of Agent for the benefit of the Lenders and for such lien to
have priority over all other liens other than Permitted Encumbrances.

SECTION 5.                 Letters of Credit

In
order to assist the Companies, or any one of them, in establishing or opening documentary and standby Letters of Credit with an Issuing Bank to
cover the purchase of inventory, equipment or otherwise, the Companies have
requested the Agent, on behalf of the Lenders, to join in the applications for
such Letters of Credit, and/or guarantee payment or performance of such Letters
of Credit and any drafts or acceptances thereunder through the issuance of the
Letter of Credit Guaranty, thereby lending the Agent’s credit to the Companies
and the Agent and the Lenders have agreed to do so.  These arrangements shall be handled by the
Agent subject to the terms and conditions set forth below.

5.1          Requests
for Letters of Credit. 
Within the Revolving Line of Credit and the Availability for each
Company, upon request by Parent, the Agent shall assist each of the Companies,
or any one of them, in obtaining Letter(s) of Credit; provided, however,
the aggregate outstanding Letters of Credit to all of the Companies shall not
exceed the Letter of Credit Sub-Line. 
The Agent’s assistance for amounts in excess of the limitation set forth
herein shall at all times and in all respects be in the Agent’s sole discretion
(subject to Section 14.10 hereof). 
It is understood that the form of each Letter of Credit and all
documentation in connection therewith, and any amendments, modifications or
extensions thereof, must be mutually acceptable to the Agent, the Issuing Bank
and the applicable Companies.  Any and
all outstanding Letters of Credit issued hereunder for any Company shall be
reserved dollar for dollar from such Company’s Availability as an Availability
Reserve.  Any Letter of Credit issued
hereunder shall not have an expiry date subsequent to the Anniversary Date,
unless otherwise agreed to by the Agent or unless the Parent deposits with
Agent cash collateral therefor equal to 110% of the face amount of any such
Letter(s) of Credit, and upon any termination of the Revolving Line of Credit
or this Financing Agreement in accordance with Section 11 hereof,
the Agent may establish a reserve equal to 110% of the face amount of any such
outstanding Letters of Credit. 
Notwithstanding anything herein to the contrary, upon the occurrence of
an Event of Default, the Agent’s assistance in connection with the Letter of
Credit Guaranty shall be in the Agent’s sole discretion and the Agent may
reserve 110% of the face amount of outstanding Letters of Credit, unless such
Event of Default is cured to the Agent’s satisfaction in the exercise of the
Agent’s reasonable business judgment or waived by the  Required Lenders in writing at which time any
portion of such reserve in excess of the typical reserve maintained for a
Letter of Credit shall be released.

5.2          Right to
Charge Revolving Loan Accounts.  The Agent shall have the right, without
notice to the Companies, to charge any of the Companies’ Revolving Loan
Accounts on the Agent’s books or establish cash reserve(s) in the amount of any
and all indebtedness, liability

 40
 

 

or obligation of
any kind incurred by the Agent and/or the Lenders under the Letter of Credit
Guaranty at the earlier of (a) payment by the Agent under any Letter of
Credit Guaranty, or (b) the occurrence of any Event of Default which has
not been waived in writing by the Required Lenders.  Any amount charged to Companies’ Revolving
Loan Accounts, after payment by the Agent under any Letter of Credit Guaranty
or upon notice from or at the request of the Issuing Bank, shall be deemed a
Revolving Loan hereunder and shall incur interest at the rate provided in Section 8.1
of this Financing Agreement.

5.3          Indemnification.  Each of the Companies jointly and severally
unconditionally indemnifies the Agent and the Lenders and holds the Agent and
the Lenders harmless from any and all loss, claim or liability incurred by the
Agent arising from any transactions or occurrences relating to Letters of
Credit established or opened for any Company’s account, the collateral relating
thereto and any drafts or acceptances thereunder, and all Obligations
thereunder, including any such loss or claim due to any action taken by any
Issuing Bank, other than for any such loss, claim or liability arising out of
the gross negligence or willful misconduct by the Agent and the Lenders.  Each of the Companies further agrees to hold
the Agent and/or the Lenders harmless from any errors or omission, negligence
or misconduct by the Issuing Bank.  The
Companies’ unconditional obligation to the Agent and/or the Lenders hereunder
shall not be modified or diminished for any reason or in any manner whatsoever,
other than as a result of the Agent’s and/or the Lenders’ gross negligence or
willful misconduct.  The Companies agree
that any charges incurred by the Agent and the Lenders for the Companies
account by the Issuing Bank shall be conclusive on the Agent and/or the Lenders
and may be charged to any of the Companies’ Revolving Loan Accounts, provided
that nothing contained herein shall, or shall be deemed, to affect, waive or
modify any right the Companies may have against the Issuing Bank.

5.4          Disclaimer
of Liability.  In
connection with any Letters of Credit, the Agent and the Lenders shall not be
responsible for: the existence, character, quality, quantity, condition,
packing, value or delivery of the goods purporting to be represented by any
documents presented to the Issuing Bank; any difference or variation in the
character, quality, quantity, condition, packing, value or delivery of the goods
from that expressed in the documents; the validity, sufficiency or genuineness
of any documents or of any endorsements thereon, even if such documents should
in fact prove to be in any or all respects invalid, insufficient, fraudulent or
forged; the time, place, manner or order in which shipment is made; partial or
incomplete shipment, or failure or omission to ship any or all of the goods
referred to in the Letters of Credit or documents; any deviation from
instructions; delay, default, or fraud by the shipper and/or anyone else in
connection with the Collateral or the shipping thereof; or any breach of
contract between the shipper or vendors and the Companies or any one of
them.  Furthermore, without being limited
by the foregoing, the Agent and/or the Lenders shall not be responsible for any
act or omission with respect to or in connection with any Collateral arising in
connection with or created by any Letter of Credit, other than as the result of
the Agent’s and/or the Lenders’ own gross negligence or willful misconduct.

5.5          Standard
of Conduct for Agent and Lenders.  The Companies agree that any action taken by
the Agent and/or the Lenders, absent the gross negligence or willful misconduct
by the Agent and/or the Lenders, or any action taken by any Issuing Bank, under
or in connection with the Letters of Credit, the Letter of Credit Guaranties,
the drafts or acceptances

 41
 

 

relating to the
Letters of Credit, or the Collateral, shall be binding on each of the Companies
and shall not put the Agent and/or the Lenders in any resulting liability to
any of the Companies, provided that nothing contained in this Section 5.5
of this Financing Agreement shall, or shall be deemed to, affect, waive or
modify any right the Company may have against the Issuing Bank in connection
with any Letters of Credit.  In
furtherance thereof, the Agent shall have the full right and authority to clear
and resolve any questions of non-compliance of documents; to give any
instructions as to acceptance or rejection of any documents or goods; to
execute any and all steamship or airways guaranties (and applications
therefor), indemnities or delivery orders; to grant any extensions of the
maturity of, time of payment for, or time of presentation of, any drafts,
acceptances, or documents; and to give or withhold its consent to any
amendments, renewals, extensions, modifications, changes or cancellations of
any of the terms or conditions of any of the applications, Letters of Credit,
drafts or acceptances; all in the Agent’s sole name, and the Issuing Bank shall
be entitled to comply with and honor any and all such documents or instruments
executed by or received solely from the Agent, all without any notice to or any
consent from the Companies or any one of them. 
Notwithstanding any prior course of conduct or dealing with respect to
the foregoing including amendments and non-compliance with documents and/or the
Companies’ instructions with respect thereto, the Agent may exercise its rights
hereunder in its sole and reasonable business judgment.

5.6          Limitation
on Companies’ Actions. 
Without the Agent’s express consent and endorsement in writing, the
Companies agree, in connection with any Letters of Credit: (a) not to
(i) execute any and all applications for steamship or airway guaranties,
indemnities or delivery orders; (ii) grant any extensions of the maturity
of, time of payment for, or time of presentation of, any drafts, acceptances or
documents; or (iii) agree to any amendments, renewals, extensions,
modifications, changes or cancellations of any of the terms or conditions of
any of the applications, Letters of Credit, drafts or acceptances; and
(b) at the Agent’s discretion after the occurrence of an Event of Default
which is not cured within any applicable grace period, if any, not to (i) clear
and resolve any questions of non-compliance of documents, or
(ii) give any instructions as to acceptance or rejection of any documents
or goods.

5.7          Maintenance
of Leases.  The
Companies agree that any necessary import, export or other licenses or certificates
for the import or handling of the Collateral will have been promptly procured;
all foreign and domestic governmental laws and regulations in regard to the
shipment and importation of goods related to each Letter of Credit will have
been promptly and fully complied with in all material respects; and any
certificates in that regard that the Agent may at any time request will be
promptly furnished.  In this connection,
each of the Companies warrants and represents that all shipments made under any
such Letters of Credit are in accordance in all material respects with the laws
and regulations of the countries in which the shipments originate and
terminate, and are not prohibited by any such laws and regulations.  The Companies assume all risk, liability and
responsibility for, and agree to pay and discharge, all present and future
local, state, federal or foreign taxes, duties, or levies.  Any embargo, restriction, laws, customs or
regulations of any country, state, city, or other political subdivision, where
the goods related to each Letter of Credit is or may be located, or wherein
payments are to be made, or wherein drafts may be drawn, negotiated, accepted,
or paid, shall be solely at the Companies’ risk, liability and responsibility.

 42
 

 

5.8          Subrogation
Rights.  Upon any
payments made to the Issuing Bank under the Letter of Credit Guaranty, the
Agent on behalf of the Lenders shall acquire by subrogation, any rights,
remedies, duties or obligations granted or undertaken by any of the Companies
to the Issuing Bank in any application for Letters of Credit, any standing
agreement relating to Letters of Credit or otherwise, all of which shall be
deemed to have been granted to the Agent and apply in all respects to the Agent
and shall be in addition to any rights, remedies, duties or obligations
contained herein.

5.9          Rights
Against Issuing Bank. 
Notwithstanding any provision to the contrary contained in this
Financing Agreement, nothing contained herein shall, or shall be deemed to,
affect, waive or modify any rights the Companies may have against the Issuing
Bank in connection with any Letters of Credit.

SECTION 6.                 Collateral

6.1          Grant of
Security Interest. 
As security for the prompt payment in full of all loans and advances
made and to be made to the Companies or any one of them from time to time by
the Agent and/or the Lenders pursuant hereto, as well as to secure the payment
in full of the other Obligations of any of the Obligors, each of the Obligors
hereby, and pursuant to the Loan Documents, pledges and grants to the Agent on
behalf of the Lenders a continuing general lien upon and security interest in
all of its:

(a)           Accounts;

(b)           Inventory;

(c)           General
Intangibles;

(d)           Documents
of Title;

(e)           Other
Collateral; and

(f)            Equipment.

The security
interests and liens hereby granted in the Collateral are given in renewal,
extension and modification, but not in extinguishment, of the security
interests and liens previously granted to Agent, on behalf of Lenders, in the
Collateral pursuant to the Original Financing Agreement and the Existing
Financing Agreement; such prior security interests and liens are not
extinguished hereby; and the making, perfection and priority of such prior
security interests and liens shall continue in full force effect.

6.2          Illustration
of Scope of Security Interest.  The security interests granted hereunder
shall extend and attach to:

(a)           All
Collateral which is presently in existence and which is owned by any of the
Obligors or in which any of the Obligors has any interest, whether held by the
Obligors or

 43
 

 

others for its
account, and, if any Collateral is Equipment, whether such Obligors’ interest
in such Equipment is as owner or lessee or conditional vendee;

(b)           All
Equipment whether the same constitutes personal property or fixtures,
including, but without limiting the generality of the foregoing, all dies,
jigs, tools, benches, molds, tables, accretions, component parts thereof and
additions thereto, as well as all accessories, motors, engines and auxiliary
parts used in connection with or attached to the Equipment; and

(c)           All
Inventory and any portion thereof which may be returned, rejected, reclaimed or
repossessed by the Agent, the Lenders or any of the Obligors from the Obligors’
customers, as well as to all supplies, goods, incidentals, packaging materials,
labels and any other items which contribute to the finished goods or products
manufactured or processed by the Obligors, or to the sale, promotion or
shipment thereof.

6.3          Maintenance
of Inventory.  Each
of the Obligors agrees to safeguard, protect and hold all Inventory for the
Agent’s account and make no disposition thereof except in the regular course of
the business of the Obligors as herein provided.  Unless the Agent, at its election, has given
the Obligors notice to the contrary after the occurrence of an Event of
Default, any Inventory (including Inventory in possession of any third party
warehouseman or processor) may be sold and shipped by the Obligors to their
customers in the ordinary course of said Obligors’ business, on open account
and on terms then currently being extended by the Obligors to their customers, provided
that all proceeds of all sales (including cash, accounts receivable, checks,
notes, instruments for the payment of money and similar proceeds) are forthwith
transferred, endorsed, and turned over and delivered to the Agent, on behalf of
the Lenders, in accordance with Section 3.6 of this Financing
Agreement.  The Agent, at its election,
shall have the right to withdraw this permission at any time upon the
occurrence of an Event of Default and until such time as such Event of Default
is waived in writing by the Required Lenders or cured to the Required Lenders’
satisfaction, and/or give instructions to any third party warehouseman or
processor to cease following the Obligors’ instructions with respect to any
Inventory in possession of such third parties, in which event no further
disposition shall be made of the Inventory by any of the Obligors without the
Agent’s prior written approval (other than sales previously contracted for in
the ordinary course of business which sales any such Company is legally
obligated to make).  Upon the sale,
exchange, or other disposition of Inventory, as herein provided, the security
interest in each of the Obligors’ Inventory provided for herein shall, without
break in continuity and without further formality or act, continue in, and
attach to, all proceeds, including any instruments for the payment of money,
accounts receivable, contract rights, documents of title, shipping documents,
chattel paper and all other cash and non-cash proceeds of such sale,
exchange or disposition.  As to any such
sale, exchange or other disposition after the occurrence of an Event of
Default, the Agent and the Lenders shall have all of the rights of an unpaid
seller, including stoppage in transit, replevin, rescission and
reclamation.  The Companies agree that
any and all proceeds of Collateral shall be held in trust for the Agent, on
behalf of the Lenders, and promptly turned over to the Agent by deposit in the
Depository Accounts.  Irrespective of the
Agent’s perfection status in any and all of the Obligors’ General Intangibles,
including without limitation, any Trademarks, Copyrights or licenses with
respect thereto, each of the Obligors hereby irrevocably grants the Agent a
royalty

 44
 

 

free license to
sell or otherwise dispose or transfer, in accordance with Section 10.3
and the applicable terms hereof, any of the Obligors’ Inventory upon the
occurrence of an Event of Default which has not been waived in writing by the
Required Lenders.

6.4          Maintenance
of Equipment.  Each
of the Obligors agrees at its own cost and expense to keep the Equipment in as
good and substantial repair and condition as the same is now or at the time the
lien and security interest granted herein shall attach thereto, reasonable wear
and tear excepted, making any and all repairs and replacements when and where
necessary; provided that the Obligors shall not be obligated to make
repairs and replacements if, in the good faith business judgment of the Parent,
such repairs and replacements are not necessary for the continued use of the
Equipment in the business of the Obligors or are not economically
justified.  Each Obligor also agrees to safeguard,
protect and hold all Equipment for the Agent’s account and make no disposition
thereof unless such Company first obtains the prior written approval of the
Agent or except as otherwise provided below in this Section 6.4.  The proceeds of any sale, exchange or other
disposition of any Equipment permitted under this Section 6.4 shall
not be commingled with the Obligors’ other property, but shall be segregated,
held by the Obligor in trust for the Agent, on behalf of the Lenders, as the
Agent’s exclusive property, and shall be delivered immediately by the Obligor
to the Agent in the identical form received by the Obligor by deposit to the
Depository Accounts.  Upon the sale,
exchange, or other disposition of the Equipment, as herein provided, the security
interest provided for herein shall, without break in continuity and without
further formality or act, continue in, and attach to, all proceeds, including
any instruments for the payment of money, accounts receivable, contract rights,
documents of title, shipping documents, chattel paper and all other cash and
non-cash proceeds of such sales, exchange or disposition.  As to any such sale, exchange or other
disposition after the occurrence of an Event of Default, the Agent and the
Lenders shall have all of the rights of unpaid sellers, including stoppage in
transit, replevin, rescission and reclamation. 
Notwithstanding anything herein above contained to the contrary, the
Obligor may sell, exchange or otherwise dispose of obsolete Equipment or
Equipment no longer needed in the Obligors’ operations, provided, however,
that (a) the then market value of the Equipment so disposed of does not
exceed $3,000,000 in the aggregate in any Fiscal Year for all Obligors and
(b) the proceeds of such sales or dispositions are delivered to the Agent
in accordance with the foregoing provisions of this section, except that any
such Obligor may retain and use such proceeds to purchase forthwith replacement
Equipment which such Obligor determines in its reasonable business judgment to
have a collateral value at least equal to the Equipment so disposed of or sold,
provided, however, that the aforesaid right shall automatically
cease upon the occurrence of an Event of Default which is not cured within any
applicable grace period or waived in writing by Agent, provided further that if
such Obligor does not promptly replace such Equipment the Agent may apply such
proceeds to the Revolving Loans, in its sole discretion.

6.5          Survival
of Security Interest. 
The rights and security interests granted to the Agent and the Lenders
hereunder are to continue in full force and effect, notwithstanding any notice
of termination of this Financing Agreement or the fact that the Revolving Loan
Account maintained in each Company’s name on the books of the Agent may from
time to time be temporarily in a credit position, until the final payment in
cash in full to the Agent on behalf of the Lenders of all Obligations and the
termination of the Agent’s and Lenders’ obligations under this Financing
Agreement.  Any delay, or omission by the
Agent and/or the Lenders to exercise

 45
 

 

any right
hereunder, shall not be deemed a waiver thereof, or be deemed a waiver of any
other right, unless such waiver shall be in writing and signed by Required
Lenders.  A waiver on any one occasion
shall not be construed as a bar to or waiver of any right or remedy on any
future occasion.

