Document:

EX-10.1

 

Exhibit 10.1

BRIDGE CREDIT AGREEMENT

dated as of October 21, 2005

between

LANCE, INC.,

BANK OF AMERICA, NATIONAL ASSOCIATION,

as Agent and sole initial Lender,

BANC OF AMERICA SECURITIES LLC

as Lead Arranger and Book Manager

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page
	ARTICLE I DEFINITIONS
	 	 	1	 
	 
	 	 	 	 
	1.1 Certain Defined Terms
	 	 	1	 
	 
	 	 	 	 
	1.2 Other Interpretive Provisions
	 	 	16	 
	 
	 	 	 	 
	1.3 Accounting Principles
	 	 	17	 
	 
	 	 	 	 
	ARTICLE II THE CREDITS
	 	 	17	 
	 
	 	 	 	 
	2.1 Amounts and Terms of Commitments
	 	 	17	 
	 
	 	 	 	 
	2.2 Loan Accounts
	 	 	17	 
	 
	 	 	 	 
	2.3 Procedure for Borrowing
	 	 	18	 
	 
	 	 	 	 
	2.4 Conversion and Continuation Elections for Borrowings
	 	 	19	 
	 
	 	 	 	 
	2.5 Termination or Reduction of Commitments
	 	 	20	 
	 
	 	 	 	 
	2.6 Prepayments
	 	 	20	 
	 
	 	 	 	 
	2.7 Repayment
	 	 	21	 
	 
	 	 	 	 
	2.8 Interest
	 	 	21	 
	 
	 	 	 	 
	2.9 Facility Fees
	 	 	21	 
	 
	 	 	 	 
	2.10 Computation of Fees and Interest
	 	 	21	 
	 
	 	 	 	 
	2.11 Payments by the Borrower
	 	 	22	 
	 
	 	 	 	 
	2.12 Payments by the Lenders to the Agent
	 	 	22	 
	 
	 	 	 	 
	2.13 Sharing of Payments
	 	 	23	 
	 
	 	 	 	 
	ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY
	 	 	24	 
	 
	 	 	 	 
	3.1 Taxes
	 	 	24	 
	 
	 	 	 	 
	3.2 Illegality
	 	 	25	 
	 
	 	 	 	 
	3.3 Increased Costs and Reduction of Return
	 	 	25	 
	 
	 	 	 	 
	3.4 Funding Losses
	 	 	26	 
	 
	 	 	 	 
	3.5 Inability to Determine Rates
	 	 	27	 
	 
	 	 	 	 
	3.6 Certificates of Lenders
	 	 	27	 
	 
	 	 	 	 
	3.7 Substitution of Lenders
	 	 	27	 
	 
	 	 	 	 
	3.8 Survival
	 	 	27	 
	 
	 	 	 	 
	ARTICLE IV CONDITIONS PRECEDENT
	 	 	27	 
	 
	 	 	 	 
	4.1 Conditions to Effectiveness
	 	 	27	 

-i-

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 
	 	 	Page
	4.2 Conditions to All Credit Extensions
	 	 	29	 
	 
	 	 	 	 
	ARTICLE V REPRESENTATIONS AND WARRANTIES
	 	 	29	 
	 
	 	 	 	 
	5.1 Corporate Existence and Power
	 	 	29	 
	 
	 	 	 	 
	5.2 Corporate Authorization; No Contravention
	 	 	30	 
	 
	 	 	 	 
	5.3 Governmental Authorization
	 	 	30	 
	 
	 	 	 	 
	5.4 Binding Effect
	 	 	30	 
	 
	 	 	 	 
	5.5 Litigation
	 	 	30	 
	 
	 	 	 	 
	5.6 No Default
	 	 	30	 
	 
	 	 	 	 
	5.7 ERISA Compliance
	 	 	31	 
	 
	 	 	 	 
	5.8 Use of Proceeds; Margin Regulations
	 	 	31	 
	 
	 	 	 	 
	5.9 Title to Properties
	 	 	31	 
	 
	 	 	 	 
	5.10 Taxes
	 	 	32	 
	 
	 	 	 	 
	5.11 Financial Condition
	 	 	32	 
	 
	 	 	 	 
	5.12 Environmental Matters
	 	 	32	 
	 
	 	 	 	 
	5.13 Regulated Entities
	 	 	32	 
	 
	 	 	 	 
	5.14 No Burdensome Restrictions
	 	 	32	 
	 
	 	 	 	 
	5.15 Copyrights, Patents, Trademarks and Licenses, etc
	 	 	32	 
	 
	 	 	 	 
	5.16 Subsidiaries
	 	 	33	 
	 
	 	 	 	 
	5.17 Insurance
	 	 	33	 
	 
	 	 	 	 
	5.18 Swap Obligations
	 	 	33	 
	 
	 	 	 	 
	5.19 Full Disclosure
	 	 	33	 
	 
	 	 	 	 
	ARTICLE VI AFFIRMATIVE COVENANTS
	 	 	33	 
	 
	 	 	 	 
	6.1 Financial Statements
	 	 	33	 
	 
	 	 	 	 
	6.2 Certificates; Other Information
	 	 	34	 
	 
	 	 	 	 
	6.3 Notices
	 	 	34	 
	 
	 	 	 	 
	6.4 Preservation of Corporate Existence, Etc
	 	 	35	 
	 
	 	 	 	 
	6.5 Maintenance of Property
	 	 	36	 
	 
	 	 	 	 
	6.6 Insurance
	 	 	36	 
	 
	 	 	 	 
	6.7 Payment of Obligations
	 	 	36	 

-ii-

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 
	 	 	Page
	6.8 Compliance with Laws
	 	 	36	 
	 
	 	 	 	 
	6.9 Compliance with ERISA
	 	 	36	 
	 
	 	 	 	 
	6.10 Inspection of Property and Books and Records
	 	 	36	 
	 
	 	 	 	 
	6.11 Environmental Laws
	 	 	37	 
	 
	 	 	 	 
	6.12 Use of Proceeds
	 	 	37	 
	 
	 	 	 	 
	ARTICLE VII NEGATIVE COVENANTS
	 	 	37	 
	 
	 	 	 	 
	7.1 Financial Condition Covenants
	 	 	37	 
	 
	 	 	 	 
	7.2 Limitation on Liens
	 	 	37	 
	 
	 	 	 	 
	7.3 Disposition of Assets
	 	 	39	 
	 
	 	 	 	 
	7.4 Consolidations and Mergers
	 	 	39	 
	 
	 	 	 	 
	7.5 Loans and Investments
	 	 	40	 
	 
	 	 	 	 
	7.6 Limitation on Subsidiary Indebtedness
	 	 	41	 
	 
	 	 	 	 
	7.7 Transactions with Affiliates
	 	 	41	 
	 
	 	 	 	 
	7.8 Use of Proceeds
	 	 	41	 
	 
	 	 	 	 
	7.9 Swap Contracts
	 	 	42	 
	 
	 	 	 	 
	7.10 Restricted Payments
	 	 	42	 
	 
	 	 	 	 
	7.11 ERISA
	 	 	42	 
	 
	 	 	 	 
	7.12 Change in Business
	 	 	42	 
	 
	 	 	 	 
	7.13 Accounting Changes
	 	 	42	 
	 
	 	 	 	 
	7.14 HSW Mortgage Loan
	 	 	42	 
	 
	 	 	 	 
	ARTICLE VIII EVENTS OF DEFAULT
	 	 	43	 
	 
	 	 	 	 
	8.1 Event of Default
	 	 	43	 
	 
	 	 	 	 
	8.2 Remedies
	 	 	44	 
	 
	 	 	 	 
	8.3 Rights Not Exclusive
	 	 	45	 
	 
	 	 	 	 
	ARTICLE IX THE AGENT
	 	 	45	 
	 
	 	 	 	 
	9.1 Appointment and Authorization
	 	 	45	 
	 
	 	 	 	 
	9.2 Delegation of Duties
	 	 	45	 
	 
	 	 	 	 
	9.3 Liability of Agent
	 	 	46	 
	 
	 	 	 	 
	9.4 Reliance by Agent
	 	 	46	 

-iii-

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 
	 	 	Page
	9.5 Notice of Default
	 	 	46	 
	 
	 	 	 	 
	9.6 Credit Decision
	 	 	47	 
	 
	 	 	 	 
	9.7 Indemnification
	 	 	47	 
	 
	 	 	 	 
	9.8 Agent in Individual Capacity
	 	 	47	 
	 
	 	 	 	 
	9.9 Successor Agent
	 	 	48	 
	 
	 	 	 	 
	9.10 Withholding Tax
	 	 	48	 
	 
	 	 	 	 
	ARTICLE X MISCELLANEOUS
	 	 	49	 
	 
	 	 	 	 
	10.1 Amendments and Waivers
	 	 	49	 
	 
	 	 	 	 
	10.2 Notices
	 	 	50	 
	 
	 	 	 	 
	10.3 No Waiver; Cumulative Remedies
	 	 	51	 
	 
	 	 	 	 
	10.4 Costs and Expenses
	 	 	51	 
	 
	 	 	 	 
	10.5 Borrower Indemnification
	 	 	51	 
	 
	 	 	 	 
	10.6 Payments Set Aside
	 	 	52	 
	 
	 	 	 	 
	10.7 Successors and Assigns
	 	 	52	 
	 
	 	 	 	 
	10.8 Assignments, Participations, etc
	 	 	52	 
	 
	 	 	 	 
	10.9 Confidentiality
	 	 	54	 
	 
	 	 	 	 
	10.10 Set-off
	 	 	54	 
	 
	 	 	 	 
	10.11 Notification of Addresses, Lending Offices, Etc
	 	 	55	 
	 
	 	 	 	 
	10.12 Counterparts
	 	 	55	 
	 
	 	 	 	 
	10.13 Severability
	 	 	55	 
	 
	 	 	 	 
	10.14 No Third Parties Benefited
	 	 	55	 
	 
	 	 	 	 
	10.15 Governing Law and Jurisdiction
	 	 	55	 
	 
	 	 	 	 
	10.16 Waiver of Jury Trial
	 	 	55	 
	 
	 	 	 	 
	10.17 Pari Passu Obligations
	 	 	56	 
	 
	 	 	 	 
	10.18 Judgment
	 	 	56	 
	 
	 	 	 	 
	10.19 Entire Agreement
	 	 	56	 
	 
	 	 	 	 
	10.20 USA Patriot Act Notice
	 	 	57	 

-iv-

 

	 
	SCHEDULES

	 

	Schedule 2.1   Commitments and Pro Rata Shares

	Schedule 5.7   ERISA

	Schedule 5.16 Subsidiaries of Lance, Inc.

	Schedule 7.2   Permitted Liens

	Schedule 10.2 Offshore and Domestic Lending Offices, Addresses for Notices

	 

	EXHIBITS

	 

	Exhibit A Form of Notice of Borrowing

	Exhibit B Form of Notice of Conversion/Continuation

	Exhibit C Form of Compliance Certificate

	Exhibit D Form of Assignment and Acceptance

	Exhibit E Form of Promissory Note

-v-

 

BRIDGE CREDIT AGREEMENT

     This BRIDGE CREDIT AGREEMENT is entered into as of October 21, 2005, between LANCE, INC., a
North Carolina corporation (the “Borrower”), and BANK OF AMERICA, NATIONAL ASSOCIATION, as
the sole initial lender hereunder (together with any assigns and successors in such capacity,
individually a “Lender” and collectively the “Lenders”) and as administrative agent
for the Lenders (the “Agent”).

WITNESSETH:

     WHEREAS, the Borrower wishes to finance its acquisition of assets of Tom’s Foods Inc. out of
the bankruptcy estate pursuant to a Section 363 auction process (the “Tom’s Foods
Acquisition”) and the Lender is willing to provide such financing on the terms and conditions
stated herein;

     NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained
herein, the parties agree as follows:

ARTICLE I

DEFINITIONS

1.1 Certain Defined Terms. The following terms have the following meanings:

     Acquisition means any transaction or series of related transactions for the
purpose of or resulting, directly or indirectly, in (a) the acquisition of all or
substantially all of the assets of a Person, or of any business or division of a Person, (b)
the acquisition of in excess of 50% of the capital stock, partnership interests, membership
interests or equity of any Person, or otherwise causing any Person to become a Subsidiary,
or (c) a merger or consolidation or amalgamation or any other combination with another
Person (other than a Person that is a Subsidiary) provided that the Borrower or the
Subsidiary is the surviving entity or, in the case of an amalgamation, the resulting
corporation has provided an assumption agreement and all other assurances as the Agent may
reasonably require.

     Affiliate means, as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with such Person.
A Person shall be deemed to control another Person if the controlling Person possesses,
directly or indirectly, the power to direct or cause the direction of the management and
policies of the other Person, whether through the ownership of voting securities or
membership interests, by contract or otherwise.

     Agent means Bank of America in its capacity as agent for the Lenders hereunder,
and any successor thereto in such capacity arising under Section 9.9.

     Agent-Related Persons means Bank of America and any successor to Bank of
America as Agent arising under Section 9.9, together with their respective
Affiliates

 

 

(including, in the case of Bank of America, the Arranger), and the officers, directors,
employees, agents and attorneys-in-fact of such Persons and Affiliates.

     Agent’s Payment Office means the address for payments set forth on Schedule
10.2 or such other address as the Agent may from time to time specify.

     Aggregate Commitment means at any time an amount equal to the aggregate amount
of the Commitments of all Lenders. The initial amount of the Aggregate Commitment is
U.S.$50,000,000.

     Agreement means this Bridge Credit Agreement.

     Applicable Law means, with reference to any Person, all laws (foreign or
domestic), ordinances and treaties and all judgments, decrees, injunctions, writs and orders
of any court, arbitrator or Governmental Authority, and all rules and regulations of any
Governmental Authority applicable to such Person.