6.6          No
Requirement to Marshal Collateral.  Notwithstanding the Agent’s security interest
in the various assets constituting Collateral and to the extent that the
Obligations are now or hereafter secured by any assets or property other than
the Collateral or by the guarantee, endorsement, assets or property of any
other Person, the Agent shall have the right in its sole discretion to
determine which rights, security, liens, security interests or remedies the
Agent shall at any time pursue, foreclose upon, relinquish, subordinate, modify
or take any other action with respect to, without in any way modifying or
affecting any of them, or any of the Agent’s and/or the Lenders’ rights
hereunder.

6.7          Right to
Charge Revolving Loan Account, Etc..  Any reserves or balances to the credit of the
Obligors, or any one of them, and any other property or assets of the Obligors,
or any one of them, in the possession or control of the Agent and/or the Lenders
may be held by the Agent as security for any Obligations and applied in whole
or partial satisfaction of such Obligations when due but will be released to
Parent upon Parent’s written request if no Default or Event of Default has
occurred and is continuing.  The liens
and security interests granted herein and any other lien or security interest
the Agent and/or the Lenders may have in any other assets of the Obligor, shall
secure payment and performance of all now existing and future Obligations.  The Agent may in its discretion charge any or
all of the Obligations to the Revolving Loan Accounts of the Companies, or any
one of them, when due.

6.8          Further
Assurances.  The
Companies shall deliver to the Agent on behalf of the Lenders, and/or shall
cause the appropriate party to deliver to the Agent, from time to time such
pledge or security agreements with respect to General Intangibles (now or
hereafter acquired) of each of the
Companies and all of its or their subsidiaries (other than Designated Subsidiaries
and Foreign Subsidiaries) as the Agent shall require to obtain valid first
liens thereon.  In furtherance of the
foregoing, the Companies shall provide timely notice to the Agent of any
additional Patents, Trademarks, tradenames, service marks, Copyrights, brand
names, trade names, logos and other trade designations acquired or applied for
subsequent to the Closing Date and such Companies shall execute such
documentation as the Agent may reasonably require to obtain and perfect its
lien thereon. Each of the
Companies hereby confirms that it shall hold any stock pledged pursuant to the
Loan Documents, in trust for the Agent and deliver or cause to be delivered any
stock issued subsequent to the Closing Date, to the Agent on behalf of the
Lenders in accordance with the applicable Pledge Agreement. In the absence of
an Event of Default, the owner of any pledged stock shall be entitled to vote
such stock (in a manner which is not detrimental to the Agent and/or the
Lenders, or inconsistent with the terms of the Pledge Agreement) and to receive
any dividend thereon.  Each of the
Companies hereby irrevocably grants to the Agent a royalty-free, non-exclusive
license in the  General Intangibles,
including tradenames, Trademarks, Copyrights, Patents, licenses, and any other
proprietary and intellectual property rights and any and all right, title and
interest in any of the foregoing, for the sole purpose, upon the occurrence of
an Event of Default, of the right to: (i) advertise for sale and sell or
transfer any Inventory bearing any of the General Intangibles, and
(ii) make, assemble,

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prepare for sale
or complete, or cause others to do so, any applicable raw materials or
Inventory bearing any of the General Intangibles, including use of the
Equipment and Real Estate for the purpose of completing the manufacture of
unfinished goods, raw materials or work-in-process comprising  Inventory, and apply the proceeds thereof to
the Obligations hereunder, all as further set forth in this Financing Agreement
and irrespective of the Agent’s lien and perfection in any General Intangibles.

SECTION 7.                 Representations, Warranties and Covenants

7.1          Solvency,
Company Information, First Priority Lien, Etc..  Each of the Obligors hereby warrants,
represents and covenants that with respect to itself and each other Obligor,
that each Company is Solvent and the Obligors taken as a whole are
Solvent.  Each Company further warrants
and represents that: (i) Schedule 7.1 hereto correctly and
completely sets forth such Company’s (A) legal name in its state of
organization, (B) state of organization, (C) Federal Tax
Identification Number, (D) chief executive office, (E) tradenames
used by the Company in connection with the sale of Inventory or providing
services to its customers, (F) prior names used in the last five (5) years
(including, such names of such Company’s predecessors in interest as a result
of a merger or consolidation) and (G) charter or other similar number for
such Company in its state of organization; (ii) except for the Permitted
Encumbrances, after filing of financing statements with such Obligor’s state of organization, this Financing
Agreement creates a valid, perfected and first priority security interest upon
and security interests in the Collateral and the security interests granted
herein constitute and shall at all times constitute the first and only liens on
the Collateral, except for Permitted Encumbrances; that, except for the
Permitted Encumbrances, any such Obligor is or will be at the time additional
Collateral is acquired by it, the absolute owner or lessee of the Collateral
with full right to pledge, sell, consign, transfer and create a security
interest in such Obligor’s interest in the Collateral, free and clear of any
and all claims or liens in favor of others, other than Permitted Encumbrances;
that each of the Obligors will at its expense forever warrant and, at the Agent’s
request, defend the same from any and all claims and demands of any other
Person other than the Permitted Encumbrances; that the Obligors, or any one of
them, will not grant, create or permit to exist, any lien upon or security
interest in the Collateral, or any proceeds thereof, in favor of any other
Person other than the holders of the Permitted Encumbrances; and that the
Equipment does not comprise a part of the Inventory of any of the Obligors and
that the Equipment is and will only be used by the Obligors in their business
and will not be held for sale or lease, or removed from their premises, or
otherwise disposed of by the Obligors without the prior written approval of the
Agent except as otherwise permitted in Section 6.4 and Section 7.10(c)
of this Financing Agreement.

7.2          Maintenance
and Inspection of Books. 
Each of the Obligors agrees to maintain books and records pertaining to
the Collateral in detail, form and scope consistent with the manner in which
the Obligors have historically maintained the same.  Each of the Obligors agrees that the Agent or
its agents, and any of the Lenders who may wish to accompany the Agent at their
own cost and expense, may enter upon the Obligors’ premises, upon reasonable
prior notice, at any time during normal business hours, and from time to time
in its reasonable business judgment, for the purpose of inspecting the
Collateral, and any and all records pertaining thereto.  Each of the Obligors agrees to provide the
Agent with monthly Collateral

 47
 

 

reports, including
notice of all locations of Inventory (and specifically indicating any new
locations or locations on which the Agent does not have any applicable landlord
or warehouseman waiver), and (y) to promptly execute and deliver to the
Agent upon the Agent’s request appropriate Uniform Commercial Code financing
statements and, with respect to assets that a Company wants to include as
Eligible Inventory, to deliver executed landlord or warehouseman liens waivers,
in form and substance reasonably satisfactory to Agent, for any new Collateral
locations in the United States.  Each of
the Obligors is also to advise the Agent promptly, in sufficient detail, of any
material adverse change relating to the type, quantity or quality of the
Collateral or on the security interests granted to the Agent therein.  The Obligors shall advise the Lenders of any
material adverse change in the Collateral or financial condition of the
Obligors, taken as a whole.

7.3          Reports
on Collateral. 
Each of the Obligors agrees to execute and deliver to the Agent, from
time to time, solely for the Agent’s convenience in maintaining a record of the
Collateral, such written statements, and schedules as the Agent may reasonably
require, designating, identifying or describing the Collateral pledged to the
Agent hereunder, provided that prior to the occurrence of an Event of
Default hereunder the Obligors shall not be required to report as to (i) Accounts
more frequently than monthly and (ii) Inventory more frequently than
monthly.  Subsequent to the occurrence of
an Event of Default the Agent shall be entitled to request and receive more
frequent reporting as to Accounts and/or Inventory.  The Obligors’ or an Obligor’s failure,
however, to promptly give the Agent such statements, or schedules shall not
affect, diminish, modify or otherwise limit the Agent’s and/or the Lenders’
security interests in the Collateral. 
Each of the Obligors also agrees to provide Agent, upon request by Agent
not more than once each Fiscal Year, with an appraisal of its Inventory, any
such appraisal to be at the Obligors’ expense and otherwise acceptable to
Agent; provided, however, subsequent to the occurrence of a Default
or Event of Default, Agent may request additional appraisals of Inventory at
the Agent’s expense.

7.4          Further
Assurances.  Each
of the Obligors agrees to comply in all material respects with the requirements
of all state and federal laws in order to grant to the Agent on behalf of the
Lenders valid and perfected first security interests in the Collateral, subject
only to the Permitted Encumbrances.  The
Agent is hereby authorized by the Obligors to file from time to time any
financing or continuation statements, or amendments thereto, covering the
Collateral whether or not any of the Obligors’ signatures appear thereon.  Agent will give Parent copies of and filing
information for each of the same and will correct any material errors upon the
reasonable request of Parent.  Each
Obligor hereby consents to and ratifies any such filings made by Agent prior to
the Closing Date.  Each of the Obligors
agrees to do whatever the Agent may reasonably request, from time to time, by
way of: filing notices of liens, financing statements, amendments, renewals and
continuations thereof; cooperating with the Agent’s custodians; keeping stock
records; transferring proceeds of Collateral to the Agent’s possession if
otherwise required hereunder or under any of the other Loan Documents; and
performing such further acts as the Agent and/or the Lenders may reasonably
require in order to effect the purposes of this Financing Agreement.

7.5          Insurance.  (a)  Each
of the Obligors agrees to maintain insurance on its Real Estate (other than
undeveloped acreage), Equipment and Inventory (other than, so long as

 48

 

Availability does not
fall below $50,000,000, insurance on Inventory that constitutes raw materials
or work-in-progress; once Availability falls below $50,000,000, Obligors shall
maintain insurance on all Inventory as the Agent may require, consistent with
the other terms and provisions herein, at all times thereafter) under such
policies of insurance, with such insurance companies, in such reasonable
amounts and covering such insurable risks as are at all times reasonably
satisfactory to the Agent, Agent agreeing that flood insurance is not required
on any of the Real Estate owned by Obligors as of December 16, 2003. The Agent
acknowledges and agrees that the insurance coverage maintained by each of the
Obligors on the date hereof described in Schedule 7.5(a) attached hereto
is satisfactory to each of the Lenders on the date hereof.  All policies covering the Equipment and
Inventory are, subject to the rights of any holders of Permitted Encumbrances
holding claims senior to the Agent, to be made payable to the Agent on behalf
of the Lenders, in case of loss, under a standard non-contributory “mortgagee”,
“lender” or “secured party” clause and are to contain such other provisions as
the Agent may reasonably require to fully protect the Agent’s interest in the Inventory
and Equipment and to any payments to be made under such policies, certificates
of insurance, or at the Agent’s prior reasonable request, all original
policies, are to be delivered to the Agent, premium prepaid, with the loss
payable endorsement in the Agent’s favor, and shall provide for not less than
thirty (30) days prior written notice to the Agent of the exercise of any right
of cancellation.  At any Obligor’s
request, or if any Obligor fails to maintain such insurance, the Agent may
arrange for such insurance, but at the Obligors’ expense and without any
responsibility on the Agent’s part for obtaining the insurance, the solvency of
the insurance obligors, the adequacy of the coverage, or the collection of
claims.  Upon the occurrence of an Event
of Default which is not waived or cured to the Agent’s satisfaction, the Agent
shall, subject to the rights of any holders of Permitted Encumbrances holding
claims senior to the Agent, have the sole right, in the name of the Agent or
the Obligors or any one of them, to file claims under any insurance policies,
to receive, receipt and give acquittance for any payments that may be payable
thereunder, and to execute any and all endorsements, receipts, releases,
assignments, reassignments or other documents that may be necessary to effect
the collection, compromise or settlement of any claims under any such insurance
policies.

(b)           Application of Insurance Proceeds.   (i)  Upon any loss or damage by fire or other
casualty, Insurance Proceeds relating to an Obligor’s Inventory shall first
reduce the Revolving Loans to the extent any Revolving Loans are outstanding,
and the balance, if any, shall be remitted to Parent.  Upon the occurrence of an Event of Default,
such Proceeds shall be applied to the Obligations in such order as the Agent
may reasonably elect.

(ii)           If any part of any
Obligor’s Equipment is damaged by fire or other casualty and the Insurance
Proceeds for such damage or other casualty are less than or equal to $100,000,
the Agent shall promptly apply such Insurance Proceeds to reduce the Obligor’s
Revolving Loans and any excess shall be remitted to Parent.  Upon the occurrence of an Event of Default,
such Insurance Proceeds shall be applied to the Obligations in such order as
the Agent may reasonably elect and any excess shall be remitted to Parent.

(iii)         As long as an Event
of Default has not occurred (which is not cured to the Required Lenders’
satisfaction), the Obligors have sufficient business

 49
 

 

interruption insurance generally to replace the lost
profits of any of the Obligors’ facilities, and the Insurance Proceeds are in
excess of $100,000, the Obligors may elect (by delivering written notice to the
Agent) to replace, repair or restore such Equipment to substantially the
equivalent condition prior to such fire or other casualty as set forth
herein.  If the Obligors do not, or
cannot, elect to use the Insurance Proceeds as set forth above, the Agent may,
subject to the rights of any holders of Permitted Encumbrances holding claims
senior to the Agent, apply the Insurance Proceeds to the payment of the
Obligations in such manner and in such order as the Agent may reasonably elect
and any excess shall be remitted to Parent.

(iv)          If the Obligors
elect to use the Insurance Proceeds for the repair, replacement or restoration
of any Equipment, and there is then no Event of Default, (i) Insurance
Proceeds on Equipment in excess of $100,000 will be applied to the reduction of
the Revolving Loans and (ii) the Agent may set up a reserve against Availability
for an amount equal to the said Insurance Proceeds referred to in clause (i)
hereof.  The reserve will be reduced
dollar-for-dollar upon receipt of non-cancelable executed
purchase orders, delivery receipts or contracts for the replacement, repair or
restoration of Equipment and disbursements in connection therewith.  Upon completion of the restoration or repair,
any remaining reserve as established hereunder will be automatically released.

(v)            The Obligors agree
to pay any reasonable costs, fees or expenses that the Agent may reasonably
incur in connection herewith.

(c)           Agent’s
Right to Purchase Insurance.  If
any of the Obligors fail to provide the Agent with timely evidence, reasonably
acceptable to the Agent, of their maintenance of insurance coverage required
pursuant to Section 7.5(a) above, the Agent may purchase, at such
Obligors’ expense, insurance to protect the Agent’s interests in the
Collateral.  Agent shall promptly notify
Parent of Agent’s purchase of any such insurance coverage.  The insurance acquired by the Agent may, but
need not, protect the Obligors’ interest in the Collateral, and therefore such
insurance may not pay claims which the Obligors, or any one of them, may have
with respect to the Collateral or pay any claim which may be made against the
Obligors in connection with the Collateral. 
The Obligors may request cancellation of any such insurance obtained by
the Agent, but only after providing the Agent with satisfactory evidence that
the Obligors have applicable insurance. 
If the Agent purchases, obtains or acquires insurance covering all or
any portion of the Collateral, the Obligors shall be responsible for all of the
applicable costs of such insurance, including premiums, interest (at the
applicable Chase Bank Rate for Revolving Loans set forth in Section 8.1
hereof), fees and any other charges with respect thereto, until the effective
date of the cancellation or the expiration of such insurance.  The Agent may charge all of such premiums,
fees, costs, interest and other charges to the Obligors’ Revolving Loan
Accounts.  Each of the Obligors hereby
acknowledges that the costs of the premiums of any insurance acquired by the
Agent may exceed the costs of insurance which the Obligors may be able to
purchase on their own.  If the Agent
purchases such insurance, the Agent will notify the Obligors or the applicable
Obligor of said purchase within thirty (30) days after the date of such
purchase.  If, within thirty (30) days of
the date of such notice, the Obligors provide the Agent with proof that the
Obligors had the insurance coverage

 50
 

 

required
pursuant to Section 7.5(a) above (in form and substance satisfactory to
the Agent), as of the date on which the Agent purchased insurance and the
Obligors continued at all times to have such insurance, then the Agent agrees
to cancel the insurance purchased by the Agent and credit the Obligors’
Revolving Loan Accounts with the amount of all costs, interest and other
charges associated with such insurance, including with any amounts previously
charged by the Agent to the Revolving Loan Accounts.

7.6          Payment
of Taxes.  Each of
the Obligors agrees to pay, when due, all taxes, sales taxes, assessments,
claims and other charges (herein “taxes”)
lawfully levied or assessed upon an Obligor, the Obligors or the Collateral
unless such taxes are being disputed or diligently contested in good faith by
the applicable Obligors by appropriate proceedings and adequate reserves are
established in accordance with GAAP. 
Notwithstanding the foregoing, if any lien shall be filed or claimed
thereunder (x) for taxes due the United States of America or
(y) which in the Agent’s opinion might create a valid obligation having
priority over the rights granted to the Agent herein, such lien shall not be
deemed to be a Permitted Encumbrance hereunder and the Obligors shall
immediately pay such tax and remove the lien of record unless the enforcement
of such lien against assets of the Obligors has been effectively stayed by
operation of law or legal proceeding.  If
the Obligors fail to do so promptly, then at the Agent’s election, the Agent
may (i) create an Availability Reserve or (ii) on the Obligor’s or
the Obligors’ behalf, as applicable, pay such taxes, and the amount thereof
shall be an Obligation secured hereby and due to the Agent by the Obligors on
demand.