     Applicable Margin means (a) initially, 0.35% per annum, and (b) beginning on
any date on which the Applicable Margin is to be adjusted pursuant to the sentence following
the table below, the rate per annum set forth in the table below opposite the applicable
Total Debt to EBITDA Ratio:

	 	 	 	 	 
	Total Debt	 	Applicable
	to EBITDA Ratio	 	Margin
	Less than or equal
to 0.50 to 1
	 	 	0.26	%
	 
	 	 	 	 
	Greater than 0.50
to 1 but less than
or equal to 1.25 to 1
	 	 	0.35	%
	 
	 	 	 	 
	Greater than 1.25 to
to 1 but less than
or equal to 2.00 to 1
	 	 	0.425	%
	 
	 	 	 	 
	Greater than 2.00
to 1
	 	 	0.575	%

The Applicable Margin for all Offshore Rate Loans shall be adjusted, to the extent
applicable, 46 days (or, in the case of the last fiscal quarter of any year, 101 days) after
the end of each fiscal quarter (or, if earlier, 10 days following delivery by the Borrower
of the financial statements required by subsection 6.1(a) or 6.1(b), as
applicable, and the related Compliance Certificate required by subsection 6.2(a) for
such fiscal quarter), based on the Total Debt to EBITDA Ratio as of the last day of such
fiscal quarter; it being understood that if the Borrower fails to deliver the
financial statements required by subsection 6.1(a) or 6.1(b), as applicable,
and the related Compliance Certificate required by subsection 6.2(a) by the 46th day
(or, if applicable, the 101st day) after any fiscal

2

 

quarter, the Applicable Margin shall be 0.575% until such financial statements and
Compliance Certificate are delivered.

     Arranger means Banc of America Securities LLC.

     Assignee — see subsection 10.8(a).

     Assignment and Acceptance — see subsection 10.8(a).

     Attorney Costs means and includes all reasonable fees and disbursements of any
law firm or other external counsel and, without duplication, the allocated cost of internal
legal services and all reasonable disbursements of internal counsel provided that all
attorneys’ fees shall be determined without regard to any statutory presumption based on the
standard hourly rates for such attorneys and the actual hours expended.

     Bank of America means Bank of America, National Association, a national banking
association.

     Bankruptcy Code means the Federal Bankruptcy Reform Act of 1978 (11 U.S.C.
§101, et seq.).

     Borrower — see preamble to this Agreement.

     Borrowing means a borrowing hereunder consisting of Loans of the same Type made
to the Borrower on the same day by one or more Lenders under Article II and, other
than in the case of U.S. Base Rate Loans, having the same Interest Period.

     Borrowing Date means any date on which a Borrowing occurs under Section
2.3.

     Business Day means any day other than a Saturday, Sunday or other day on which
commercial banks in Charlotte, North Carolina are authorized or required by law to close
and, if the applicable Business Day relates to any Offshore Rate Loan, means such a day on
which dealings are carried on in the London offshore dollar interbank market.

     Capital Adequacy Regulation means any guideline, request or directive of any
central bank or other relevant Governmental Authority, or any other law, rule or regulation,
whether or not having the force of law, in each case, regarding capital adequacy of any bank
or of any corporation controlling a bank.

     Change of Control means any of the following events:

          (a) any Person or group (within the meaning of Rule 13d-5 of the SEC under the Securities
Exchange Act of 1934 as in effect on the date hereof) (other than the Van Every Family) shall
become the Beneficial Owner (as defined in Rule 13d-3 of the SEC under the Securities Exchange Act
of 1934 as in effect on the date hereof) of 20% or more of the capital stock or other equity
interests of the Borrower the holders of which are entitled under ordinary circumstances
(irrespective of whether at the time the holders of such stock or other equity

3

 

interests shall have or might have voting power by reason of the happening of any contingency)
to vote for the election of the directors of the Borrower; or

           (b) a majority of the members of the Board of Directors of the Borrower shall cease to be
Continuing Members.

     Code means the U.S. Internal Revenue Code of 1986, and regulations promulgated
thereunder.

     Commitment — see Section 2.1. As of the Effective Date, the amount of
the Aggregate Commitments of the sole initial Lender is U.S.$50,000,000.

     Compliance Certificate means a certificate substantially in the form of
Exhibit C.

     Computation Period means any period of four consecutive fiscal quarters ending
on the last day of a fiscal quarter.

     Contingent Obligation means, as to any Person, without duplication, any direct
or indirect liability of such Person, whether or not contingent, with or without recourse,
(a) with respect to any Indebtedness, lease, dividend, letter of credit or other obligation
(the “primary obligations”) of another Person (the “primary obligor”), including any
obligation of such Person (i) to purchase, repurchase or otherwise acquire such primary
obligations or any security therefor, (ii) to advance or provide funds for the payment or
discharge of any such primary obligation, or to maintain working capital or equity capital
of the primary obligor or otherwise to maintain the net worth or solvency or any balance
sheet item, level of income or financial condition of the primary obligor, (iii) to purchase
property, securities or services primarily for the purpose of assuring the owner of any such
primary obligation of the ability of the primary obligor to make payment of such primary
obligation, or (iv) otherwise to assure or hold harmless the holder of any such primary
obligation against loss in respect thereof (each a “Guaranty Obligation”); (b) with
respect to any Surety Instrument issued for the account of such Person or as to which such
Person is otherwise liable for reimbursement of drawings or payments; or (c) in respect of
any Swap Contract. The amount of any Contingent Obligation shall (a) in the case of
Guaranty Obligations, be deemed equal to the stated or determinable amount of the primary
obligation in respect of which such Guaranty Obligation is made or, if not stated or if
indeterminable, the maximum reasonably anticipated liability in respect thereof, and (b) in
the case of other Contingent Obligations, be equal to the maximum reasonably anticipated
liability in respect thereof.

     Continuing Member means a member of the Board of Directors of the Borrower who
either (a) was a member of the Borrower’s Board of Directors on the Effective Date and has
been such continuously thereafter or (b) became a member of such Board of Directors after
the Effective Date and whose election or nomination for election was approved by a vote of
the majority of the Continuing Members then members of the Borrower’s Board of Directors.

4

 

     Contractual Obligation means, as to any Person, any provision of any security
issued by such Person or of any agreement, undertaking, contract, indenture, mortgage, deed
of trust or other document to which such Person is a party or by which it or any of its
property is bound.

     Conversion/Continuation Date means any date on which, under Section 2.4
the Borrower (a) converts Loans of one Type to the other Type or (b) continues Offshore Rate
Loans for a new Interest Period.

     Credit Extension means and includes the making of any Loan hereunder.

     Deferred Notes — see Section 7.6.

     Disclosure Memorandum means the disclosure memorandum dated October 21, 2005 of
the Borrower delivered to the Agent and the Lender on or before the Effective Date.

     Dollar, dollar, U.S. Dollar, U.S.$ and $ each
means lawful money of the United States.

     EBIT means, for any Computation Period, the Borrower’s consolidated earnings
from continuing operations for such period, plus, to the extent deducted in determining such
earnings, Interest Expense and income taxes, minus, to the extent included in determining
such earnings, any income tax refunds.

     EBITDA means, for any Computation Period, the Borrower’s consolidated earnings
from continuing operations for such period, plus, to the extent deducted in determining such
earnings, Interest Expense, income taxes, depreciation and amortization, minus, to the
extent included in determining such earnings, any income tax refunds.

     Effective Date — see Section 4.1.