7.7          Compliance
With Laws.  Each of
the Obligors:  (a) agrees to comply
with all acts, rules, regulations and orders of any legislative, administrative
or judicial body or official, which the failure to comply with would reasonably
be expected to have a Material Adverse Effect; provided that the
Obligors may dispute or contest any acts, rules, regulations, orders and
directions of such bodies or officials in any reasonable manner which will not,
in the Agent’s reasonable opinion, materially and adversely effect the Agent’s
and/or the Lenders’ rights or priority in any material part of the Collateral;
(b) agrees to comply with all Environmental Laws applicable to the
Collateral, the ownership and/or use of its real property and operation of its
business, which the failure to comply with would reasonably be expected to have
a Material Adverse Effect; and (c) shall not be deemed to have breached
any provision of this Section 7.7 if (i) the failure to comply
with the requirements of this Section 7.7 resulted from good faith
error or innocent omission, (ii) the Obligors promptly commence and
diligently pursue a cure of such breach, and (iii) such failure is cured
within sixty (60) Business Days following any of the Obligors’ receipt of
notice of such failure.  Each of the
Obligors hereby indemnifies the Agent and the Lenders and agrees to defend and
hold the Agent and the Lenders harmless from and against any and all loss,
damage, claim, liability, injury or expense which the Agent may sustain or
incur (other than solely as a result of the physical actions of the Agent on
the Obligors’ premises which are finally determined to constitute gross
negligence or willful misconduct by a court of competent jurisdiction) in
connection with:  any and all claims or
expenses asserted against the Agent and/or the Lenders as a result of any
environmental pollution, hazardous material or environmental clean-up of
any of the Obligors’ Real Property; or any claim or expense which results from
the Obligors’ operations (including, but not limited to, any of the Obligors’
off-site disposal practices), and each of the Obligors further agrees
that this

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indemnification
shall survive termination of this Financing Agreement as well as the payment of
all Obligations or amounts payable hereunder.

7.8          Financial
Reporting.  Until
termination of this Financing Agreement and payment and satisfaction of all
Obligations due hereunder, each of the Companies agrees that, unless the Agent
shall have otherwise consented in writing, the Companies will furnish to the
Agent and each Lender: (a) within ninety (90) days after the end of each
Fiscal Year of each of the Companies, an audited Consolidated Balance Sheet, as
at the close of such year, and statements of profit and loss, cash flow and
shareholders’ equity, of the Companies and their consolidated subsidiaries for
such year, audited by independent public accountants selected by the Companies
and reasonably satisfactory to the Agent accompanied by the unqualified opinion
of such accountants, that such Consolidated Balance Sheet was prepared in
accordance with GAAP, and with a Consolidating Balance Sheet attached thereto
which will not be covered by such opinion; (b) within forty five (45) days
after the end of each Fiscal Quarter a Consolidated Balance Sheet and
Consolidating Balance Sheet as at the end of such period and statements of
profit and loss, cash flow and shareholders’ equity of the Companies and their
consolidated subsidiaries, certified by an authorized financial or accounting
officer of the Companies; provided, however, during anytime when
there are Revolving Loans outstanding the financial statements required by this
clause (b) shall be prepared as of the end of each calendar month and delivered
within thirty (30) days after the end of each such calendar month;
(c) prior to any Fiscal Year End, projections for the next succeeding four
quarter period, including balance sheets, income statements and cash flow for
such period, all in form reasonably satisfactory to the Agent; and
(d) from time to time, such further information regarding the business
affairs and financial condition of the Companies and/or any subsidiaries
thereof as the Agent may reasonably request, including without limitation
(i) the accountant’s management practice letter and (ii) copies of
all of the Parent’s 10-K, 10-Q and Proxy Statements.  In conjunction with such financial statements
the Companies shall deliver the internal management letters (prepared by
financial officers of such Companies), if any, and the accountants management
practice letter.  Each financial
statement which the Companies are required to submit hereunder must be
accompanied by an officer’s certificate, signed by the President, Vice
President, Controller, or Treasurer, pursuant to which any one such officer
must certify that, to the best of such officer’s knowledge after due inquiry:
(x) the financial statement(s) fairly and accurately represent(s) such
Company’s or the Companies consolidated as applicable, financial condition at
the end of the particular accounting period, as well as such Company’s or the
Companies consolidated operating results during such accounting period, subject
to year-end audit adjustments and the omission of footnotes; and
(y) during the particular accounting period: (A) there has been no
Default or Event of Default under this Financing Agreement, provided, however,
that if any such officer has knowledge that any such Default or Event of
Default, has occurred during such period, the existence of and a detailed
description of same shall be set forth in such officer’s certificate;
(B) any of the Companies have not received any notice of cancellation with
respect to its property insurance policies; (C) the Companies have not
received any notice that could result in a material adverse effect on the value
of the Collateral taken as a whole; and (D) the exhibits attached to such
certificate constitutes detailed calculations showing compliance with all
financial covenants contained in this Financing Agreement.

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7.9          Anti-Money
Laundering and Terrorism Regulations.  Companies agree to comply with all applicable
anti-money laundering and terrorism laws, regulations and executive orders in
effect from time to time (including, without limitation, the USA Patriot Act
(Pub. L. No. 107-56)).  Companies also
agree to ensure that no Person who owns a controlling interest in or otherwise
controls Companies (or any of them) is a Person designated under
Section 1(b), (c) or (d) of Executive Order No. 13224 (issued September
23, 2001) or any other similar Executive Order. 
Companies acknowledge that Agent’s and each Lender’s performance
hereunder is subject to compliance with all such laws, regulations and
executive orders, and in furtherance of the foregoing, Companies agree to
provide to Agent and the Lenders all information about Companies’ ownership,
officers, directors, customers and business structure as Agent and the Lenders
reasonably may require to comply with, such laws, regulations and executive
orders.

7.10        Negative
Covenants.  Until
termination of this Financing Agreement and payment and satisfaction of all
Obligations due hereunder, each of the Obligors agrees that, without the prior
written consent of the Agent, except as otherwise herein provided, each such
Obligor will not, nor will the Obligors permit any Domestic Subsidiary, to:

(a)           Additional
Liens.  Mortgage,
assign, pledge, transfer or otherwise permit any lien, charge, security
interest, encumbrance or judgment, (whether as a result of a purchase money or title
retention transaction, or other security interest, or otherwise) to exist on
any of its assets or goods, whether real, personal or mixed, whether now owned
or hereafter acquired, except for the Permitted Encumbrances;

(b)           Additional
Indebtedness.   Incur or create any Indebtedness other than
the Permitted Indebtedness or borrow any money on the security of any of the
Collateral or any other assets or stock of the Obligors from sources other than
the Agent and the Lenders, except for Permitted Indebtedness secured by
Permitted Encumbrances;

(c)           Sales
and Other Dispositions.  Sell,
lease, assign, transfer or otherwise dispose of (i) Collateral, except as
otherwise specifically permitted by this Financing Agreement, or
(ii) either all or substantially all of any Obligor’s or the Obligors’
assets, which do not constitute Collateral; provided, however,
that as long as there has not occurred an Event of Default that is continuing
which has not been waived in writing by Agent and no Default or Event of
Default would occur after giving effect thereto, neither this Section 7.10(c)
nor any other provisions of this Financing Agreement shall prohibit:

(i)                                   the sale or
lease of Inventory in the ordinary course of business;

(ii)                               the sale, lease or
other disposition of Equipment permitted under Section 6.4 hereof;
and

(iii)                            the sale or other
disposition approved by the Board of Directors of Parent to a Person who is not
an Affiliate of the Obligors of all of the Capital Stock or all or
substantially all of the assets of any Obligor which is not a Material Obligor;

(d)           Mergers
and Other Corporate Changes.  Merge,
consolidate or otherwise alter or modify its corporate name, state of formation
or organization, structure, status

 53
 

 

or
existence, or enter into or engage in any operation that is not a Qualified
Business, except that an Obligor may change its corporate name or principal
place of business or address within the 48 contiguous States of the United
States of America, provided that in any such case (x) such Obligor
shall give the Agent thirty (30) days prior written notice thereof and
(y) such Obligor and the other Obligors shall execute and deliver prior to
or simultaneously with any such action any and all applicable documents and
agreements reasonably requested by the Agent (including, without limitation,
any and all UCC financing statements) to confirm the continuation and
preservation of all security interests and liens granted to the Agent for the
benefit of the Lenders hereunder; provided, however, as long as
no Default or Event of Default has occurred and is continuing and no Default or
Event of Default would occur or exist after giving effect thereto, and such
Obligor has complied with clause (x) and (y) immediately above, this Subsection
(d) shall not prohibit a Permitted Merger, except to the extent the Agent
reasonably determines, during the thirty (30) day period following Agent’s
receipt of the notice referred to in clause (x) above, that the liabilities and
other obligations (contingent or otherwise) of any Obligor resulting therefrom
or associated therewith could readily be expected to have a Material Adverse
Effect on the Company Group of which the surviving Obligor is a part or cause
such Company Group to not be Solvent;

(e)           Contingent
Obligations. 
Assume, guarantee, endorse, or otherwise become liable upon the
obligations of any Person, except by the endorsement of negotiable instruments
for deposit or collection or similar transactions in the ordinary course of
business and except (i) for assumptions or guaranties of Permitted
Indebtedness and (ii) for assumptions and guaranties of accounts payable
and other liabilities in connection with a Permitted Acquisition or a Permitted
Merger;

(f)            Restricted
Payments.  Declare
or pay any Restricted Payments, except the (i) Parent may make Restricted
Payments, provided that, in any instance under this Subsection (f), such
Restricted Payments may only be made if (w) the aggregate Availability of
the Companies is at least $30,000,000 after any such payment, (x) no Default
or Event of Default has occurred hereunder and is continuing, (y) after
giving effect to such payment, no Default and/or Event of Default has occurred
and is continuing or would occur hereunder and (z) the Obligor making such
Restricted Payments has sufficient working capital to pay its debts as they
come due and (ii) Obligors may complete transactions that qualify as Permitted
Intercompany Balances;

(g)           Investments
and Loans.  Make
any advance or loan to, or any investment in, any Person or make any Acquisitions;
provided, however, that as long as there has not occurred any
Default or Event of Default that is continuing which has not been waived in
writing by Agent and a Default or Event of Default would not occur or exist
after giving effect thereto, this Subsection (g) shall not prohibit:
(i) Permitted Acquisitions, (ii) loans, deposits, prepayments and
advances by the Companies to their employees or non-Affiliates of Obligors in
the ordinary course of their business in an amount not to exceed $3,000,000 in
the aggregate at any one time outstanding, (iii) Permitted Intercompany
Balances, (iv) mergers permitted under Section 7.10(d) hereof,
(v) Permitted Financial Investments, (vi) Trade Account Receivable
which are for goods furnished or services rendered in the ordinary course of
business and are payable in accordance with customary trade terms,
(vii) the VTW Transaction, provided that the aggregate amount of

 54
 

 

cash invested by
Parent in MPM and Sales Company pursuant to the VTW Transaction shall not exceed
$300,000,000, and (viii) the Apolo Transaction. 

(h)           Affiliate
Transactions.  Directly
or indirectly conduct any business or enter into, renew, extend or permit to
exist any transaction (including the purchase, sale, lease or exchange of any
assets or the rendering of any service) or series of related transactions with
any Affiliate of any Obligor (an “Affiliate
Transaction”) on terms that are less favorable to the Obligor
party to such transaction, than would be available in a comparable arm’s length
transaction with a Person who is not an Affiliate of any Obligor, except for:

(i)            the payment of
reasonable and customary regular fees to directors of the Obligor who are not
employees of the Obligor;

(ii)           loans and advances
to employees permitted under Section 7.10(g) hereof;

(iii)         any transaction
entered into in the ordinary course of business with the Obligor which is for
inter-company charges for administrative services, allocations of overhead,
concentrated cash management systems for collections and disbursements, and
sales of goods and services in connection with the business of the Obligors in
the ordinary course of business of such Persons;

(iv)          licenses and other
transfers of patents, trademarks, trade names, copyrights, trade secrets,
know-how and other intellectual property between and among any two or more of
the Obligors; and

(v)            transactions which
qualify as Permitted Intercompany Balances.

7.11        Fixed
Charge Coverage Ratio. 
Until termination of this Financing Agreement and payment and satisfaction
in full of all Obligations hereunder, unless a written waiver or consent is
granted by Agent, if at any time or from time to time Availability falls below
$30,000,000 (each being a “Fixed Charge
Coverage Ratio Event”), then, as of the end of the Fiscal
Quarter immediately before the date the Fixed Charge Coverage Ratio Event
occurred and as of each Fiscal Quarter thereafter through and including the end
of the Fiscal Quarter following the occurrence of such Fixed Charge Coverage
Ratio Event in which Availability equals or exceeds $30,000,000, Obligors on a
consolidated basis shall maintain for the 12-month period ending with
each such Fiscal Quarter a Fixed Charge Coverage Ratio of not less than 1.10 to
1.00.

7.12        Capital
Leases.  Without
the prior written consent of the Agent, the Obligors will not contract for
amounts due and payable pursuant to all Capital Leases and contracts for
purchase of, or otherwise incur obligations with respect to, Capital
Expenditures (whether subject to a security interest or otherwise) in the
aggregate amount in excess of $80,000,000 for the Fiscal Year ending
December 31, 2006 and for each Fiscal Year thereafter.

7.13        Notices.  The Obligors agree to advise the Agent and
each Lender in writing of any notices any of the Obligors receive from any
local, state or federal authority advising such

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Obligors, or any
one of them, of any environmental liability (real or potential) stemming from
such Obligors’ operations, their premises, their waste disposal practices, or
waste disposal sites used by the Obligors, or any one of them, and to provide
the Agent with copies of all such notices if so required.

7.14        Indemnification
Regarding Depository Accounts.  Each of the Obligors, jointly and severally,
hereby agrees to pay any and all out-of-pocket fees, costs, expenses, charges,
liabilities, obligations and other amounts relating to, or contemplated by, the
Depository Accounts, the lockbox and/or any other depository account and/or any
agreements or ancillary agreements entered in connection therewith from time to
time, including, without limitation, for the establishment and maintenance of
post office boxes and depository and collection accounts.  In furtherance thereof, each of the Companies
hereby agrees that any and all such payments shall be deemed Obligations and
irrevocably instructs the Agent to charge their Revolving Loan Accounts under
this Financing Agreement with any and all payments which the Agent may, in its
sole discretion, make from time to time with respect to any such Depository
Accounts, lockbox and/or any other depository account.  Each of the Obligors, jointly and severally,
hereby agrees to indemnify and hold harmless the Agent, the Lenders and their
officers, directors, employees, attorneys and agents (each an “Indemnified Party”) from, and holds
each of them harmless against, any and all losses arising under this Financing
Agreement and the Loan Documents, including, without limitation, losses
resulting from items deposited and returned unpaid or returned under a claim
that a presentment of warranty has been breached, liabilities, obligations,
claims, actions, damages, costs and expenses (including attorney’s fees) and
any payments made by the Agent pursuant to any indemnity provided by the Agent
with respect to or to which any Indemnified Party could be subject insofar as
such losses, liabilities, obligations, claims, actions, damages, costs, fees or
expenses arise from or relate to the Depository Accounts, the lockbox and/or
any other depository account and/or the agreements executed in connection
therewith, whether through the alleged or actual negligence of such Person or
otherwise, except and to the extent that the same results solely and directly
from the gross negligence or willful misconduct of such Indemnified Party as
finally determined by a court of competent jurisdiction.  This indemnity shall survive termination of
this Financing Agreement.  The Agent may,
in its reasonable business judgment, establish such Availability Reserves with
respect thereto as it may deem advisable under the circumstances and, upon any
termination hereof, hold such reserves as cash reserves for any such contingent
liabilities for the applicable duration of the Agent’s indemnity under any such
Depository Account, lockbox and/or any other depository account.

7.15        Representations
and Warranties.  In
order to induce Agent and the other Lenders to enter into this Financing
Agreement and to make the loans and advances provided for herein, the Obligors
make, on or as of the occurrence of each such loan or advance (except to the
extent such representations or warranties relate to an earlier date or are no
longer true and correct in all material respects solely as a result of
transactions not prohibited by the Loan Documents), the following representations
and warranties to the Agent and the other Lenders.

(a)           Organization
and Qualification. 
Each Obligor (i) is duly organized validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
organization, (ii) has the corporate, limited liability company or
partnership power, as the case may be, to own its property and to carry on its
business as now conducted and (iii) is duly

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qualified
to do business and is in good standing, in each case in each jurisdiction in which
the failure to be so qualified or in good standing would reasonably be expected
to have a Material Adverse Effect.

(b)           Authorization
and Validity.  Each
Obligor has the corporate, limited liability company or partnership power, as
the case may be, and authority to execute, deliver and perform its obligations
hereunder and under the other Loan Documents to which each such Obligor is a
party and all such action has been duly authorized by all necessary corporate,
limited liability company or partnership proceedings on its part.  The Loan Documents to which it is a party
have been duly and validly executed and delivered by each such Obligor and
constitute valid and legally binding agreements of each such Obligor enforceable
in accordance with the respective terms thereof, except, in each case, as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other similar laws relating to or affecting
the enforcement of creditors’ rights generally and general principles of
equity.

(c)           Consents.  No authorization, consent, approval, license
or exemption (other than such exemptions that exist under applicable law, that
are permitted, or that have been obtained) of any Person or filing or
registration with any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, is necessary for the
valid delivery or performance by any Obligor of any Loan Document to which it
is a party or for the grant of a security interest in or mortgage on the
collateral covered by the Loan Documents, except such matters relating to
performance as would ordinarily be done in the ordinary course of business
after the date hereof.