     Eligible Assignee means (i) a commercial bank organized under the laws of the
United States, or any state thereof, and having a combined capital and surplus of at least
U.S.$100,000,000; (ii) a commercial bank organized under the laws of any other country which
is a member of the Organization for Economic Cooperation and Development (the OECD), or a
political subdivision of any such country, and having a combined capital and surplus of at
least U.S.$100,000,000, provided that such bank is acting through a branch or agency located
in the United States; and (iii) a Person that is primarily engaged in the business of
commercial banking and that is (A) a Subsidiary of a Lender, (B) a Subsidiary of a Person of
which a Lender is a Subsidiary, or (C) a Person of which a Lender is a Subsidiary.

     Environmental Claims means all claims, however asserted, by any Governmental
Authority or other Person alleging potential liability or responsibility for violation of
any Environmental Law, or for release or injury to the environment.

5

 

     Environmental Laws means all federal, state or local laws, statutes,
rules, regulations, ordinances and codes, together with all administrative orders, directed
duties, requests, licenses, authorizations and permits of, and agreements with, any
Governmental Authorities, in each case relating to environmental and human health matters.

     ERISA means the U.S. Employee Retirement Income Security Act of 1974, and the
regulations promulgated thereunder.

     ERISA Affiliate means any trade or business (whether or not incorporated) under
common control with the Borrower within the meaning of Section 414(b) or (c) of the Code
(and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412
of the Code).

     ERISA Event means (a) a Reportable Event with respect to a Pension Plan; (b) a
withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan subject to Section
4063 of ERISA during a plan year in which it was a substantial employer (as defined in
Section 4001(a)(2) of ERISA) or a substantial cessation of operations which is treated as
such a withdrawal; (c) a complete or partial withdrawal by the Borrower or any ERISA
Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in
reorganization; (d) the filing of a notice of intent to terminate, the treatment of a
Pension Plan amendment as a termination under Section 4041 or 4041A of ERISA, or the
commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan;
(e) an event or condition which might reasonably be expected to constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer,
any Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under Title
IV of ERISA, other than PBGC premiums due but not delinquent under Section 4007 of ERISA,
upon the Borrower or any ERISA Affiliate.

     Event of Default means any of the events or circumstances specified in
Section 8.1.

     Existing Credit Agreement means the Second Amended and Restated Credit
Agreement dated as of February 8, 2002 among the Borrower, Lanfin Investments Inc., the
lenders party thereto and Bank of America, as administrative agent, letter of credit issuer
and Canadian agent, as amended, restated, supplemented or otherwise modified from time to
time.

     Facility Fee Rate means (a) initially, 0.10% per annum, and (b) beginning on
any date on which the Facility Fee Rate is to be adjusted pursuant to the sentence following
the table below, the rate per annum set forth in the table below opposite the applicable
Total Debt to EBITDA Ratio:

6

 

	 	 	 	 	 
	Total Debt to	 	Facility	 
	EBITDA Ratio	 	Fee Rate	 
	Less than or equal
to 0.50 to 1
	 	 	0.09	%
	 
	 	 	 	 
	Greater than 0.50
to 1 but less than
or equal to 1.25 to 1
	 	 	0.10	%
	 
	 	 	 	 
	Greater than 1.25
to 1 but less than
or equal to 2.00 to 1
	 	 	0.125	%
	 
	 	 	 	 
	Greater than 2.00
to 1
	 	 	0.175	%

The Facility Fee Rate shall be adjusted, to the extent applicable, 46 days (or, in the case
of the last fiscal quarter of any year, 101 days) after the end of each fiscal quarter (or,
if earlier, 10 days following delivery by the Borrower of the financial statements required
by subsection 6.1(a) or 6.1(b), as applicable, and the related Compliance
Certificate required by subsection 6.2(a) for such fiscal quarter), based on the
Total Debt to EBITDA Ratio as of the last day of such fiscal quarter; it being
understood that if the Borrower fails to deliver the financial statements required by
subsection 6.1(a) or 6.1(b), as applicable, and the related Compliance
Certificate required by subsection 6.2(a) by the 46th day (or, if applicable, the
101st day) after any fiscal quarter, the Facility Fee Rate shall be 0.175% until such
financial statements and Compliance Certificate are delivered.

     Federal Funds Rate means, for any day, the rate set forth in the weekly
statistical release designated as H.15(519), or any successor publication, published by the
Federal Reserve Bank of New York (including any such successor, “H.15(519)”) on the
preceding Business Day opposite the caption “Federal Funds (Effective)”; or, if for any
relevant day such rate is not so published on any such preceding Business Day, the rate for
such day will be the arithmetic mean as determined by the Agent of the rates for the last
transaction in overnight Federal funds arranged prior to 9:00 a.m. (New York City time) on
that day by each of three leading brokers of Federal funds transactions in New York City
selected by the Agent.

     Fixed Rate Loan means an Offshore Rate Loan.

     FRB means the Board of Governors of the Federal Reserve System, and any
Governmental Authority succeeding to any of its principal functions.

     Further Taxes means any and all present or future taxes, levies, assessments,
imposts, duties, deductions, fees, withholdings or similar charges (including net income
taxes and franchise taxes), and all liabilities with respect thereto, imposed by any
jurisdiction on account of amounts payable or paid pursuant to Section 3.1.

     GAAP means generally accepted accounting principles set forth from time to time
in the opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements

7

 

of the Financial Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the U.S. accounting profession), which are
applicable to the circumstances as of the date of determination.

     Governmental Authority means any applicable nation or government, any state,
provincial or other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government, and any corporation
or other entity owned or controlled, through stock or capital ownership or otherwise, by any
of the foregoing.

     Guaranty Obligation has the meaning specified in the definition of Contingent
Obligation.

     HSW Mortgage Loan means the mortgage loan in the original principal amount of
U.S.$95,000,000 owing by the Borrower to HSW Mortgage Corp. and secured by a deed of trust
on the real property of the Borrower contiguous to and including its corporate headquarters
located at 8600 South Boulevard, Charlotte, North Carolina.

     Indebtedness of any Person means, without duplication, (a) all indebtedness of
such Person for borrowed money; (b) all obligations issued, undertaken or assumed by such
Person as the deferred purchase price of property or services (other than trade payables
entered into in the ordinary course of business on ordinary terms); (c) all reimbursement or
payment obligations of such Person with respect to Surety Instruments; (d) all obligations
of such Person evidenced by notes, bonds, debentures or similar instruments; (e) all
indebtedness of such Person created or arising under any conditional sale or other title
retention agreement, or incurred as financing, in either case with respect to property
acquired by such Person (even though the rights and remedies of the seller or lender under
such agreement in the event of default are limited to repossession or sale of such
property); (f) all obligations of such Person with respect to capital leases which should be
recorded on a balance sheet of such Person in accordance with GAAP; (g) all indebtedness of
the types referred to in clauses (a) through (f) above secured by (or for
which the holder of such indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien upon or in property (including accounts and contracts rights) owned by
such Person, even though such Person has not assumed or become liable for the payment of
such Indebtedness, provided that the amount of any such Indebtedness shall be deemed to be
the lesser of the face principal amount thereof and the fair market value of the property
subject to such Lien; and (h) all Guaranty Obligations of such Person in respect of
indebtedness or obligations of others. For all purposes of this Agreement, the Indebtedness
of any Person shall include all Indebtedness of any partnership or joint venture in which
such Person is a general partner or a joint venturer to the extent of such Person’s
liability therefor; provided that to the extent that any such indebtedness is
expressly non-recourse to such Person it shall not be included as Indebtedness.