(d)           Conflicting
or Adverse Agreements or Ratifications.  Neither the delivery of the Loan Documents
nor compliance with the terms and provisions hereof or thereof will be contrary
to the provisions of, or constitute a default under (i) the charter or
bylaws of any corporate Obligor, the Certificate of limited partnership or
partnership agreement for any Obligor that is a partnership or the certificate
of formation or limited liability company agreement for any Obligor that is a
limited liability company or (ii) any applicable law or any applicable
regulation, order, writ, injunction or decree of any court or governmental
instrumentality or (iii) any material agreement to which any Obligor is a
party or by which any Obligor is bound or to which any Obligor is subject.

(e)           Other
Lending Agreements. 
As of the date hereof, all agreements of the Obligors (other than this
Financing Agreement and the other Loan Documents) relating to the borrowing of
money, or the issuance of letters of credit to or for the account of any party
or any contractually assumed contingent obligations are described on Schedule 7.15(e)
hereto.

(f)            Title
to Assets; Collateral Locations; Licenses and Permits.  The Obligors each have good and marketable
title to all personal property and good and indefeasible title to or a
subsisting leasehold interest in, all realty as reflected as of the date hereof
on its books and records as being owned or leased by it after giving effect to
the transaction contemplated herein, subject to no Liens except Permitted
Encumbrances.  All of such assets are
being maintained by the appropriate Person in good working condition in
accordance with

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historical
practice of the Obligors.  All real
property owned and leased by the Obligors as of the date hereof is set forth in
Schedule 7.15(f) hereto. All of the Collateral is located on the owned
and leased premises set forth in Schedule 7.15(f) hereto.  To the knowledge of the Obligors there are no
actual, threatened or alleged defaults of a material nature with respect to any
leases of real property under which any Obligor is bound after giving effect to
the transaction contemplated herein the consequences of which would reasonably
be expected to have a Material Adverse Effect. 
After giving effect to the transaction contemplated herein, each Obligor
is current and in good standing with respect to all governmental approvals,
permits, certificates, licenses, consents and franchises necessary to continue
to conduct its business and to own or lease and operate its properties as
heretofore conducted, owned, leased or operated except where any such failure
to maintain or file approvals, permits, certificates, licenses, consents and
franchises would not reasonably be expected to have a Material Adverse Effect.

(g)           Litigation.  Except as set forth in Schedule 7.15(g)
hereof, as of the date hereof, no proceedings against or affecting any Obligor
are pending or, to the knowledge of the Obligors, threatened before any court
or governmental agency or department which could reasonably be expected to have
a Material Adverse Effect.

(h)           Financial
Statements.  Prior
to the date hereof, the Obligors have furnished to the Lenders the audited,
consolidated financial statements of the Obligors as of December 31, 2005 and the consolidated financial
statements of the Obligors as of September 30, 2006 (such financial statements, collectively, are referred to as “Financials”).  The Financials have been prepared in
conformity with GAAP consistently applied (except for year-end adjustments and
omissions of footnotes with respect to the September 30, 2006 financial statements) and present fairly,
in all material respects, the financial condition of the Obligors as of the
dates thereof.  Since such dates, there
has not occurred any event which would reasonably be expected have a Material
Adverse Effect.

(i)            No Defaults.  The Obligors are not in default
(i) under any material provisions of any instrument evidencing any
Indebtedness or of any agreement relating thereto in such manner as to cause a
Material Adverse Effect, (ii) in any respect under or in violation of any
order, writ, injunction or decree of any court or governmental instrumentality,
in such manner as to cause a Material Adverse Effect or (iii) under any
provision of any material contract to which any Obligor is a party, which
default would reasonably be expected to have a Material Adverse Effect. The
Obligors will give the Agent prompt written notice of any event or circumstance
that may constitute such a default if it could reasonably be expected to cause
a Default or Event of Default or otherwise have a Material Adverse Effect.

(j)            Investment
Company Act.  The
Obligors are not, nor are the Obligors directly or indirectly controlled by or
acting on behalf of any Person which is, an “investment company,” as such term
is defined in the Investment Company Act of 1940, as amended.

(k)           ERISA.  (i) Each Obligor and each ERISA
Affiliate have operated and administered each Plan and Employee Plan in
compliance with all applicable laws except for such instances of noncompliance
as have not resulted in and would not reasonably be expected to have a Material
Adverse Effect.  Neither any Obligor nor
any ERISA Affiliate has incurred any

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liability pursuant to
Title I or IV of ERISA or the penalty or excise tax provisions of the Code
relating to employee benefit plans
(as defined in Section 3 of ERISA) which would individually or in the
aggregate reasonably be expected to have a Material Adverse Effect and no
event, transaction or condition has occurred or exists that would reasonably be
expected to result in the incurrence of any such liability by the Obligors or
any ERISA Affiliate, or in the imposition of any Lien on any of the rights,
properties or assets of the Obligors or any ERISA Affiliate, in either case
pursuant to Title I or IV of ERISA or to such penalty or excise tax provisions
or to Section 401(a)(29) or 412 of the Code, other than such liabilities
or liens as would not individually or in the aggregate reasonably be expected
to have a Material Adverse Effect;

(ii)           No accumulated
funding deficiency (as defined in Section 412 of the Code or
Section 302 of ERISA), whether or not waived, exists or is expected to be
incurred with respect to any Plan.

(iii)         The Obligors and each
ERISA Affiliate have not incurred and do not expect to incur withdrawal
liabilities under Section 4201 or 4204 of ERISA in respect of Multiemployer
Plans that individually or in the aggregate would reasonably be expected to
have a Material Adverse Effect.

(iv)          The expected
post-retirement benefit obligation (determined as of the last day of the
Obligors’ most recently ended Fiscal Year in accordance with Financial
Accounting Standards Board Statement No. 106, without regard to liabilities
attributable to continuation coverage mandated by Section 4980B of the
Code) of the Obligors and their respective Subsidiaries would not reasonably be
expected to have a Material Adverse Effect.

(l)            Environmental
Matters. To the best of the Obligors’ knowledge, the
Obligors (a) possess all environmental, health and safety licenses,
permits, authorizations, registrations, approvals and similar rights necessary
under Environmental Laws for the Obligors to conduct their respective
operations as now being conducted, except where failure to have such licenses,
permits, authorizations, registrations, approvals, and similar rights would not
reasonably be expected to have a Material Adverse Effect, and (b) each of
such licenses, permits, authorizations, registrations, approvals and similar
rights is valid and subsisting, in full force and effect and enforceable by the
Obligors, and the Obligors are in compliance with all terms, conditions or
other provisions of such permits, authorizations, regulations, approvals and
similar rights except for such failure or noncompliance that, individually or
in the aggregate for the Obligors, would not reasonably be expected to have a
Material Adverse Effect.  Except as
disclosed in Schedule 7.15(l) hereto, none of the Obligors has received
any written notices of any violation or noncompliance with, or remedial
obligation under, any Environmental Laws (which violation, non-compliance, or
remedial obligation has not been cured or would not reasonably be expected to
have a Material Adverse Effect) and there are no writs, injunctions, decrees,
orders or judgments outstanding under the Environmental Laws, or lawsuits,
claims, proceedings, or, to the knowledge of the Obligors, investigations or
inquiries pending or threatened under Environmental Laws, relating to the
ownership, use, condition, maintenance or operation of, or conduct of business
related to, any property owned, leased or operated by the any Obligor or other
assets of any Obligor other than those violations, instances of noncompliance,
obligations,

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writs,
injunctions, decrees, orders, judgments, lawsuits, claims, proceedings, investigations
or inquiries that individually or in the aggregate for any Obligor, would not
reasonably be expected to have a Material Adverse Effect. Except as disclosed
in Schedule 7.15(l) hereto, there are no obligations, undertakings or
liabilities arising out of or relating to Environmental Laws which the Obligors
have agreed to, assumed or retained, or to the best of the Obligors’ knowledge,
by which the Obligors are adversely affected, by contract or otherwise, except
such obligations, undertakings or liabilities as would not reasonably be
expected to have a Material Adverse Effect. 
Except as disclosed in Schedule 7.15(l) hereto, none of the
Obligors have received a written notice or claim to the effect that any of them
are or may be liable to any other Person as the result of a release or
threatened release of a Hazardous Material except such notice or claim that
would not reasonably be expected to have a Material Adverse Effect.  The Obligors have complied with all
applicable Environmental Laws for which the failure to comply would reasonably
be expected to have a Material Adverse Effect.

(m)          Purpose
of Loans.  The
proceeds of the Revolving Loans will be used by the Obligors for Permitted
Acquisitions, to refinance current debt, and for working capital purposes.  None of the proceeds of any Revolving Loans
will be used directly or indirectly for the purpose of purchasing or carrying
any “margin stock” within the meaning of Regulation U (herein called “margin stock”) or for the purpose of
reducing or retiring any indebtedness which was originally incurred to purchase
or carry margin stock, or for any other purpose which might constitute this
transaction as a “purpose credit” within the meaning of Regulation U.  Neither the Obligors nor any agent acting on
their behalf has taken or will take any action which might cause this Financing
Agreement or any other Loan Document to violate, or involve the Lenders in a
violation of, Regulation U, Regulation X or any other regulation of the Board
of Governors or to violate the Securities Exchange Act of 1934.

(n)           Security
Interests in Favor of Agent.  This Financing Agreement and the other Loan
Documents create valid security interest and liens in all of the Collateral
described therein in favor of Agent, for the benefit of the Lenders, securing
the Obligations and constitute (subject to (i) the filing of financing
statements, delivered to Agent on the date hereof and thereafter from time to
time on the Agent’s request therefor and (ii) delivery of any collateral
after the date hereof as provided herein or any other Loan Document) perfected
first priority liens and security interests in substantially all of such
collateral described therein subject to no liens other than Permitted
Encumbrances.

(o)           Subsidiaries.  Except as disclosed on Schedule
7.15(o) attached hereto, the Obligors do not have any Subsidiaries and are
not a party to any joint venture, partnership, or similar organization.

(p)           Intellectual
Property.  All
Patents, Trademarks and Copyrights which the Obligors and their respective
Subsidiaries own or have a license or other right to use in connection with
conducting the Obligors’ business are listed on Schedule 7.15(p)
hereto.

SECTION 8.                 Interest, Fees and Expenses 

8.1          Applicable
Rate for Chase Bank Rate Loans.  Interest on the Revolving Loans shall be
payable monthly as of the end of each month and with respect to Chase Bank Rate
Loans

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shall be an amount
equal to the lesser of (a) the Maximum Legal Rate or (b) the Chase
Bank Rate plus the Applicable Margin for Chase Bank Rate Loans, on the average
of the net balances owing by each of the Companies to the Agent and/or the
Lenders in their Revolving Loan Accounts at the close of each day during such
month. Upon any change in said Chase Bank Rate, the rate hereunder for Chase
Bank Rate Loans shall change, as of the date of such change, so as to remain an
amount equal to the Applicable Margin for Chase Bank Rate Loans above the Chase
Bank Rate.  The rate hereunder for Chase
Bank Rate Loans shall be calculated based on a 360-day year.  The Agent shall be entitled to charge each of
the Companies’ Revolving Loan Accounts at the rate provided for herein when due
until all Obligations have been paid in full.

8.2          Letter
of Credit Guaranty Fee. 
In consideration of the Letter of Credit Guaranty of the Agent, the
Companies shall pay the Agent on behalf of the Lenders the Letter of Credit
Guaranty Fee which shall be an amount equal to (a) one and one-quarter
percent (1.25%) on the face amount of each documentary Letter of Credit payable
upon issuance thereof and (b) one and one-quarter percent (1.25%) per
annum, payable monthly, on the face amount of each standby Letter of Credit
less the amount of any and all amounts previously drawn under such standby
Letter of Credit.

8.3          Reimbursement
of Letter of Credit Charges.  Any and all charges, fees, commissions, costs
and expenses charged to the Agent and/or the Lenders for the Companies’ account
by any Issuing Bank in connection with or arising out of Letters of Credit
issued pursuant to this Financing Agreement or out of transactions relating
thereto will be charged to the Companies’ or any one of their Revolving Loan
Account(s) in full when charged to or paid by the Agent and/or the Lenders, or
as may be due upon any early termination hereof, and when made by any such
Issuing Bank shall be conclusive on the Agent and/or the Lenders.

8.4          Reimbursement
of Certain Charges. 
The Companies shall, jointly and severally, reimburse or pay the Agent,
as the case may be, for: (a) all Out-of-Pocket Expenses of the
Agent, (b) any applicable Documentation Fee, (c) Agent’s standard
charges for any employee of Agent used to conduct any of the examinations,
verifications, inspections, physical counts and other valuations described in Section 7.2
hereof (currently $1,000 per person, per day), and (d) Agent’s standard
charges for each wire transfer made by Agent to or for the benefit of a Company
(currently $30) and for Dunn and Bradstreet searches conducted by Agent for a
Company’s account (currently $65), provided that such standard charges
may be increased by Agent from time to time. 
Such charges shall be due and payable in accordance with Agent’s
standard practices, as in effect from time to time.

8.5          Line of
Credit Fee.  Upon
the last Business Day of each month, commencing on December 31, 2006, the
Companies shall pay the Agent the Line of Credit Fee.  For purposes of the calculating the amount of
the Line of Credit Fee, all Swingline Loans shall be included and the amount of
such Swingline Loans shall be deemed to have been advanced by CITBC.

8.6          Loan
Facility Fee and Syndication Fee.  To induce the Agent and the Lenders to enter
into this Financing Agreement and to extend to the Companies the Revolving Loan
and Letter of Credit Guaranties, the Companies shall pay to the Agent, for the
benefit of the Lenders, on the Closing Date a Loan Facility Fee in the amount
of $212,500 to be shared with the Lenders

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in accordance with
Section 13.4 hereof.  The
Companies shall also pay the Agent solely for its own account, as of the
Closing Date and otherwise, the Syndication Fee in accordance with the Fee
Letter.

8.7          Collateral
Management Fee.  On
the Closing Date and each anniversary of the Closing Date thereafter, the
Companies shall pay to the Agent, for its account, the Collateral Management
Fee in an amount equal to 0.04% of the then applicable Revolving Line of
Credit, which shall be deemed fully earned when paid.

8.8          Audit
Fees.  Upon the
occurrence of an Event of Default, which is not waived in writing by the Agent,
the Companies shall, jointly and severally, for its account, pay the Agent’s
standard charges and the fees for the Agent’s personnel used by the Agent for
reviewing the books and records of the Companies and for verifying, testing,
protecting, safeguarding, preserving or disposing of all or any part of the
Collateral (which fees shall be in addition to the Collateral Management Fee
and any Out-of-Pocket Expenses).

8.9          Authorization
to Charge Revolving Loan Accounts.  Each of the Companies hereby authorizes the
Agent to charge the Companies’ Revolving Loan Account(s) with the Agent with
the amount of all payments due hereunder as such payments become due.  Each of the Companies confirms that
(i) its liability for any and all of the Obligations under this Financing
Agreement and the Loan Documents is joint and several, (ii) the Companies,
as between themselves, shall determine how to pro-rate any payments due
hereunder, and (iii) any charges which the Agent may so make to any of the
Companies’ Revolving Loan Account(s) as herein provided will be made as an
accommodation to the Companies and solely at the Agent’s discretion.

8.10        Additional
Costs from Capital Adequacy Requirements.  If the Agent shall have determined in the
exercise of its reasonable business judgment that subsequent to the Closing
Date any change in applicable law, rule, regulation or guideline regarding
capital adequacy, or any change in the interpretation or administration
thereof, or compliance by the Agent (or any financial institution which may
become a participant or Lender hereunder) with any new request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the effect of reducing
the rate of return on the Agent’s or any Lender’s capital as a consequence of
its obliga­tions hereunder to a level below that which the Agent or such Lender
could have achieved but for such adoption, change or compliance (taking into
consideration the Agent’s or such Lender’s policies with respect to capital
adequacy) by an amount reasonably deemed by the Agent to be material, then,
from time to time, the Companies shall pay no later than five (5) days follow­ing
demand to the Agent such additional amount or amounts as will compensate the
Agent for such reduction.  In determin­ing
such amount or amounts, the Agent or such Lender may use any reason­able
averaging or attribution methods.  The
protection of this Section 8.10 shall be available to the Agent and
the Lenders regardless of any possible contention of invalidity or
inapplicability with respect to the applicable law, regulation or
condition.  A certificate of the Agent
setting forth such amount or amounts as shall be necessary to compensate the
Agent or any Lender with respect to this Section 8.10 and the
calculation thereof when delivered to the Companies shall be conclusive on the
Companies absent manifest error. Notwithstanding

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anything in this Section
8.10 to the contrary, if the Agent or any Lender has exercised its rights
pursuant to this Section 8.10, and subsequent thereto determines that
the additional amounts paid by the Companies in whole or in part exceed the
amount which the Agent or such Lender actually required pursuant hereto, the
excess, if any, shall be returned to the Companies by the Agent or such Lender.

8.11        Payment
of Additional Taxes and Fees from Making LIBOR Loans.  If subsequent to the Closing Date any change
in applicable law, treaty or governmental regulation, or any change therein or
in the interpretation or applica­tion thereof, or compliance by the Agent or
any Lender with any new request or directive (whether or not having the force
of law) from any central bank or other financial, monetary or other authority,
shall:

(a)           subject
the Agent or such Lender to any tax of any kind whatsoever with respect to this
Financing Agreement or change the basis of taxation of payments to the Agent
and/or any such Lender of principal, fees, interest or any other amount payable
hereunder or under any other documents (except for changes in the rate of tax
on the overall net income of the Agent or such Lender by the federal government
or the jurisdiction in which it maintains its principal of­fice, and except for
changes in franchise taxes applicable to the Lenders);

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

(c)           impose
on the Agent and/or any such Lender any other condition with respect to this
Financing Agreement or any other document,

and the result of
any of the foregoing is to increase the cost to the Agent and/or any such
Lender of making, renewing or maintaining its LIBOR Loans hereunder by an
amount that the Agent or such Lender deems to be material in the exercise of
its reasonable busi­ness judgment or to reduce the amount of any payment
(whether of principal, interest or otherwise) in respect of any of the LIBOR
Loans by an amount that the Agent or such Lenders deem to be material in the
exercise of its or their reasonable business judgment, then, in any case the
Companies shall pay the Agent on behalf of such Lenders, within five (5) days
following its demand, such additional cost or such reduction, as the case may
be.  The applicable Lenders shall certify
the amount of such ad­ditional cost or reduced amount to the Companies and the
calculation thereof and such certification shall be conclusive upon the
Companies absent manifest error.  No
amount paid by the Companies under this Section 8.11 shall be
duplicative of any amount paid by the Companies under Section 8.10.
Notwithstanding anything in this Section 8.11 to the contrary, if such
Lender has exercised its rights pursuant to this Section 8.11, and
subsequent thereto determine that the additional amounts paid by the Companies
in whole or in part exceed the amount which the Agent actually required
pursuant hereto, the excess, if any, shall be returned to the Companies by such
Lender.

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8.12        LIBOR Conversion Options.

(a)           Conversion
of LIBOR Loans. 
The Companies, or any one of them, may elect, subsequent to seven (7)
days from the Closing Date and from time to time thereafter, (i) to
request any loan made hereunder to be a LIBOR Loan as of the date of such loan
or (ii) to convert Chase Bank Rate Loans to LIBOR Loans, and may elect
from time to time to convert LIBOR Loans to Chase Bank Rate Loans by giv­ing
the Agent at least three (3) Business Days’ prior irrevocable notice of such
election, provided that any such conversion of LIBOR Loans to Chase Bank
Rate Loans shall only be made, subject to the second following sentence, on the
last day of an Interest Period with respect thereto.  Should the Companies elect to convert Chase
Bank Rate Loans to LIBOR Loans, they shall give the Agent at least four (4)
Business Days’ prior irrevocable notice of such election.  If the last day of an Interest Period with
respect to a loan that is to be converted to a LIBOR Loan is not a Working Day,
then such conversion shall be made on the next succeeding Working Day, and
during the period from such last day of an Interest Period to such succeeding
Working Day, such loan shall bear interest as if it were a Chase Bank Rate
Loan.  All or any part of outstanding Chase
Bank Rate Loans then outstanding with respect to Revolving Loans may be
converted to LIBOR Loans as provided herein, provided that partial
conversions shall be in multiples in an aggregate principal amount of
$1,000,000 or more.  The Agent or the Swingline Lender (as the case may be) shall be
entitled to charge the Companies, for its own account, a $500 processing fee,
for its own account, upon the first effective day of any such election for a
LIBOR Loan.

(b)           Continuation
of LIBOR Loans. 
Any LIBOR Loans may be continued as such upon the expiration of an
Interest Period, provided the applicable Company so notifies the Agent,
at least three (3) Business Days prior to the expiration of said Interest
Period, and provided, further that no LIBOR Loan may be continued
as such upon the occurrence of any Default or Event of Default under this
Financing Agreement, but shall be automatically converted to an Chase Bank Rate
Loan on the last day of the Interest Period during which occurred such Default
or Event of Default. Absent such notification, LIBOR Rate Loans shall convert
to Chase Bank Rate Loans on the last day of the applicable Interest Period.
Each notice of election, conversion or continuation furnished by the Companies
pursuant hereto shall specify whether such election, conversion or continuation
is for a one, two or three month period. Notwithstanding anything to the
contrary contained herein, the Agent and the Lenders (and any participant or
co-lender, if applicable) shall not be required to purchase United States
Dollar deposits in the London interbank market or from any other applicable
LIBOR Rate market or source or otherwise “match fund” to fund LIBOR Rate Loans,
but any and all provisions hereof relating to LIBOR Rate Loans shall be deemed
to apply as if the Agent (and any such other Lender or participant, if
applicable) had purchased such deposits to fund any LIBOR Rate Loans.

(c)           Absent
of a Default or an Event of Default.  The Companies may request a LIBOR Loan,
convert any Chase Rate Loan or continue any LIBOR Loan, provided that no
Default or Event of Default has occurred hereunder, which has not been waived
in writing by the Required Lenders.

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8.13        Applicable Rate for LIBOR Loans.

(a)           Applicable
Margin.  The LIBOR
Loans shall bear interest for each Interest Period with respect thereto on the
unpaid principal amount thereof at a rate per annum equal to the lesser of
(1) the Maximum Legal Rate or (2) the LIBOR determined for each
Interest Period in accordance with the terms hereof plus the Applicable
Margin for LIBOR Loans.

(b)           Conversion
to Chase Bank Rate Loan. 
If all or a portion of the outstanding principal amount of the
Obligations shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such outstanding amount, to the extent it is a
LIBOR Loan, shall be converted to a Chase Bank Rate Loan at the end of the last
Interest Period therefor.

(c)           Maximum
LIBOR Loans.  The
Companies in the aggregate may not have more than five (5) LIBOR Loans
outstanding at any given time.

8.14        Computation and Payment of Interest.

(a)           Computation
and Frequency of Payment. 
Interest in respect of the LIBOR Loans shall be calculated on the basis
of a 360 day year and shall be payable monthly as of the end of each month
(although the applicable LIBOR shall apply to each tranche for each Interest
Period).

(b)           Statement
of Calculations of Base Rates.  The Agent shall, at the written request of
the Companies, deliver to the Companies a statement showing the quotations
given by JPMorgan Chase Bank, N.A. and the computations used by the Agent in
determining any interest rate pursuant to Section 8.14 hereof.

8.15        Inability to Determine Interest Rate.

As
further set forth in Section 8.11 hereof, if the Agent shall
determine, or any Lender notifies the Agent in writing that it has determined,
in the exercise of its reason­able business judgment (which determination shall
be conclusive and binding upon the Companies), that by reason of circumstances
affecting the interbank LIBOR market, adequate and reasonable means do not
exist for ascertaining LIBOR applicable for any Interest Period with respect to
(a) a proposed loan that any of the Companies have requested be made as a
LIBOR Loan, (b) a LIBOR Loan that will result from the requested
conversion of a Chase Bank Rate Loan into a LIBOR Loan or (c) the
continuation of LIBOR Loans beyond the expira­tion of the then current Interest
Period with respect thereto, the Agent or such Lender, as applicable, shall
forthwith give written notice of such determination to the Companies at least
one (1) day prior to, as the case may be, the requested borrowing date for such
LIBOR Loan, the conversion date of such Chase Bank Rate Loan or the last day of
such Interest Period.  If such notice is
given (i) any requested LIBOR Loan shall be made as a Chase Bank Rate
Loan, (ii) any Chase Bank Rate Loan that was to have been converted to a
LIBOR Loan shall be continued as a Chase Bank Rate Loan, and (iii) any
outstanding LIBOR Loan shall be converted, on the last day of then current
Interest Period with respect thereto, to a Chase Bank Rate Loan.  Until the Agent or such Lender has

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withdrawn such
notice, no further LIBOR Loan shall be made nor shall the Companies have the
right to convert a Chase Bank Rate Loan to a LIBOR Loan.

8.16        Payments.

If
any payment on a LIBOR Loan becomes due and payable on a day other than a
Working Day, the maturity thereof shall be extended to the next succeeding
Business Day unless the result of such extension would be to extend such
payment into another calendar month in which event such payment shall be made
on the immediately preceding Working Day.

8.17        Illegality.

Notwithstanding
any other provisions herein, if any law, regulation, treaty or directive or any
change therein or in the interpretation or application thereof, shall make it
unlawful for the Agent or any Lender to make or maintain LIBOR Loans as
contemplated herein, the then outstanding LIBOR Loans so affected, if any,
shall be converted automatically to Chase Bank Rate Loans on the next
succeeding Interest Payment Date or within such earlier period as required by
law. Each of the Companies hereby agrees promptly to pay the Agent, upon its
demand, any additional amounts necessary to compensate the Agent or any Lender
for any costs incurred by the Agent or any Lender in making any conversion in
accordance with this Section 8.17 including, but not limited to,
any interest or fees payable by the Agent or any Lender to lenders of funds
obtained by either of them in order to make or maintain LIBOR Loans hereunder.

8.18        Indemnity.

Each
of the Companies agrees to indemnify and to hold the Agent and the Lenders
(including any participant or co-lender, if applicable) harmless from any loss
or expense which  the Agent or any Lender
may sustain or incur as a consequence of (a) default by the Companies in
payment of the principal amount of or interest on any LIBOR Loans, as and when
the same shall be due and payable in accordance with the terms of this
Financing Agreement, including, but not limited to, any such loss or expense
arising from interest or fees payable by the Agent or any Lender to lenders of
funds obtained by either of them in order to maintain the Agent’s and the
Lenders LIBOR Loans hereunder, (b) default by any of the Companies in making
a borrowing or conversion after any such the Company has given a notice in
accordance with Section 8.12 hereof, (c) any prepayment of
LIBOR Loans on a day which is not the last day of the Interest Period
applicable thereto, including without limitation prepayments arising as a
result of the application of the collection of Accounts to the Revolving Loans
and (d) default by any of the Companies in making any prepayment after any
such Company had given notice to the Agent thereof.  This covenant shall survive termination of
this Financing Agreement and payment of the outstanding Obligations.

8.19        LIBOR Provisions.

Notwithstanding
anything to the contrary in this Financing Agreement, if, by reason of any
Regulatory Change (for purposes hereof “Regulatory
Change” shall mean, with respect to the Agent or any Lender, any
change after the date of this Financing Agreement in United States

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Federal, state or
foreign law or regulations (including, without limitation, Regulation D) or the
adoption or making after such date of any interpretation, directive or request
applying to a class of banks including the Agent or any Lender of or under any
United States Federal, state or foreign law or regulations (whether or not
having the force of law and whether or not failure to comply therewith would be
unlawful)), the Agent or any Lender either (a) incurs any material
additional costs based on or measured by the excess above a specified level of
the amount of a category of deposits or other li­abilities of such bank which includes
deposits by reference to which the interest rate on LIBOR Loans is determined
as provided in this Financing Agreement or a category of extensions of credit
or other assets of the Agent or any Lender which includes LIBOR Loans or
(b) becomes subject to any material restrictions on the amount of such a
category of liabilities or assets which it may hold, then, if the Agent or the
Required Lenders so elect by notice to the Companies the obligation of the
Agent and the Lenders to make or continue, or to convert Chase Bank Rate Loans
into LIBOR Loans hereunder shall be suspended until such Regulatory Change
ceases to be in effect.

8.20        Application.

For
purposes of this Financing Agreement and Section 8 thereof, any
reference to the Agent or the Lenders shall include any financial institution
which may become a Lender subsequent to the Closing Date.

SECTION 9.                 Powers

Each
of the Obligors hereby constitutes the Agent or any Person or agent the Agent
may designate as its attorney-in-fact, at the Obligors’ cost and
expense, to exercise all of the following powers, which being coupled with an
interest, shall be irrevocable until all of the Obligors’ Obligations to the
Agent and the Lenders have been paid in full:

(a)           To
receive, take, endorse, sign, assign and deliver, all in the name of the Agent
or the Obligors or any one of them, any and all checks, notes, drafts, and
other documents or instruments relating to the Collateral;

(b)           To
receive, open and dispose of all mail addressed to the Obligors or any one of
them and to notify postal authorities to change the address for delivery
thereof to such address as the Agent may designate;

(c)           To
request from customers indebted on Accounts at any time, in the name of the
Agent or the Obligors or any one of them or that of the Agent’s designee,
information concerning the amounts owing on the Accounts;

(d)           To
transmit to customers indebted on Accounts notice of the Agent’s interest
therein and to notify customers indebted on Accounts to make payment directly
to the Agent for the Obligors’ account; and

(e)           To
take or bring, in the name of the Agent or the Obligors or any one of them, all
steps, actions, suits or proceedings deemed by the Agent necessary or desirable
to enforce or effect collection of the Accounts.

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Notwithstanding
anything herein above contained to the contrary, the powers set forth in (b),
(d) and (e) above may only be exercised after the occurrence and continuance of
an Event of Default and until such time as such Event of Default is waived in
writing by the Required Lenders or cured to the Required Lenders’ satisfaction.

SECTION 10.               Events of Default and Remedies

10.1        Events of
Default. 
Notwithstanding anything herein above to the contrary, the Agent, with
the concurrence of the Required Lenders, may terminate this Financing Agreement
immediately upon the occurrence of any of the following (herein “Events of Default”):

(a)           cessation
of the business of the Material Obligors or any one of them, except pursuant to
a Permitted Merger hereunder;

(b)           the
failure of any of the Material Obligors to generally meet debts as they mature;

(c)           (i) the
commencement by any of the Material Obligors of any bankruptcy,
insolvency, arrangement, reorganization, receivership or similar proceedings
under any federal or state law; or (ii) the commencement against any of
the Material Obligors, of any bankruptcy, insolvency, arrangement,
reorganization, receivership or similar proceeding under any federal or state
law by creditors of any of the Material Obligors, as applicable, provided
that such involuntary proceeding shall not have been contested within ten (10)
days or shall not have been dismissed and vacated within sixty (60) days of
commencement, or any of the actions sought in any such proceeding shall occur
or such Material Obligors shall take action to authorize or effect any of the
actions in any such proceeding;

(d)           breach
by any of the Obligors in any material respect of any warranty, representation
or covenant contained herein (other than those referred to in subparagraph (e) below), in the other Loan Documents or
in any other written agreement between such Obligors or the Agent, provided
that such breach by such Obligors of any of the warranties, representations or
covenants referred in this clause (d) shall not be deemed to be an Event of
Default unless and until such breach shall remain unremedied to the Agent’s or
the Required Lenders’ satisfaction for a period of twenty (20) Business Days
from the date of such breach; provided, however, any breach by
any Obligor of the covenants contained in Section 7.8 hereof shall not
be deemed to be an Event of Default unless and until such breach remains
unremedied to the Agent’s or Required Lenders’ satisfaction for a period of
ten (10) Business Days from the date of written notice of such breach from
Agent to Parent;

(e)           breach
by any of the Obligors of any warranty, representation or covenant of
Sections 3.5 (other than the third sentence of Section 3.5)
and 3.6 hereof; Sections 6.3 and 6.4 (other than the
first sentence of Section 6.4); Sections 7.1, 7.5,
7.6, 7.9 through 7.12, 7.14 and 7.15 hereof;

(f)            failure
of any of the Obligors to pay any of the Obligations within five (5) Business
Days of the due date thereof, provided that nothing contained herein
shall prohibit the

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Agent from
charging such amounts to any of the Companies’ Revolving Loan Accounts on the
due date thereof;

(g)           a
Change of Control;

(h)           any
of the Obligors shall with respect to any Plan (i) engage in any non-exempt “prohibited
transaction” as defined in ERISA, (ii) have any “accumulated funding deficiency”
as defined in ERISA, (iii) have any “reportable event” as defined in ERISA, for
which the requirement to provide notice to the PBGC has not been waived by the
PBGC, (iv) terminate any Obligor Plan in a “distress termination” under Section
4041(c)of ERISA or a termination instituted by the PBGC under Section 4042 of
ERISA, or (v) be engaged in any proceeding in which the PBGC shall seek
appointment, or is appointed, as trustee or administrator of any “plan”, as
defined in ERISA, and with respect to this sub-paragraph (h) such event
or condition (x) remains uncured for a period of thirty (30) days from date of
occurrence and (y) subjects the Obligors to any tax, penalty or other liability
which could reasonably be expected to have a Material Adverse Effect;

(i)            without
the prior written consent of the Agent, any of the Obligors shall
(x) amend or modify the Subordinated Debt in any respect which materially
and adversely affects the rights of the Lenders or of any other holders of
Senior Debt (as defined therein) or (y) except for Excluded Principal
Payments, make any payment on account of the Subordinated Debt except as
permitted in a Subordination Agreement;

(j)            the
occurrence of any default or event of default (after giving effect to any
applicable grace or cure periods) under any instrument or agreement evidencing
(x) Subordinated Debt or (y) any other Indebtedness of the Obligors,
or any one of them, having a principal amount in excess of $5,000,000; provided,
however, any such default or event of default shall not be deemed an
Event of Default hereunder unless and until (i) the holders of such debt
accelerate the maturity thereof, (ii) the Parent fails to deliver to Agent a
written waiver of such default or event of default from the holders of such
debt within twenty (20) Business Days after the occurrence of such default or
event of default, or (iii) the Parent fails to pay-off all of such debt (and
terminate any commitment of the holder of such debt to provide further
Indebtedness) within twenty (20) Business Days after the occurrence of such
default or event of default to the extent such payoff would not otherwise be
prohibited under this Financing Agreement; or

(k)           all
of the Capital Stock of Obligors (other than Parent) ceases to be beneficially
owned by another Obligor, except as otherwise permitted hereunder;

(l)            if
any Guarantor terminates its obligations under the Guaranty or otherwise fails
to perform any of the terms (beyond the scope of any applicable cure or grace
periods) of its Guaranty, all prior to termination of this Financing Agreement
and payment in full of all Obligations except in connection with or as a result
of a transaction permitted under this Financing Agreement; or

(m)          any
judgment or judgments aggregating in excess of $5,000,000 or any injunction or
attachment is obtained or enforced against any Material Obligor and which
remains

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unstayed for more
than ten (10) Business Days and which could reasonably be expected to have a
Material Adverse Effect.