     Indemnified Liabilities — see Section 10.5.

8

 

     Indemnified Person — see Section 10.5.

     Independent Auditor — see subsection 6.1(a).

     Insolvency Proceeding means, with respect to any Person, (a) any case, action
or proceeding with respect to such Person before any court or other Governmental Authority
relating to bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution,
winding-up or relief of debtors or (b) any general assignment for the benefit of creditors,
composition, marshalling of assets for creditors, or other, similar arrangement in respect
of its creditors generally or any substantial portion of its creditors; in each case
undertaken under any Applicable Law, including the Bankruptcy Code.

     Interest Coverage Ratio means, for any Computation Period, the ratio of (a)
EBIT for such Computation Period, to (b) Interest Expense for such Computation Period.

     Interest Expense means for any period, without duplication, the consolidated
interest expense (whether paid or accrued) of the Borrower and its Subsidiaries for such
period (including all imputed interest on capital leases) plus the interest
component of synthetic leases (regardless of the accounting treatment of the synthetic
leases) plus consolidated yield or discount accrued during such period on the
aggregate outstanding investment or claim held by purchasers, assignees or other transferees
of (or of interests in) receivables of the Borrower and its Subsidiaries in connection with
any Securitization Transaction (regardless of the accounting treatment of such
Securitization Transaction).

     Interest Payment Date means, as to any Offshore Rate Loan, the last day of each
Interest Period applicable to such Loan and, as to any U.S. Base Rate Loan, the last
Business Day of each calendar quarter, provided that if any Interest Period for an
Offshore Rate Loan exceeds three months, each three-month anniversary of the first day of
such Interest Period also shall be an Interest Payment Date.

     Interest Period means, as to any Offshore Rate Loan, the period commencing on
the Borrowing Date of such Loan or on the Conversion/Continuation Date on which such Loan is
converted into or continued as an Offshore Rate Loan, and ending on the date one, two or
three months thereafter as selected by the Borrower in its Notice of Borrowing or Notice of
Conversion/Continuation, as the case may be; provided that:

     (i) if any Interest Period would otherwise end on a day that is not a Business
Day, such Interest Period shall be extended to the following Business Day unless, in
the case of an Offshore Rate Loan, the result of such extension would be to carry
such Interest Period into another calendar month, in which event such Interest
Period shall end on the preceding Business Day;

     (ii) any Interest Period for an Offshore Rate Loan that begins on the last
Business 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 Business Day of the calendar month at the end of such Interest
Period; and

9

 

     (iii) no Interest Period for any Loan shall extend beyond the Termination
Date.

     IRS means the Internal Revenue Service, and any Governmental Authority
succeeding to any of its principal functions under the Code.

     Lender — see the preamble to this Agreement.

     Lending Office means, as to any Lender, the office or offices of such Lender
specified as its “Lending Office” or “Domestic Lending Office” or “Offshore Lending Office”,
as the case may be, on Schedule 12.2, or such other office or offices as such Lender
may from time to time notify the Borrower and the Agent.

     Lien means any security interest, mortgage, deed of trust, pledge,
hypothecation, assignment, charge or deposit arrangement, encumbrance, lien (statutory or
other) or preferential arrangement of any kind or nature whatsoever in respect of any
property (including those created by, arising under or evidenced by any conditional sale or
other title retention agreement, the interest of a lessor under a capital lease, or any
financing lease having substantially the same economic effect as any of the foregoing, but
not including the interest of a lessor under an operating lease).

     Loan means an extension of credit by a Lender to the Borrower under Article
II in the form of a Loan, which may be a U.S. Base Rate Loan or an Offshore Rate Loan
(each a “Type” of Loan).

     Loan Documents means this Agreement and any Notes.

     Margin Stock means “margin stock” as such term is defined in Regulation T, U or
X of the FRB.

     Material Adverse Effect means a material adverse change in, or a material
adverse effect upon, the operations, business, properties, assets, liabilities (actual or
contingent), or financial condition of the Borrower and its Subsidiaries taken as a whole.

     Material Financial Obligations means Indebtedness or Contingent Obligations of
the Borrower or any Subsidiary or obligations of the Borrower or any Subsidiary in respect
of any Securitization Transaction, in an aggregate principal amount (for all applicable
Indebtedness, Contingent Obligations and obligations in respect of Securitization
Transactions) equal to or greater than U.S.$7,500,000.

     Multiemployer Plan means a “multiemployer plan”, within the meaning of Section
4001(a)(3) of ERISA, with respect to which the Borrower or any ERISA Affiliate may have any
liability.

     Net Cash Proceeds means (a) all cash proceeds received by the Borrower or any
Subsidiary pursuant to any issuance of (i) equity securities or equity-linked securities
(other than any issuance (A) to the Borrower or any Subsidiary or (B) in the ordinary

10

 

course of business in connection with employee compensation and stock option, stock
purchase and similar plans) or (ii) Indebtedness for borrowed money (other than the Existing
Credit Agreement), in each case net of the direct costs relating to such issuance (including
sales and underwriter’s discounts and commissions, upfront fees and legal, accounting and
investment banking fees); and (b) all cash proceeds received by the Borrower or any
Subsidiary pursuant to any sale (or series of related sales) of assets (other than sales of
inventory in the ordinary course of business) having a net book value in excess of
$10,000,000, net of the direct costs relating to such sale.

     Note means a promissory note executed by the Borrower in favor of a Lender
pursuant to subsection 2.3(b), in substantially the form of Exhibit E.

     Notice of Borrowing means a notice in substantially the form of Exhibit
A.

     Notice of Conversion/Continuation means a notice in substantially the form of
Exhibit B.

     Obligations means all advances, debts, liabilities, obligations, covenants and
duties arising under any Loan Document owing by the Borrower to any Lender, the Agent or any
other Indemnified Person, whether direct or indirect (including those acquired by
assignment), absolute or contingent, due or to become due, or now existing or hereafter
arising.