10.2        Acceleration,
Default Rate of Interest and Termination upon an Event of Default.  Upon the occurrence and during the
continuance of a Default and/or an Event of Default, upon the written direction
of the Required Lenders the Agent shall declare that, all loans, advances and
extensions of credit provided for in Sections 3, 4 and 5
of this Financing Agreement shall be thereafter in the Agent’s or the Required
Lenders’ sole discretion and the obligation of the Agent and the Lenders to
make Revolving Loans and open Letters of Credit shall cease unless such Default
or Event of Default is waived in writing by the Required Lenders or cured to
the Agent’s or the Required Lenders’ satisfaction in the exercise of the Agent’s
and the Lenders’ reasonable business judgment, and the Agent, upon the written
direction of the Required Lenders after the occurrence and during the
continuance of an Event of Default: (a) all Obligations shall become
immediately due and payable; (b) the Agent may charge the Companies the
lesser of (i) the Default Rate of Interest or (ii) the Maximum Legal
Rate on all then outstanding or thereafter incurred Obligations in lieu of the
interest provided for in Section 8 of this Financing Agreement, provided
that, with respect to this clause “(b)” (i) the Agent has given the
Companies written notice of the Event of Default, provided, however,
that no notice is required if the Event of Default is the Event of Default
listed in Section 10.1(c), and (ii) the Companies have failed
to cure the Event of Default within ten (10) days after (x) the Agent gave
such notice pursuant to Section 12.6 below or (y) the
occurrence of the Event of Default listed in Section 10.1(c); and
(c) the Agent shall, upon the written direction of the Required Lenders,
immediately terminate this Financing Agreement upon notice to the Companies, provided,
however, that no notice of termination is required if the Event of
Default occurs pursuant to Section 10.1(c).  The exercise of any option is not exclusive
of any other option which may be exercised at any time by the Agent and/or the
Lenders.

10.3        Other
Remedies. 
Immediately upon the occurrence of any Event of Default, the Agent may
at its option, or shall at the direction of the Required Lenders, to the extent
permitted by law:  (a) remove from
any premises where same may be located any and all books and records, software,
documents, instruments, files and records, and any receptacles or cabinets
containing same, relating to the Accounts, or the Agent may use, at the
Obligors’ expense, such of the Obligors’ personnel, supplies or space at the
Companies’ places of business or otherwise, as may be necessary to properly
collect and realize upon the Accounts; (b) bring suit, in the name of any
of the Companies or the Agent, and generally shall have all other rights
respecting said Accounts, including without limitation the right to:  accelerate or extend the time of payment,
settle, compromise, release in whole or in part any amounts owing on any
Accounts and issue credits in the name of any of the Companies or the Agent;
(c) sell, assign and deliver the Collateral and any returned, reclaimed or
repossessed merchandise, with or without advertisement, at public or private
sale, for cash, on credit or otherwise, at the Agent’s sole option and
discretion, and the Agent or the Lenders may bid or become a purchaser at any
such sale, free from any right of redemption, which right is hereby expressly
waived by each of the Companies; (d) foreclose the security interests in
the Collateral created herein or by the Loan Documents by any available
judicial procedure, or to take possession of any or all of the Collateral,
including any Inventory, Equipment and/or Other Collateral without judicial
process, and to enter any premises where any Inventory and Equipment and/or
Other Collateral may be

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located for the
purpose of taking possession of or removing the same and (e) exercise any
other rights and remedies provided in law, in equity, by contract or
otherwise.  The Agent shall have the right,
without notice or advertisement (other than notice required by law), to sell,
lease, or otherwise dispose of all or any part of the Collateral whether in its
then condition or after further preparation or processing, in the name of any
of the Companies or the Agent, or in the name of such other party as the Agent
may designate, either at public or private sale or at any broker’s board, in
lots or in bulk, for cash or for credit, with or without warranties or
representations, and upon such other terms and conditions as the Agent in its
sole discretion may deem advisable, and the Agent and the Lenders shall have
the right to purchase at any such sale. 
If any Inventory and Equipment shall require rebuilding, repairing,
maintenance or preparation, the Agent shall have the right, at its option, to
do such of the aforesaid as is necessary, for the purpose of putting the
Inventory and Equipment in such saleable form as the Agent shall deem
appropriate.  Each of the Obligors agree,
at the request of the Agent, to make the Inventory and Equipment available to
the Agent at the premises where such Equipment and Inventory is then located
and to make available to the Agent the premises and facilities of any of the
Companies for the purpose of the Agent’s taking possession of, removing or
putting the Inventory and Equipment in saleable form.  However, if notice of intended disposition of
any Collateral is required by law, it is agreed that ten (10) days’ notice
shall constitute reasonable notification and full compliance with the law.  The net cash proceeds resulting from the
Agent’s exercise of any of the foregoing rights (after deducting all charges,
costs and expenses, including reasonable attorneys’ fees) shall be applied by
the Agent to the payment of any of the Companies’ Obligations, whether due or
to become due, in the following order:  first,
to pay any fees, indemnities and expense reimbursements then due to the Agent, second,
to pay any fees, indemnities and expense reimbursements then due to the
Lenders, third, to pay interest due in respect of discretionary advances
made by the Agent pursuant to Section 14.10 of this Financing
Agreement, fourth, ratably, to pay interest due in respect of the
Revolving Loans and the Swingline Loans, fifth, to pay or prepay the
principal amount of all discretionary advances made by Agent pursuant to Section 14.10
of this Financing Agreement, sixth, to pay the principal of all
Swingline Loans, seventh, ratably, to pay all principal amounts then due
and payable with respect to the other Revolving Loans, eighth, to the
Agent, in an amount equal to one hundred ten percent (110%) of the undrawn
amount of the outstanding Letters of Credit to be held as cash collateral for
payment of such Obligations, ninth, ratably to payment of all other
Obligations (excluding any Cash Management Obligations), tenth, ratably
to the payment of all Cash Management Obligations, and eleventh, any
surplus to the Companies or their respective successors or assigns.  The Companies shall remain liable to Agent
and Lenders for any deficiencies.  The
enumeration of the foregoing rights is not intended to be exhaustive and the
exercise of any right shall not preclude the exercise of any other rights, all
of which shall be cumulative.  Each of
the Companies hereby indemnifies the Agent and the Lenders and holds the Agent
and the Lenders harmless from any and all costs, expenses, claims, liabilities,
Out-of-Pocket Expenses or otherwise, incurred or imposed on the Agent and/or
the Lenders by reason of exercise of any rights, remedies and interests
hereunder, including without limitation from any sale or transfer of
Collateral, preserving, maintaining or securing the Collateral, defending its,
the Agent’s and/or the Lenders’ interests in Collateral (including pursuant to
any claims brought by any of the Companies, any of the Companies as
debtor-in-possession, any secured or unsecured creditors of any of the
Companies, any trustee or receiver in bankruptcy, or otherwise), and each of
the Companies hereby agrees to so indemnify and hold the Agent and the Lenders
harmless, absent the Agent’s, or the Lenders’, as applicable, gross

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negligence or
willful misconduct as finally determined by a court of competent
jurisdiction.  The foregoing
indemnification shall survive termination of this Financing Agreement until
such time as all Obligations (including without limitation the foregoing and
any contingent obligations) have been finally and indefeasibly paid in
full.  In furtherance thereof the Agent
may establish such reserves for Obligations hereunder (including any contingent
Obligations) as it may deem advisable in its reasonable business judgment.

SECTION 11.               Termination

Except
as otherwise permitted herein, the Companies or the Agent may terminate this
Financing Agreement and the Revolving Line of Credit only as of the initial or
any subsequent Anniversary Date and then only by giving the other at least
sixty (60) days’ prior written notice of termination.  Notwithstanding the foregoing the Agent, upon
the direction of the Required Lenders, may terminate this Financing Agreement
immediately upon the occurrence of an Event of Default, provided, however,
that if the Event of Default is an event listed in Section 10.1(c)
of this Financing Agreement, the Agent may regard this Financing Agreement as
terminated and notice to that effect is not required.  This Financing Agreement, unless terminated
as herein provided, shall automatically continue from Anniversary Date to
Anniversary Date.  Notwithstanding the
foregoing, the Parent may terminate this Financing Agreement and the Revolving
Line of Credit prior to any applicable Anniversary Date upon sixty (60) days’
prior written notice to the Agent, provided that the Companies, jointly
and severally, agree to pay to the Agent immediately on demand, an Early
Termination Fee, if applicable.  All
Obligations shall become due and payable as of any termination hereunder or
under Section 10 hereof and, pending a final accounting, the Agent
may withhold any balances in the Companies’ accounts (unless supplied with an
indemnity satisfactory to the Agent) to cover all of the Companies’ or any of
their Obligations, whether absolute or contingent.  All of the Agent’s and the Lenders’ rights,
liens and security interests shall continue after termination of this Financing
Agreement until full and final payment or satisfaction (which in the case of
Letters of Credit may be in the form of a pledge and deposit with the Agent, in
form and substance satisfactory to the Agent, of an amount in cash equal to 110%
of the outstanding and undrawn Letters of Credit) of all Obligations hereunder
(other than the Companies’ Obligations with respect to any indemnity set forth
in this Financing Agreement), provided the Agent has not prior thereto
made a demand for payment thereunder, the Agent agrees to release its liens
upon the Collateral (other than cash collateral for the outstanding and undrawn
Letter of Credit) and execute and deliver (at the Companies’ cost and expense)
appropriate releases for such liens.

SECTION 12.               Miscellaneous

12.1        Waivers.  Each of the Obligors hereby waives diligence,
demand, presentment and protest and any notices thereof as well as notice of
nonpayment, notice of intent to accelerate, notice of acceleration, and notice
of dishonor, and any and all defenses based on suretyship.  No delay or omission of the Agent and/or the
Lenders or the Obligors to exercise any right or remedy hereunder, whether
before or after the happening of any Event of Default, shall impair any such
right or shall operate as a waiver thereof or as a waiver of any such Event of
Default.  No single or partial exercise
by the Agent and/or the Lenders of any right or remedy precludes any other or
further exercises thereof, or precludes any other right or remedy.

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12.2        Final
Agreement.  This
Financing Agreement, the loan documents executed and delivered in connection
therewith and the confidentiality agreement signed by agent and any
confidentiality agreement signed by the prospective lenders, constitute the
final and entire agreement between each of the Obligors, the Lenders  and the Agent and may not be contradicted by
evidence of prior, contemporaneous or subsequent oral agreements of the
parties; supersede any prior agreements; can be changed only by a writing
signed by the Obligors, the Lenders and the Agent; and shall bind and benefit
the Obligors, the Lenders and the Agent and their respective successors and
assigns. For purposes of this Financing Agreement and the Loan Documents “Obligors”
and “Obligor” shall be used in the broadest possible use and as applicable in
order to give use to the intent hereof to apply the terms and provisions hereof
to all of the applicable Obligors to which such provisions relate.

12.3        Usury
Saving Clause.  It
is the intent of the Companies, the other Obligors, the Lenders and the Agent
to conform strictly to all applicable state and federal usury laws. All
agreements between the Companies, the other Obligors, and the Agent and/or the
Lenders whether now existing or hereafter arising and whether written or oral,
are hereby expressly limited so that in no contingency or event whatsoever,
whether by reason of acceleration of the maturity hereof or otherwise, shall
the amount contracted for, charged or received by the Agent and/or the Lenders
for the use, forbearance, or detention of the money loaned hereunder or
otherwise, or for the payment or performance of any covenant or obligation
contained herein or in any other document evidencing, securing or pertaining to
the Obligations evidenced hereby which may be legally deemed to be for the use,
forbearance or detention of money, exceed the maximum amount which the Agent
and the Lenders are legally entitled to contract for, charge or collect under
applicable state or federal law.  If from
any circumstances whatsoever fulfillment of any provision hereof or such other
documents, at the time performance of such provision shall be due, shall
involve transcending the limit of validity prescribed by law, then the
obligation to be fulfilled shall be automatically reduced to the limit of such
validity, and if from any such circumstance the Agent and/or the Lenders shall
ever receive as interest or otherwise an amount in excess of the maximum that
can be legally collected, then such amount which would be excessive interest
shall be applied to the reduction of the principal indebtedness hereof and any
other amounts due with respect to the Obligations evidenced hereby, but not to
the payment of interest and if such amount which would be excess interest
exceeds the Obligations and all other non interest indebtedness described
above, then such additional amount shall be refunded to the Companies.  In determining whether or not all sums paid
or agreed to be paid by the Companies for the use, forbearance or detention of
the Obligations of the Companies to the Agent and/or the Lenders, under any
specific contingency, exceeds the maximum amount permitted by applicable law,
the Companies and the Agent and/or the Lenders shall to the maximum extent
permitted under applicable law, (a) treat all Obligations as but a single
extension of credit, (b) characterize any nonprincipal payment as an
expense, fee or premium rather than as sums paid or agreed to be paid by the
Companies for the use, forbearance or detention of money, (c) exclude
voluntary prepayments and the effect thereof, and (d) amortize, prorate,
allocate and spread the total amount of such sums paid or agreed to be paid by
the Companies for the use, forbearance or detention of money throughout the
entire contemplated term of the Obligations in accordance with all legal
limits. The terms and provisions of this section shall control and supersede
every other provision hereof and all other agreements between the Companies and
the Agent and/or the Lenders.

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12.4        Severability;
Section Headings; Counterparts.  If any provision hereof or of any other
agreement made in connection herewith is held to be illegal or unenforceable,
such provision shall be fully severable, and the remaining provisions of the
applicable agreement shall remain in full force and effect and shall not be
affected by such provision’s severance. 
Furthermore, in lieu of any such provision, there shall be added
automatically as a part of the applicable agreement a legal and enforceable
provision as similar in terms to the severed provision as may be possible.  The captions or section headings used in the
Loan Documents are intended for convenience and reference only and shall not
affect the meaning or interpretation of the Loan Documents.  This Financing Agreement may be executed in
one or more counterparts, which when taken together shall constitute one and
the same instrument.

12.5        WAIVER OF
JURY TRIAL.  TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, EACH OF THE OBLIGORS, THE LENDERS AND THE AGENT
HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING
OUT OF THIS FINANCING AGREEMENT.  TO THE
MAXIMUM EXTENT PERMITTED BY LAW, EACH OF THE OBLIGORS HEREBY IRREVOCABLY WAIVES
PERSONAL SERVICE OF PROCESS AND CONSENTS TO SERVICE OF PROCESS BY CERTIFIED OR
REGISTERED MAIL, RETURN RECEIPT REQUESTED.

12.6        Notices.  Except as otherwise herein provided, any
notice or other communication required hereunder shall be in writing, and shall
be deemed to have been validly served, given or delivered when hand delivered
or sent by telegram or telex, or three days after deposit in the United States
mails, with proper first class postage prepaid and addressed to the party to be
notified as follows:

(a)           if to the Agent,
at:

The
CIT Group/Business Credit, Inc., as Agent

5420 LBJ Freeway

Dallas, TX  75240

Attn: Regional Credit Manager 

Fax No.: (972) 455-1690

With a courtesy copy of any material notice to Agent’s
counsel at:

Patton
Boggs LLP

2001 Ross Avenue, Suite 3000

Dallas, Texas 75201

Attn:  James C. Chadwick

Fax No.: (214) 758-1550

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(b)           if to the Obligors
at:

c/o  Lone Star
Technologies, Inc.

15660 N. Dallas Parkway, Suite 500

Dallas Texas 75248

Attn:  Robert F. Spears

Fax No.:  (972) 770-6411

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

Fulbright
& Jaworski L.L.P.

2200 Ross Avenue, Suite 2800

Dallas, Texas 75201

Attn:  David E. Morrison

Fax No.:  (214) 855-8200

(c)           if to the
Guarantors at:

c/o Environmental Holdings, Inc.

15660 N. Dallas Parkway, Suite 500

Dallas Texas 75248

Attn:  Robert F. Spears

Fax No.:  (972) 770-6411

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

Fulbright
& Jaworski L.L.P.

2200 Ross Avenue, Suite 2800

Dallas, Texas 75201

Attn:  David E. Morrison

Fax No.:  (214) 855-8200

(d)           if
to any other Lender hereunder, at the address set forth therefor in the
applicable Assignment and Assumption Agreement

or to such other
address as any party may designate for itself by like notice.

12.7        CHOICE OF
LAW.  THE VALIDITY, INTERPRETATION
AND ENFORCEMENT OF THIS FINANCING AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL
BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. TO THE EXTENT THAT TEXAS LAW
MAY EVER APPLY, NOTWITHSTANDING THE FOREGOING CHOICE OF LAW, THE PROVISIONS OF
CHAPTER 346 (OTHER THAN SECTION 346.004 THEREOF) OF THE TEXAS FINANCE
CODE, SHALL NOT BE APPLICABLE TO ANY LOAN(S) OR EXTENSIONS OF CREDIT EVIDENCED
BY THIS FINANCING AGREEMENT.

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12.8        Amendment
and Restatement. 
This Financing Agreement is in amendment, restatement, renewal and extension
(but not in novation, extinguishment or satisfaction) of the Existing Financing
Agreement as of the Closing Date.  All
liens and security interests securing payment of the obligations under the
Existing Financing Agreement and the Original Financing Agreement are hereby
collectively renewed, extended, ratified and brought forward as security for
the payment and performance of the Obligations. 
With respect to matters relating to the period prior to the Closing Date,
all of the provisions of the Existing Financing Agreement and the Original
Financing Agreement, as the case may be, and the security agreements, pledge
agreements, guarantees, and other documents, instruments and agreements
executed in connection therewith, are each ratified and confirmed and shall
remain in full force and effect.

SECTION 13.               Agreement among the Lenders

13.1        Advances to and Notification by Agent.  (a)  Advances by Agent. 
The Agent, for the account of the Lenders, shall disburse all loans and
advances to the Obligors and shall handle all collections of Collateral and
repayment of Obligations.  It is
understood that for purposes of advances to the Obligors and for purposes of
this Section 13 the Agent is using the funds of the Agent.

(b)           Notification
to Agent.  Unless
the Agent or the Swingline Lender shall have been notified in writing by any
Lender prior to any advance to the Obligors that such Lender will not make the
amount which would constitute its share of the borrowing on such date available
to the Agent and the Swingline Lender, the Agent and the Swingline Lender may
assume that such Lender shall make such amount available to the Agent on a
Settlement Date, and the Agent, or the Swingline Lender, as the case may be,
may, in reliance upon such assumption, make available to the Obligors a
corresponding amount.  A certificate of
the Agent submitted to any Lender with respect to any amount owing under this
subsection shall be conclusive, absent manifest error.  If such Lender’s share of such borrowing is
not in fact made available to the Agent by such Lender on the Settlement Date,
the Agent shall be entitled to recover such amount with interest thereon at the
rate per annum applicable to Revolving Loans hereunder, on demand, from the
Obligors without prejudice to any rights which the Agent may have against such
Lender hereunder.  Nothing contained in
this subsection shall relieve any Lender which has failed to make available its
ratable portion of any borrowing hereunder from its obligation to do so in
accordance with the terms hereof. 
Nothing contained herein shall be deemed to obligate the Agent or the
Swingline Lender to make available to the Obligors the full amount of a
requested advance when the Agent or the Swingline Lender has any notice
(written or otherwise) that any of the Lenders will not advance its ratable
portion thereof.

13.2        Settlement
Date Payments.  On
the Settlement Date, the Agent and the Lenders shall each remit to the other,
in immediately available funds, all amounts necessary so as to ensure that, as
of the Settlement Date, the Lenders shall have their proportionate share of all
outstanding Obligations.

13.3        Account
Statement.  The
Agent shall forward to each Lender, at the end of each month, a copy of the
account statement rendered by the Agent to the Obligors.

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13.4        Distribution
of Fees.  The Agent
shall, after receipt of any interest and fees earned under this Financing
Agreement as Agent, promptly remit to the Lenders:  (a) their respective Pro Rata Share of
all fees, provided, however, that the Lenders (other than CITBC
in its role as the Agent) shall (x) not share in the Syndication Fee, the
Collateral Management Fee or the fees provided for in Section 8.4
or Section 8.8; (y) receive their respective share of the Loan
Facility Fee paid to Agent on the Closing Date in the amount equal to the sum
of 0.05% multiplied by the Lender’s Commitment, if any, under the Existing
Financing Agreement plus 0.15% multiplied by the increase in such Lender’s
Commitment pursuant to this Financing Agreement over such Lender’s Commitment
under the Existing Financing Agreement; and (z) receive their respective Pro
Rata Share on the last Business Day of each month of an amount equal to the
average daily balance of Swingline Loans outstanding for said month multiplied
by 0.325% per annum for the number of days in said month (and Swingline Lender
agrees to remit such amount to Agent as of the last Business Day of each month
and for clarification, this clause (z) shall impose an obligation to pay the
amounts described in this clause upon Swingline Lender only and not a Company);
and (b) interest computed at the rate and as provided for in Section 8
of this Financing Agreement on all outstanding amounts advanced by the Lenders
(other than the Swingline Loans) on each Settlement Date, prior to adjustment,
that are subsequent to the last remittance by the Agent to the Lenders of the
Obligors’ interest.

13.5        Participations and Disclosure of
Information. 
(a)  Participations.  The Obligors acknowledge that the Lenders
with the prior written consent of the Agent may sell participations in the
loans and extensions of credit made and to be made to the Obligors
hereunder.  The Obligors further
acknowledge that in doing so, the Lenders may grant to such participants
certain rights which would require the participant’s consent to certain
waivers, amendments and other actions with respect to the provisions of this
Financing Agreement, provided that the consent of any such participant
shall not be required except for matters requiring the consent of all Lenders
hereunder as set forth in Section 14.10 hereof.

(b)           Disclosure
of Information. 
The Obligors authorize each Lender to disclose to any participant or
purchasing lender/assignee (each, a “Transferee”)
and any prospective Transferee any and all financial information in such Lender’s
possession concerning the Obligors and their affiliates which has been
delivered to such Lender by or on behalf of the Obligors pursuant to this
Financing Agreement or which has been delivered to such Lender by or on behalf
of the Obligors in connection with such Lender’s credit evaluation of the
Obligors and their affiliates prior to entering into this Financing Agreement, provided
that such Transferee agrees to hold such information in confidence in the
ordinary course of its business.

13.6        Several
Nature of Obligation to Fund Advances.  The Obligors hereby agree that each Lender is
solely responsible for its portion of the Line of Credit and that neither the
Agent nor any Lender shall be responsible for, nor assume any obligations for
the failure of any Lender to make available its portion of the Revolving Line
of Credit.  Further, should any Lender
refuse to make available its portion of the Revolving Line of Credit, then any
other Lenders may, but without obligation to do so, increase, unilaterally, its
portion of the Revolving Line of Credit in which event the Obligors are so
obligated to that other Lender.

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13.7        Sharing
of Certain Costs. 
If the Agent, the Lenders or any one of them is sued or threatened with
suit by the Obligors or any one of them, or by any receiver, trustee, creditor
or any committee of creditors on account of any preference, voidable transfer
or lender liability issue, alleged to have occurred or been received as a
result of, or during the transactions contemplated under this Financing
Agreement, then in such event any money paid in satisfaction or compromise of
such suit, action, claim or demand and any expenses, costs and attorneys’ fees
paid or incurred in connection therewith, whether by the Agent, the Lenders or
any one of them, shall be shared proportionately by the Lenders.  In addition, any costs, expenses, fees or
disbursements incurred by outside agencies or attorneys retained by the Agent
to effect collection or enforcement of any rights in the Collateral, including
enforcing, preserving or maintaining rights under this Financing Agreement
shall be shared proportionately between and among the Lenders to the extent not
reimbursed by the Obligors or from the proceeds of Collateral.  The provisions of this section shall not
apply to any suits, actions, proceedings or claims that (x) predate the
date of this Financing Agreement or (y) are based on transactions, actions
or omissions that predate the date of this Financing Agreement.

13.8        Receipt
of Collateral Proceeds. 
Each of the Lenders agrees with each other Lender that any money or
assets of the Obligors held or received by such Lender, no matter how or when
received, shall be applied to the reduction of the Obligations (to the extent
permitted hereunder) after (x) the occurrence of an Event of Default and
(y) the election by the Required Lenders to accelerate the Obligations.  In addition, the Obligors authorize, and the
Lenders shall have the right, without notice, upon any amount becoming due and
payable hereunder, to set-off and apply against any and all property held by,
or in the possession of such Lender the Obligations due such Lenders.

13.9        Assignments.  The Agent and each Lender shall have the
right at any time to assign to one or more commercial banks, commercial finance
lenders or other financial institutions or funds all or a portion of its rights
and obligations under this Financing Agreement (including, without limitation,
its obligations under the Revolving Loans and its rights and obligations with
respect to Letters of Credit).  Upon
execution of an Assignment and Transfer Agreement, (a) the assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such assignment,
have the rights and obligations of the Agent or such Lender as the case may be
hereunder and (b) the Agent and such Lender shall, to the extent that
rights and obligations hereunder have been assigned by it pursuant to such
assignment, relinquish its rights and be released from its obligations under
this Financing Agreement.  The Obligors
shall, if necessary, execute any documents reasonably required to effectuate
the assignments.  No other Lender may
assign its interest in the loans and advances and extensions of credit
hereunder without the prior written consent of the Agent (which consent shall
not be unreasonably withheld).  If the
Agent consents to any such assignment by any other Lender (i) the amount
being assigned shall in no event be less than the lesser of (x) $5,000,000
or (y) the entire interest of such Lender hereunder, (ii) such
assignment shall be of a pro-rata portion of all of such assigning Lender’s
loans and commitments hereunder and (iii) the parties to such assignment
shall execute and deliver to the Agent an Assignment and Transfer Agreement,
and, at the Agent’s election, a processing and recording fee of $1,000 payable
by the Obligors to the Agent for its own account.

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SECTION 14.               Agency

14.1        Appointment
of Agent.  Each
Lender hereby irrevocably designates and appoints CITBC as the Agent for the
Lenders under this Financing Agreement and any ancillary loan documents and
irrevocably authorizes CITBC as the Agent for such Lender, to take such action
on its behalf under the provisions of this Financing Agreement and all
ancillary documents and to exercise such powers and perform such duties as are
expressly delegated to the Agent by the terms of this Financing Agreement and
all ancillary documents together with such other powers as are reasonably
incidental thereto.  Notwithstanding any
provision to the contrary elsewhere in this Financing Agreement, the Agent
shall not have any duties or responsibilities, except those expressly set forth
herein, or any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities
shall be read into this Financing Agreement and the ancillary documents or
otherwise exist against the Agent.

14.2        Use of
Other Agents.  The
Agent may execute any of its duties under this Financing Agreement and all
ancillary documents by or through agents or attorneys-in-fact and shall be entitled
to the advice of counsel concerning all matters pertaining to such duties.

14.3        Limitation
of Liability. 
Neither the Agent nor any of its officers, directors, employees, agents,
or attorneys-in-fact shall be (i) liable to any Lender for any action lawfully
taken or omitted to be taken by it or such Person under or in connection with
this Financing Agreement and all ancillary documents (except for its or such
Person’s own gross negligence or willful misconduct), or (ii) responsible
in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by the Obligors or any officer thereof
contained in this Financing Agreement and all ancillary documents or in any
certificate, report, statement or other document referred to or provided for
in, or received by the Agent under or in connection with, this Financing
Agreement and all ancillary documents or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Financing
Agreement and all ancillary documents or for any failure of the Obligors to
perform their obligations thereunder. 
The Agent shall not be under any obligation to any Lender to ascertain
or to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Financing Agreement and all ancillary
documents or to inspect the properties, books or records of the Obligors.

14.4        Reliance
by Agent.  The
Agent shall be entitled to rely, and shall be fully protected in relying, upon
any note, writing, resolution, notice, consent, certificate, affidavit, letter,
cablegram, telegram, telecopy, telex or teletype message, statement, order or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons and upon advice
and statements of legal counsel (including, without limitation, counsel to the
Obligors), independent accountants and other experts selected by the
Agent.  The Agent shall be fully
justified in failing or refusing to take any action under this Financing
Agreement and all ancillary documents unless it shall first receive such advice
or concurrence of the Lenders, or the Required Lenders, as the case may be, as
it deems appropriate or it shall first be indemnified to its satisfaction by
the Lenders against any and all liability and expense which may be incurred by
it by reason of taking or continuing to take any such action.  The Agent shall in all cases be fully
protected in acting, or in refraining

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from acting, under
this Financing Agreement and all ancillary documents in accordance with a
request of the Lenders, or the Required Lenders, as the case may be, and such
request and any action taken or failure to act pursuant thereto shall be
binding upon all the Lenders.

14.5        Agent’s
Knowledge.  The
Agent shall not be deemed to have knowledge or notice of the occurrence of any
Default or Event of Default hereunder unless the Agent has received written
notice from a Lender or the Obligors describing such Default or Event of
Default.  If the Agent receives such a
notice, the Agent shall promptly give notice thereof to the Lenders.  The Agent shall take such action with respect
to such Default or Event of Default as shall be reasonably directed by the
Lenders, or Required Lenders, as the case may be; provided that unless
and until the Agent shall have received such direction, the Agent may in the
interim (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it
shall deem advisable and in the best interests of the Lenders.

14.6        No
Reliance upon Agent. 
Each Lender expressly acknowledges that neither the Agent nor any of its
officers, directors, employees, agents or attorneys-in-fact has made any representations
or warranties to it and that no act by the Agent hereinafter taken, including
any review of the affairs of the Obligors shall be deemed to constitute any
representation or warranty by the Agent to any Lender.  Each Lender represents to the Agent that it
has, independently and without reliance upon the Agent or any other Lender and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Obligors and made its
own decision to enter into this Financing Agreement.  Each Lender also represents that it will,
independently and without reliance upon the Agent or any other Lender and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Financing Agreement and to make such investigation
as it deems necessary to inform itself as to the business, operations,
property, financial and other condition or creditworthiness of the
Obligors.  The Agent, however, shall
provide the Lenders with copies of all financial statements, projections and
business plans which come into the possession of the Agent or any of its
officers, employees, agents or attorneys-in-fact.

14.7        Indemnification and Limitation of
Liability of Agent. 
(a)  Indemnification of
Agent.  The Lenders agree
to indemnify the Agent in its capacity as such (to the extent not reimbursed by
the Obligors and without limiting the obligation of the Obligors to do so),
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
(including, without limitation, all Out-of-Pocket Expenses) of any kind
whatsoever (including negligence on the part of the Agent) which may at any
time be imposed on, incurred by or asserted against the Agent in any way
relating to or arising out of this Financing Agreement or any ancillary
documents or any documents contemplated by or referred to herein or the
transactions contemplated hereby or any action taken or omitted by the Agent
under or in connection with any of the foregoing; provided that no
Lender shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting solely

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from the Agent’s gross
negligence or willful misconduct. The agreements in this section shall survive
the payment of the Obligations.

(b)           Reasonable
Business Judgment. 
The Agent will use its reasonable business judgment in handling the
collection of the Accounts, enforcement of its rights hereunder and realization
upon the Collateral but shall not be liable to the Lenders for any action taken
or omitted to be taken in good faith or on the written advice of counsel.  The Lenders expressly release the Agent from
any and all liability and responsibility (express or implied), for any loss,
depreciation of or delay in collecting or failing to realize on any Collateral,
the Obligations or any guaranties therefor and for any mistake, omission or
error in judgment in passing upon or accepting any Collateral or in making (or
in failing to make) examinations or audits or for granting indulgences or
extensions to the Obligors, any account debtor or any guarantor, other than
resulting from the Agent’s gross negligence or willful misconduct.

14.8        Other
Business Relationships with Obligors.  The Agent may make loans to, and generally
engage in any kind of business with the Obligors as though the Agent were not
the Agent hereunder.  With respect to its
loans made or renewed by it or loan obligations hereunder as Lender, the Agent
shall have the same rights and powers, duties and liabilities under this
Financing Agreement as any Lender and may exercise the same as though it was
not the Agent and the terms “Lender” and “Lenders” shall include the Agent in
its individual capacity.

14.9        Resignation.  The Agent may resign as the Agent upon thirty
(30) days’ notice to the Lenders and such resignation shall be effective upon
the appointment of a successor Agent.  If
the Agent shall resign as Agent, then the Lenders shall appoint a successor
Agent for the Lenders whereupon such successor Agent shall succeed to the
rights, powers and duties of the Agent and the term “Agent” shall mean such
successor agent effective upon its appointment, and the former Agent’s rights,
powers and duties as Agent shall be terminated, without any other or further
act or deed on the part of such former Agent or any of the parties to this
Financing Agreement.  After any retiring
Agent’s resignation hereunder as the Agent the provisions of this Section 14
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was the Agent.

14.10      Consent
Required for Certain Amendments.  Notwithstanding anything contained in this
Financing Agreement to the contrary, the Agent will not, without the prior
written consent of all Lenders: (a) amend this Financing Agreement to
(i) increase the Revolving Line of Credit; (ii) reduce the interest
rates; (iii) reduce or waive (x) any fees in which the Lenders share
hereunder, or (y) the repayment of any Obligations due the Lenders;
(iv) extend the maturity of the Obligations; or (v) alter or amend
(x) this Section 14.10 or (y) the definitions of Eligible
Accounts Receivable, Eligible Inventory, Inventory Loan Cap, Collateral or
Required Lenders, or (vi) increase the advance percentages against
Eligible Accounts Receivable or Eligible Inventory or alter or amend the Agent’s
criteria for determining compliance with such definitions of Eligible Accounts
Receivable and/or Eligible Inventory if the effect thereof is to increase
Availability; (b) except as otherwise required in this Financing
Agreement, release any guaranty or Collateral in excess of $500,000 during any
year, or (c) knowingly make any Revolving Loan or assist in opening any
Letter of Credit hereunder if after giving effect thereto the total of
Revolving Loans and Letters of Credit hereunder for the Obligors would exceed
one

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hundred and ten
percent (110%) of the maximum amount available under this Financing Agreement
(the portion in excess of 100% of such maximum available amount shall be
referred to herein as the “Agent Permitted
Overadvances”), provided that the Agent shall not be
entitled to continue to knowingly make such Agent Permitted Overadvances for a
period in excess of ninety (90) days without the Lenders’ consent, and provided,
further, that the foregoing limitations shall not prohibit or restrict
advances by the Agent to preserve and protect and realize upon Collateral.  Subject to the provisions of Section 12.2
and the provisions of this Section 14.10 of this Financing
Agreement, in all other respects the Agent is authorized by each of the Lenders
to take such actions or fail to take such actions under this Financing
Agreement if the Agent, in its reasonable discretion, deems such to be
advisable and in the best interest of the Lenders.  Notwithstanding any provision to the contrary
contained in this Financing Agreement (including the provisions of Section 12.2
and Section 14.10 hereof) the Agent is authorized to take such actions
or fail to take such actions in connection with (a) the exercise of
(i) any and all rights and remedies under this Financing Agreement
(including but not limited to the exercise of rights and remedies under Section 10.2,
of this Financing Agreement) and (ii) its discretion in (x) determining
compliance with the eligibility requirements of Eligible Accounts Receivable
and/or Eligible Inventory and establishing reserves against Availability in
connection therewith and/or (y) the making of Agent Permitted
Overadvances, and/or (b) the release of Collateral not to exceed $250,000
in the aggregate during any Fiscal Year, and/or (c) curing any ambiguity,
defect or inconsistency in the terms of this Financing Agreement; provided
that the Agent, in its reasonable discretion, deems such to be advisable and in
the best interests of the Lenders.