     Offshore Rate means, for any Interest Period, with respect to Offshore Rate
Loans comprising part of the same Borrowing, the rate of interest per annum (rounded upward
to the next 1/100th of 1%) determined by the Agent as follows:

	 	 	 	 	 	 	 
	 

	 	Offshore Rate =
	 	LIBOR	 	 
	 

	 	          1.00      -
	 	 

Eurodollar Reserve Percentage
	 	 

Where,

     “Eurodollar Reserve Percentage” means for any day for any Interest
Period the maximum reserve percentage (expressed as a decimal, rounded upward, if
necessary, to an integral multiple of 1/100th of 1%) in effect on such day (whether
or not applicable to any Lender) under regulations issued from time to time by the
FRB for determining the maximum reserve requirement (including any emergency,
supplemental or other marginal reserve requirement) with respect to Eurocurrency
funding (currently referred to as “Eurocurrency liabilities”); and

     “LIBOR” means, for any Offshore Rate Loan for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the nearest 1/100th
of 1%) appearing on Telerate Page 3750 (or any successor or equivalent page), as the
London interbank offered rate for deposits in U.S. Dollars and in the approximate
amount of the Loan to be made or continued as, or converted into, such Offshore Rate
Loan at approximately 11:00 a.m. (London time) two (2) Business Days prior to the
first day of such Interest Period for a term comparable to such Interest Period;
provided, however, if more than one rate is specified on

11

 

Telerate Page 3750, the relevant rate shall be the arithmetic mean of all such
rates. If for any reason such rate is not available, the term “LIBOR” shall mean,
for any Offshore Rate Loan for any Interest Period therefor,

     (a) the rate per annum (rounded upwards, if necessary, to the nearest
1/100th of 1%) appearing on Reuters Screen LIBO Page as the London interbank
offered rate for deposits in U.S. Dollars and in the approximate amount of
the Loan to be made or continued as, or converted into, such Offshore Rate
Loan at approximately 11:00 a.m. (London time) two Business Days prior to
the first day of such Interest Period for a term comparable to such Interest
Period; provided, however, if more than one rate is
specified on Reuters Screen LIBO Page, the relevant rate shall be the
arithmetic mean of all such rates, or

     (b) if no rate is available on the Reuters Screen LIBO page, then the
rate determined by the Agent at which U.S. Dollars in the approximate amount
of the loan to be made or continued as, or converted into, such Offshore
Rate Loan is offered by leading banks in the London interbank market at
approximately 11:00 a.m. (London time) two Business Days prior to the first
day of the applicable Interest Period (rounded upwards, if necessary, to the
nearest 1/100th of 1%).

The Offshore Rate shall be adjusted automatically as to all Offshore Rate Loans then
outstanding as of the effective date of any change in the Eurodollar Reserve Percentage.

     Offshore Rate Loan means a Loan that bears interest based on the Offshore Rate.

     Organization Documents means (i) for any corporation, the certificate of
incorporation, the bylaws, any certificate of determination or instrument relating to the
rights of preferred shareholders of such corporation, any shareholder rights agreement, and
all applicable resolutions of the board of directors (or any committee thereof) of such
corporation, (ii) for any partnership or joint venture, the partnership or joint venture
agreement and any other organizational document of such entity, (iii) for any limited
liability company, the certificate or articles of organization, the operating agreement and
any other organizational document of such limited liability company, (iv) for any trust, the
declaration of trust, the trust agreement and any other organizational document of such
trust and (v) for any other entity, the document or agreement pursuant to which such entity
was formed and any other organizational document of such entity.

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

     Participant — see subsection 10.8(d).

12

 

     PBGC means the Pension Benefit Guaranty Corporation, or any Governmental
Authority succeeding to any of its principal functions under ERISA.

     Pension Plan means a pension plan (as defined in Section 3(2) of ERISA) subject
to Title IV of ERISA, other than a Multiemployer Plan, with respect to which the Borrower or
any ERISA Affiliate may have any liability.

     Permitted Liens — see Section 7.2.

     Permitted Swap Obligations means all obligations (contingent or otherwise) of
the Borrower or any Subsidiary existing or arising under Swap Contracts, provided that such
obligations are (or were) entered into by such Person in the ordinary course of business for
the purpose of directly mitigating risks associated with (a) raw materials purchases, (b)
interest or currency exchange rates, (c) operating expenses or other anticipated obligations
of such Person, (d) other liabilities, commitments or assets held or reasonably anticipated
by such Person or (e) changes in the value of securities issued by such Person in
conjunction with a securities repurchase program not otherwise prohibited hereunder.

     Person means an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association, joint
venture or Governmental Authority.

     Plan means an employee benefit plan (as defined in Section 3(3) of ERISA),
other than a Multiemployer Plan, with respect to which the Borrower or any ERISA Affiliate
may have any liability, and includes any Pension Plan.

     Pro Rata Share means for any Lender at any time the proportion (expressed as a
decimal, rounded to the ninth decimal place) which the aggregate amount of such Lender’s
Commitments constitutes of the aggregate amount of the combined Commitments (or, after the
Commitments have terminated, which (i) the principal amount of such Lender’s Loans
constitutes of (ii) the Total Outstandings).

     Reportable Event means, any of the events set forth in Section 4043(b) of ERISA
or the regulations thereunder, other than any such event for which the 30-day notice
requirement under ERISA has been waived in regulations issued by the PBGC.

     Required Lenders means Lenders holding Pro Rata Shares aggregating more than
50%.

     Requirement of Law means, as to any Person, any law (statutory or common),
treaty, rule or regulation or determination of an arbitrator or of a Governmental Authority,
in each case applicable to or binding upon such Person or any of its property or to which
such Person or any of its property is subject.

     Responsible Officer means the chief executive officer, the president or any
vice president of the Borrower, or any other officer having substantially the same authority
and responsibility; or, with respect to financial matters, the chief financial officer or
the

13

 

treasurer of the Borrower, or any other officer having substantially the same authority
and responsibility.

     Restricted Subsidiary — see Section 7.4.

     SEC means the Securities and Exchange Commission, or any Governmental Authority
succeeding to any of its principal functions.

     Securitization Transaction means any sale, assignment or other transfer by the
Borrower or any Subsidiary of accounts receivable, lease receivables or other payment
obligations owing to the Borrower or any Subsidiary or any interest in any of the foregoing,
together in each case with any collections and other proceeds thereof, any collection or
deposit accounts related thereto, and any collateral, guaranties or other property or claims
in favor of the Borrower or such Subsidiary supporting or securing payment by the obligor
thereon of, or otherwise related to, any such receivables.

     Subsidiary of a Person means any corporation, association, partnership, limited
liability company, joint venture or other business entity of which more than 50% of the
voting stock, membership interests or other equity interests is owned or controlled directly
or indirectly by such Person, or one or more of the Subsidiaries of such Person, or a
combination thereof. Unless the context otherwise clearly requires, references herein to a
“Subsidiary” refer to a Subsidiary of the Borrower.

     Surety Instruments means all letters of credit (including standby and
commercial), bankers’ acceptances, bank guaranties, shipside bonds, surety bonds and similar
instruments.

     Swap Contract means any agreement, whether or not in writing, relating to any
transaction that is a rate swap, basis swap, forward rate transaction, commodity swap,
commodity option, equity or equity index swap or option, bond, note or bill option, interest
rate option, forward foreign exchange transaction, cap, collar or floor transaction,
currency swap, cross-currency rate swap, swaption, currency option or any other, similar
transaction (including any option to enter into any of the foregoing) or any combination of
the foregoing, and, unless the context otherwise clearly requires, any master agreement
relating to or governing any or all of the foregoing.

     Taxes means any and all present or future taxes, levies, assessments, imposts,
duties, deductions, fees, withholdings or similar charges, and all liabilities with respect
thereto, excluding, in the case of each Lender and the Agent, franchise taxes and taxes
imposed on or measured by its net income or capital by the jurisdiction (or any political
subdivision thereof) under the laws of which such Lender or the Agent, as the case may be,
is organized or maintains a lending office.

     Termination Date means the earlier to occur of:

     (a) October 20, 2006; and

14

 

     (b) the date on which the Commitments terminate in accordance with the
provisions of this Agreement.

     Tom’s
Foods Acquisition — see the recitals.

     Total Debt to EBITDA Ratio means, for any Computation Period, the ratio of (a)
Total Indebtedness as of the last day of such Computation Period, to (b) EBITDA for such
Computation Period.

     Total Indebtedness means, at any time, all Indebtedness of the Borrower and its
Subsidiaries determined on a consolidated basis and to the extent not included in the
definition of Indebtedness, the aggregate outstanding investment or claim held at such time
by purchasers, assignees or other transferees of (or of interests in) receivables or other
rights to payment of the Borrower and its Subsidiaries in connection with any Securitization
Transaction (regardless of the accounting treatment of such Securitization Transaction).

     Total Outstandings means the sum of the aggregate principal amount of all
outstanding Loans.

     Type has the meaning specified in the definition of “Loan.”

     Unfunded Pension Liability means the excess of a Pension Plan’s benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of such Plan’s
assets, determined in accordance with the assumptions used for funding such Pension Plan
pursuant to Section 412 of the Code for the applicable plan year.

     United States and U.S. each means the United States of America.

     Unmatured Event of Default means any event or circumstance which, with the
giving of notice, the lapse of time or both, will (if not cured, waived or otherwise
remedied during such time) constitute an Event of Default.

     U.S. Base Rate means, for any day, the higher of: (a) 0.50% per annum above
the latest Federal Funds Rate; and (b) the rate of interest in effect for such day as
publicly announced from time to time by Bank of America as its “prime rate.” (The “prime
rate” is a rate set by Bank of America based upon various factors including Bank of
America’s costs and desired return, general economic conditions and other factors, and is
used as a reference point for pricing some loans, which may be priced at, above or below
such announced rate.) Any change in the prime rate announced by Bank of America shall take
effect at the opening of business on the day specified in the public announcement of such
change.

     U.S. Base Rate Loan means a Loan that bears interest based on the U.S. Base
Rate.

15

 

     Van Every Family means (i) a lineal descendant of Salem A. Van Every, Sr.
including adopted persons as well as persons related by blood, (ii) a spouse, widow or
widower of an individual described in clause (i) above or (iii) a trust, estate,
custodian and other fiduciary or similar account for the benefit of an individual described
in either clause (i) or clause (ii) above.

     Wholly-Owned Subsidiary means any Subsidiary in which (other than directors’
qualifying shares required by law) 100% of the capital stock of each class having ordinary
voting power, and 100% of the capital stock of every other class, or 100% of the membership
interests or other equity interests, as applicable, in each case, at the time as of which
any determination is being made, is owned, beneficially and of record, by the Borrower, or
by one or more of the other Wholly-Owned Subsidiaries, or both.

     1.2 Other Interpretive Provisions.

          (a) The meanings of defined terms are equally applicable to the singular and plural forms of
the defined terms.

          (b) The words “hereof”, “herein”, “hereunder” and similar words refer to this Agreement as a
whole and not to any particular provision of this Agreement; and subsection, Section, Schedule and
Exhibit references are to this Agreement unless otherwise specified.

          (c) (i) The term “documents” includes any and all instruments, documents, agreements,
certificates, indentures, notices and other writings, however evidenced.

     (ii) The term “including” is not limiting and means “including without limitation.”

     (iii) In the computation of periods of time from a specified date to a later specified
date, the word “from” means “from and including”; the words “to” and “until” each mean “to
but excluding”, and the word “through” means “to and including.”

          (d) Unless otherwise expressly provided herein, (i) references to agreements (including this
Agreement) and other contractual instruments shall be deemed to include all subsequent amendments
and other modifications thereto, but only to the extent such amendments and other modifications are
not prohibited by the terms of any Loan Document, and (ii) references to any statute or regulation
are to be construed as including all statutory and regulatory provisions consolidating, amending,
replacing, supplementing or interpreting the statute or regulation.

          (e) The captions and headings of this Agreement are for convenience of reference only and
shall not affect the interpretation of this Agreement.

          (f) This Agreement and other Loan Documents may use several different limitations, tests or
measurements to regulate the same or similar matters. All such limitations, tests and measurements
are cumulative and shall each be performed in accordance with their terms. Unless otherwise
expressly provided herein, any reference to any action of the Agent, the

16

 

Lenders or the Required Lenders by way of consent, approval or waiver shall be deemed modified
by the phrase “in its/their sole discretion.”

          (g) This Agreement and the other Loan Documents are the result of negotiations among and have
been reviewed by counsel to the Agent, the Borrower and the other parties, and are the products of
all parties. Accordingly, they shall not be construed against the Lenders or the Agent merely
because of the Agent’s or Lenders’ involvement in their preparation.

     1.3 Accounting Principles.

          (a) Unless the context otherwise clearly requires, all accounting terms not expressly defined
herein shall be construed, and all financial computations required under this Agreement shall be
made, in accordance with GAAP, consistently applied; provided that if the Borrower notifies
the Agent that the Borrower wishes to amend any covenant in Article VII to eliminate the
effect of any change in GAAP on the operation of such covenant (or if the Agent notifies the
Borrower that the Required Lenders wish to amend Article VII for such purpose), then the
Borrower’s compliance with such covenant shall be determined on the basis of GAAP in effect
immediately before the relevant change in GAAP became effective, until either such notice is
withdrawn or such covenant is amended in a manner satisfactory to the Borrower and the Required
Lenders.

          (b) References herein to “fiscal year” and “fiscal quarter” refer to such fiscal periods of
the Borrower.

ARTICLE II

THE CREDITS

     2.1 Amounts and Terms of Commitments. Each Lender severally agrees (and not jointly
or jointly and severally), on the terms and conditions set forth herein, to make Loans to the
Borrower from time to time on any Business Day during the period from the Effective Date to the
Termination Date, in an aggregate amount not to exceed at any time outstanding the amount set forth
on Schedule 2.1 (such amount, as reduced pursuant to Section 2.5 or changed by one
or more assignments under Section 10.8, such Lender’s “Commitment”);
provided, however, that, after giving effect to any Borrowing, the Total
Outstandings shall not exceed the Aggregate Commitment; and provided,
further, that the aggregate principal amount of the Loans of any Lender shall not at any
time exceed such Lender’s Commitment. Within the limits of each Lender’s Commitment, and subject
to the other terms and conditions hereof, the Borrower may borrow under this Section 2.1,
prepay under Section 2.6(a) and reborrow under this Section 2.1.

     2.2 Loan Accounts. (a)The Loans made by each Lender shall be evidenced by one or more
accounts or records maintained by such Lender in the ordinary course of business. The accounts or
records maintained by the Agent and each Lender shall be rebuttable presumptive evidence of the
amount of the Loans made by the Lenders to the Borrower, and the interest and

17

 

payments thereon. Any failure so to record or any error in doing so shall not, however, limit
or otherwise affect the obligation of the Borrower hereunder to pay any amount owing with respect
to the Loans.