14.11      Deemed
Consent.  If any
Lender’s consent is required pursuant to the provisions of this Financing
Agreement and such Lender does not respond to any request by the Agent for such
consent within ten (10) days after such request is made to such Lender, such
failure to respond shall be deemed a consent. 
In addition, if any Lender declines to give its consent to any such
request, it is hereby mutually agreed that the Agent and/or any other Lender
shall have the right (but not the obligation) to purchase such Lender’s share
of the Loans for the full amount thereof together with accrued interest thereon
to the date of such purchase.

14.12      Termination
of Revolving Line of Credit and Financing Agreement.  Each Lender agrees that, notwithstanding the
provisions of Section 11 of this Financing Agreement, any Lender
may terminate this Financing Agreement and the Revolving Line of Credit only as
of the initial or any subsequent Anniversary Date and then only by giving the
Agent ninety (90) days’ prior written notice thereof.  Within thirty (30) days after receipt of any
such termination notice, the Agent shall, at its option, either (i) give
notice of termination to the Company hereunder or (ii) purchase, or
arrange for the purchase of, the Lender’s share of the Obligations hereunder
for the full amount thereof plus accrued interest thereon.  Unless so terminated this Financing Agreement
and the Revolving Line of Credit shall be automatically extended from Anniversary
Date to Anniversary Date.  Termination of
this Financing Agreement by any of the Lenders as herein provided shall not
affect the Lenders’ respective rights and obligations under this Financing
Agreement incurred prior to the effective date of termination as set forth in
the preceding sentence.

14.13      Rescission
of Payment.  If the
Agent is required at any time to return to the Companies or to a trustee,
receiver, liquidator, custodian or other similar official any portion of

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the payments made
by the Companies to the Agent as result of a bankruptcy or similar proceeding
with respect to the Companies, any guarantor or any other Person or otherwise,
then each Lender shall, on demand of the Agent, forthwith return to the Agent
its ratable share of any such payments made to such Lender by the Agent,
together with its ratable share of interest and/or penalties, if any, payable
by the Lenders; this provision shall survive the termination of this Financing
Agreement.

14.14      Confidentiality.  The Lenders agree to maintain the
confidentiality of any non-public information provided by the Companies to
them, in the ordinary course of their business, provided that the
foregoing confidentiality provision shall terminate one (1) year after the
termination date of this Financing Agreement, and provided;  further
that any such Lenders may disclose such information (i) to any applicable
bank regulatory and auditor personnel and (ii) upon the advice of their
counsel after giving reasonable notice to Parent (unless prohibited by law or
otherwise) and an opportunity for Parent to consult with the Lender preparing
to make a disclosure and such Lender’s counsel.

[REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK]

 83

 

IN WITNESS WHEREOF, the parties hereto have
caused this Financing Agreement to be executed and delivered by their proper
and duly authorized officers as of the date set forth above.

COMPANIES:

LONE STAR TECHNOLOGIES, INC.

FINTUBE TECHNOLOGIES, INC.

LONE STAR LOGISTICS, INC.

STAR TUBULAR SERVICES, INC. 

TEXAS & NORTHERN RAILWAY COMPANY

FINTUBE CANADA, INC.

STAR CAPITAL FUNDING, INC.

	
  By:

  	
   

  	
  /s/ Robert F. Spears

  	
   

  
	
  Name:

  	
   

  	
  Robert F. Spears

  
	
  Title:

  	
   

  	
  Vice President of each of the foregoing companies

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  LONE STAR STEEL COMPANY, L.P.

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  Lone Star Steel Company General, LLC,

  
	
   

  	
   

  	
  its general partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Robert F. Spears

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Robert F. Spears

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  BELLVILLE TUBE COMPANY, L.P.

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  Bellville Tube General, LLC,

  
	
   

  	
   

  	
  its general partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Robert F. Spears

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Robert F. Spears

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  

 

 

	
  WHEELING MACHINE PRODUCTS, L.P.

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  Wheeling Machine Products General, LLC,

  
	
   

  	
   

  	
  its general partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Robert F. Spears

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Robert F. Spears

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  DELTA TUBULAR PROCESSING, L.P.

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  Delta Tubular Processing General, LLC,

  
	
   

  	
   

  	
  its general partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Robert F. Spears

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Robert F. Spears

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  DELTA TUBULAR INTERNATIONAL, L.P.

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  Delta Tubular International General, LLC,

  
	
   

  	
   

  	
  its general partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Robert F. Spears

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Robert F. Spears

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
						

 

 

GUARANTORS:

ENVIRONMENTAL HOLDINGS, INC.

ZINKLAHOMA, INC.

LONE STAR STEEL SALES COMPANY

ROTAC, INC.

LONE STAR ST HOLDINGS, INC.

STAR TUBULAR TECHNOLOGIES, INC.

STAR TUBULAR TECHNOLOGIES (YOUNGSTOWN), INC.

	
  By:

  	
  /s/ Robert F. Spears

  	
   

  
	
  Name:

  	
  Robert F. Spears

  	
   

  
	
  Title:

  	
  Vice President of each of the foregoing companies

  	
   

  
				

 

BELLVILLE TUBE GENERAL, LLC

WHEELING MACHINE PRODUCTS GENERAL, LLC

DELTA TUBULAR PROCESSING GENERAL, LLC

DELTA TUBULAR INTERNATIONAL GENERAL, LLC 

STAR ENERGY GROUP, LLC

LONE STAR STEEL INTERNATIONAL GENERAL, LLC

	
  By:

  	
  /s/ Robert F. Spears

  	
   

  
	
  Name:

  	
  Robert F. Spears

  	
   

  
	
  Title:

  	
  Vice President of each of the foregoing limited

  liability companies

  	
   

  
				

 

LONE STAR NEVADA HOLDINGS, LLC

	
  By:

  	
  /s/ Richard F. Klumpp

  	
   

  
	
  Name:

  	
  Richard F. Klumpp

  	
   

  
	
  Title:

  	
  Manager, Treasurer and Secretary

  	
   

  
				

 

 

LONE STAR STEEL INTERNATIONAL, L.P.

	
  By:

  	
  Lone Star Steel International General, LLC,

  	
   

  
	
   

  	
  its general partner

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert F. Spears

  	
   

  
	
   

  	
  Name:

  	
  Robert F. Spears

  
	
   

  	
  Title:

  	
  Vice President

  
				

 

LONE STAR STEEL INTERNATIONAL
LIMITED, LLC

	
  By:

  	
  /s/ Garry J. Hills

  	
   

  
	
  Name:

  	
  Garry J. Hills

  	
   

  
	
  Title:

  	
  Manager

  	
   

  
				

 

LONE STAR STEEL COMPANY GENERAL, LLC

	
  By:

  	
  /s/ Robert F. Spears

  	
   

  
	
  Name:

  	
  Robert F. Spears

  	
   

  
	
  Title:

  	
  Vice President

  	
   

  
				

 

LONE STAR STEEL COMPANY LIMITED, LLC

	
  By:

  	
  /s/ Garry J. Hills

  	
   

  
	
  Name:

  	
  Garry J. Hills

  	
   

  
	
  Title:

  	
  Manager

  	
   

  
				

 

LONE STAR STEEL MEXICO, LLC

	
  By:

  	
  /s/ Robert F. Spears

  	
   

  
	
  Name:

  	
  Robert F. Spears

  	
   

  
	
  Title:

  	
  Manager

  	
   

  
				

 

 

STAR TC HOLDINGS, LLC

	
  By:

  	
  /s/ Robert F. Spears

  	
   

  
	
  Name:

  	
  Robert F. Spears

  	
   

  
	
  Title:

  	
  Vice President

  	
   

  
				

 

STAR BRAZIL US, LLC 1

	
  By:

  	
  /s/ Robert F. Spears

  	
   

  
	
  Name:

  	
  Robert F. Spears

  	
   

  
	
  Title:

  	
  Vice President

  	
   

  
				

 

STAR BRAZIL US, LLC 2

	
  By:

  	
  /s/ Robert F. Spears

  	
   

  
	
  Name:

  	
  Robert F. Spears

  	
   

  
	
  Title:

  	
  Vice President

  	
   

  
				

 

 

AGENT:

	
  THE CIT GROUP/BUSINESS CREDIT, INC., as Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Robyn Pingree

  	
   

  
	
  Name:

  	
  Robyn Pingree

  	
   

  
	
  Title:

  	
  Vice President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  LENDERS:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  THE CIT GROUP/BUSINESS CREDIT, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Robyn Pingree

  	
   

  
	
  Name:

  	
  Robyn Pingree

  	
   

  
	
  Title:

  	
  Vice President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Revolving Loan Commitment: $55,000,000.00

  
	
  Swingline Loan Commitment: $25,000,000.00

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  WELLS FARGO FOOTHILL, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ David P. Hill

  	
   

  
	
  Name:

  	
  David Hill

  	
   

  
	
  Title:

  	
  Vice President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Revolving Loan Commitment: $30,000,000.00

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  LASALLE BANK NATIONAL ASSOCIATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Erin M. Frey

  	
   

  
	
  Name:

  	
  Erin M. Frey

  	
   

  
	
  Title:

  	
  VP

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Revolving Loan Commitment: $47,500,000.00

  

 

 

 

	
  WACHOVIA BANK, NATIONAL ASSOCIATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Joe T. Curdy

  	
   

  
	
  Name:

  	
  Joe Curdy

  	
   

  
	
  Title:

  	
  Vice President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Revolving Loan Commitment: $47,500,000.00

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  JPMORGAN CHASE BANK, N.A.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Jeff A. Tompkins

  	
   

  
	
  Name:

  	
  Jeff A. Tompkins

  	
   

  
	
  Title:

  	
  Vice President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Revolving Loan Commitment: $45,000,000.00

  

 

 

EXHIBIT A

ASSIGNMENT AND TRANSFER AGREEMENT

Dated:                   

Reference herein
is made to the Second Amended and Restated Financing Agreement dated as of
December 14, 2006 (as amended, modified, supplemented and in effect from
time to time, the “Loan Agreement”),
among Lone Star Technologies, Inc.  (herein “Parent”),
a Delaware corporation, Lone Star Steel
Company, L.P. (herein “LSSC”),
a Delaware limited partnership, as successor in interest by the conversion of
Lone Star Steel Company with and into Lone Star Steel Company, L.P., Fintube Technologies, Inc. (herein “FTI”), an Oklahoma corporation, Lone Star Logistics, Inc., a Texas
corporation (“Logistics”), Star Tubular Services, Inc., formerly known
as T&N Lone Star Warehouse Co., a Texas corporation (“Star Tubular”), Texas & Northern Railway Company, a
Texas corporation (“T&N Railway”),
Fintube Canada, Inc., a Delaware
corporation (“FCI”), Bellville Tube Company, L.P. (“BTCLP”), a Texas limited partnership,
successor in interest by conversion to Bellville Tube Corporation, a Texas
corporation, Wheeling Machine Products, L.P.
(“Wheeling”), a Texas
limited partnership, successor in interest by conversion to Wheeling Machine
Products, Inc., formerly known as Wheeling Acquisition Corporation and Star Tubular
Technologies (Houston), Inc., Star Capital
Funding, Inc. (“Star Capital”),
a Delaware corporation, Delta Tubular
Processing, L.P. (“Delta
Processing”), a Texas limited partnership, successor in interest
by conversion to Delta Tubular Processing, Inc., formerly known as Delta Lone
Star Acquisition, Inc. and Delta Tubular
International, L.P. (“Delta
International”), a Texas limited partnership, successor in
interest by conversion to Delta Tubular International, Inc., formerly known as
Star Tubular International, Inc., each with its chief executive office at 15660
N. Dallas Parkway, Suite 500, Dallas, Texas 75248 (herein Parent, LSSC, FTI,
Logistics, Star Tubular, T&N Railway, FCI, BTCLP, Wheeling, Star Capital,
Delta Processing and Delta International, collectively, the “Borrowers” and each, a “Borrower”), certain affiliates of the
Borrowers as Guarantors thereunder (the “Guarantors”
and each, a “Guarantor”),
certain other lenders a party thereto (the “Lenders,” and each, a “Lender”) and The CIT
Group/Business Credit, Inc., as agent for itself and the other
Lenders (in such capacity the “Agent”).  Capitalized terms used herein and not
otherwise defined shall have the meanings assigned to such terms in the Loan
Agreement. This Assignment and Transfer Agreement, between the Assignor (as
defined and set forth on Schedule 1 hereto and made a part hereof) and
the Assignee (as defined and set forth on Schedule 1 hereto and
made a part hereof) is dated as of Date hereof (as set forth on Schedule 1
hereto and made a part hereof).

1.             The Assignor hereby irrevocably
sells and assigns to the Assignee without recourse to the Assignor, and the
Assignee hereby irrevocably purchases and assumes from the Assignor without
recourse to the Assignor, as of the Date hereof, an undivided interest (the “Assigned Interest”) in and to all the
Assignor’s rights and obligations under the Loan Agreement respecting those,
and only those, financing facilities contained in the Loan Agreement as are set
forth on Schedule 1 (collectively, the “Assigned Facilities” and

 A-1
 

 

individually, an “Assigned Facility”), in a principal
amount for each Assigned Facility as set forth on Schedule 1.

2.             The Assignor (i) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Loan Agreement or any other instrument, document or agreement executed in
conjunction therewith (collectively the “Loan
Documents”) or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Loan Agreement, any
Collateral thereunder or any of the Loan Documents furnished pursuant thereto,
other than that it is the legal and beneficial owner of the interest being
assigned by it hereunder and that such interest is free and clear of any
adverse claim and (ii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of any Obligor or the
performance or observance by any Obligor of any of their respective obligations
under the Loan Agreement or any of the Loan Documents furnished pursuant
thereto.

3.             The Assignee (i) represents
and warrants that it is legally authorized to enter into this Assignment and
Transfer Agreement; (ii) confirms that it has received a copy of the Loan
Agreement, together with the copies of the most recent financial statements of
each Borrower, and such other documents and information as it has deemed
appropriate to make its own credit analysis; (iii) agrees that it will,
independently and without reliance upon the Agent, the Assignor 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 the Loan Agreement; (iv) appoints and authorizes the Agent to
take such action as agent on its behalf and to exercise such powers under the
Loan Agreement as are delegated to the Agent by the terms thereof, together
with such powers as are reasonably incidental thereto; (v) agrees that it
will be bound by the provisions of the Loan Agreement and will perform in
accordance with its terms all the obligations which by the terms of the Loan
Agreement are required to be performed by it as a Lender; and (vi) if the
Assignee is organized under the laws of a jurisdiction outside the United
States, attaches the forms prescribed by the Internal Revenue Service of the
United States certifying as to the Assignee’s exemption from United States
withholding taxes with respect to all payments to be made to the Assignee under
the Loan Agreement or such other documents as are necessary to indicate that
all such payments are subject to such tax at a rate reduced by an applicable
tax treaty.

4.             Following the execution of this
Assignment and Transfer Agreement, such agreement will be delivered to the
Agent for acceptance by Agent, effective as of the Date hereof.

5.             Upon such acceptance, from and
after the Date hereof, the Agent shall make all payments in respect of the
assigned interest (including payments of principal, interest, fees and other
amounts) to the Assignee, whether such amounts have accrued prior to the Date
hereof or accrue subsequent to the Date hereof. 
The Assignor and Assignee shall make all appropriate adjustments in
payments for periods prior to the Date hereof made by the Agent or with respect
to the making of this assignment directly between themselves.

6.             From and after the Date hereof,
(i) the Assignee shall be a party to the Loan Agreement and, to the extent
provided in this Assignment and Transfer Agreement, have the

 A-2
 

 

rights and
obligations of a Lender thereunder, and (ii) the Assignor shall, to the
extent provided in this Assignment and Transfer Agreement, relinquish its
rights and be released from its obligations under the Loan Agreement.

7.             THIS
ASSIGNMENT AND TRANSFER AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

[REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK]

 A-3
 

 

IN WITNESS WHEREOF, the parties hereto have
caused this Assignment and Acceptance to be executed by their respective duly
authorized officers on the date first written above.

	
  THE CIT GROUP/BUSINESS CREDIT,

  	
   

  	
   

  
	
  INC.,
  As Agent

  	
   

  	
  as Assignor

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  as Assignee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
											

 

 A-4
 

 

Schedule 1 to Assignment and Transfer
Agreement

Name of Assignor:                

Name of Assignee:               

Date hereof of
Assignment:                        ,
200   

	
  Assigned

  Facilities

  	
   

  	
  Principal Amount

  Assigned

  	
   

  	
  Percentage Assigned of Each

  Facility (Shown as a

  percentage of aggregate

  original principal amount

  of all Lenders)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Revolving Loans

  	
   

  	
  $

  	
                  

  	
   

  	
          

  	
  %

  
							

 

 A-5

 

Schedule 1 –
Existing Liens

	
  Debtor

  	
   

  	
  Secured Party

  	
   

  	
  Financing

  Statement

  #

  	
   

  	
  Date of

  Filing

  	
   

  	
  Collateral

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

Schedule 2 – List
of Eligible Rack Transfer Sales to Customers

 

Schedule 7.1 Obligor Information

Exact
Name of Obligor in its State of Incorporation:

State of
Incorporation:

Federal
Tax I.D. No.:

Chief
Executive Office(s):

Tradenames:

Prior
Names:

Charter
No.:

 

Schedule 7.5(a) –
Insurance Coverage

 

Schedule 7.15(e) –
Other Lending Agreements

 

Schedule 7.15(f) –
Real Property Owned and Leased/Collateral Locations

	
  Location of Owned Real Property

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Location of Leased Real Property

  	
   

  	
  Owner

  

 

 

Schedule 7.15(g) –
Litigation

 

Schedule 7.15(l) –
Environmental Matters

 

Schedule 7.15(o) –
Subsidiaries and Joint Ventures

 

Schedule 7.15(p) –
Intellectual Property

Owned

Licenses

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00114-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00114-of-00352.parquet"}]]