          (b) Upon the request of any Lender made through the Agent, the Loans made by such Lender may
be evidenced by a Note, instead of or in addition to loan accounts. Each such Lender shall endorse
on the schedules annexed to its Note the date, amount and maturity of each Loan evidenced thereby
and the amount of each payment of principal made by the Borrower with respect thereto (or such
Lender shall maintain such information in its own records). Each such Lender is irrevocably
authorized by the Borrower to endorse its Note and each Lender’s record shall be rebuttable
presumptive evidence of the amount of the Loans evidenced thereby, and the interest and payments
thereon; provided, however, that the failure of a Lender to make, or an error in
making, a notation thereon or an entry therein with respect to any Loan shall not limit or
otherwise affect the obligations of the Borrower hereunder or under any such Note to such Lender.

     2.3 Procedure for Borrowing. (a) Each Borrowing shall be made upon the Borrower’s
irrevocable written notice delivered to the Agent in the form of a Notice of Borrowing, which
notice must be received by the Agent prior to (i) 11:00 a.m. Charlotte time two Business Days prior
to the requested Borrowing Date, in the case of Offshore Rate Loans, and (ii) 11:00 a.m. Charlotte
time on the requested Borrowing Date, in the case of U.S. Base Rate Loans, specifying:

          (A) the amount of the Borrowing, which shall be in an aggregate amount of
U.S.$1,000,000 or a higher multiple of U.S.$500,000;

          (B) the requested Borrowing Date, which shall be a Business Day;

          (C) the Type of Loans comprising such Borrowing; and

          (D) in the case of Offshore Rate Loans, the duration of the initial Interest
Period applicable to such Loans.

          (b) The Agent will promptly notify each Lender of its receipt of any Notice of Borrowing and
of the amount of such Lender’s Pro Rata Share of such Borrowing.

          (c) Each Lender will make the amount of its Pro Rata Share of each Borrowing available to the
Agent for the account of the Borrower at the Agent’s Payment Office by 1:00 p.m. Charlotte time on
the Borrowing Date requested by the Borrower in funds immediately available to the Agent. The
proceeds of all such Loans will then be made available to the Borrower by the Agent by wire
transfer in accordance with written instructions provided to the Agent by the Borrower of like
funds as received by the Agent.

          (d) After giving effect to any Borrowing, unless the Agent otherwise consents, there may not
be more than eight different Interest Periods in effect for all Borrowings.

18

 

     2.4 Conversion and Continuation Elections for Borrowings. (a) The Borrower may, upon
irrevocable written notice to the Agent in accordance with subsection 2.4(b):

          (i) elect, as of any Business Day, in the case of U.S. Base Rate Loans, or as of the
last day of the applicable Interest Period, in the case of Offshore Rate Loans, to convert
such Loans (or any part thereof in an aggregate amount of U.S.$1,000,000 or a higher
integral multiple of U.S.$500,000) into Loans of the other Type; or

          (ii) elect, as of the last day of the applicable Interest Period, to continue any
Offshore Rate Loans having Interest Periods expiring on such day (or any part thereof in an
aggregate amount of U.S.$1,000,000 or a higher integral multiple of U.S.$500,000) for
another Interest Period;

provided that if at any time the aggregate amount of Offshore Rate Loans in respect of any
Borrowing is reduced, by payment, prepayment, or conversion of any part thereof, to be less than
U.S.$1,000,000, such Offshore Rate Loans shall automatically convert into U.S. Base Rate Loans.

          (b) The Borrower shall deliver a Notice of Conversion/Continuation to be received by the Agent
not later than 11:00 a.m. Charlotte time at least (i) two Business Days in advance of the
Conversion/Continuation Date, if the Loans are to be converted into or continued as Offshore Rate
Loans; and (ii) on the Conversion/Continuation Date, if the Loans are to be converted into U.S.
Base Rate Loans, specifying:

          (A) the proposed Conversion/Continuation Date;

          (B) the aggregate amount of Loans to be converted or continued;

          (C) the Type of Loans resulting from the proposed conversion or continuation;
and

          (D) in the case of conversion into or continuation of Offshore Rate Loans, the
duration of the requested Interest Period.

          (c) If upon the expiration of any Interest Period applicable to Offshore Rate Loans, the
Borrower has failed to select timely a new Interest Period to be applicable to such Offshore Rate
Loans, the Borrower shall be deemed to have elected to convert such Offshore Rate Loans into U.S.
Base Rate Loans effective as of the expiration date of such Interest Period.

          (d) The Agent will promptly notify each Lender of its receipt of a Notice of
Conversion/Continuation, or, if no timely notice is provided by the Borrower, the Agent will
promptly notify each Lender of the details of any automatic conversion. All conversions and
continuations shall be made ratably among the Lenders according to the respective outstanding
principal amounts of the Loans with respect to which the notice was given.

19

 

          (e) Unless the Required Lenders otherwise consent, the Borrower may not elect to have a Loan
converted into or continued as an Offshore Rate Loan during the existence of an Event of Default or
Unmatured Event of Default.

          (f) After giving effect to any conversion or continuation of Loans, unless the Agent shall
otherwise consent, there may not be more than eight different Interest Periods in effect for all
Borrowings.

     2.5 Termination or Reduction of Commitments. (a) The Borrower may, upon not less
than five Business Days’ prior notice to the Agent, terminate the Commitments, or permanently
reduce the Commitments by a minimum amount of U.S.$1,000,000 or a higher integral multiple of
U.S.$500,000; unless, after giving effect thereto and to any prepayments of Loans made on
the effective date thereof, the Total Outstandings would exceed the amount of the combined
Commitments then in effect.

          (b) Concurrently with the receipt by the Borrower of any Net Cash Proceeds, the Aggregate
Commitment shall be reduced by an amount equal to the amount of such Net Cash Proceeds.

          (c) Once reduced in accordance with this Section, the Commitments may not be increased. Any
reduction of the Commitments shall be applied to reduce the Commitment of each Lender according to
its Pro Rata Share. If the Borrower terminates the Commitments or reduces the Commitments to zero,
the Borrower shall pay all accrued and unpaid interest, fees and other amounts payable hereunder on
the date of such termination.

     2.6 Prepayments. (a) Subject to the proviso to subsection 2.4(a) and to
Section 3.4, the Borrower may, from time to time, upon irrevocable notice to the Agent,
which notice must be received by the Agent prior to 11:00 a.m. Charlotte time (i) two Business Days
prior to the date of prepayment, in the case of Offshore Rate Loans, and (ii) on the date of
prepayment, in the case of U.S. Base Rate Loans, ratably prepay Loans in whole or in part, in an
aggregate amount of U.S.$1,000,000 or a higher integral multiple of U.S.$500,000. Such notice of
prepayment shall specify the date and amount of such prepayment and the Loans to be prepaid. If
such notice is given by the Borrower, the Borrower shall make such prepayment and the payment
amount specified in such notice shall be due and payable on the date specified therein.

          (b) Concurrently with the receipt by the Borrower of any Net Cash Proceeds, the Borrower shall
make a prepayment of the Loans in an amount equal to the excess of the Total Outstandings over the
Aggregate Commitment as reduced pursuant to Section 2.5(b) by the amount of such Net Cash
Proceeds.

          (c) The Agent will promptly notify each Lender (i) of its receipt of any notice of prepayment
pursuant to clause (a) above and (ii) upon receipt of notice of any mandatory prepayment
pursuant to clause (b) above. All prepayments shall be applied ratably to the Loans of the
Lenders in accordance with their respective Pro Rata Shares. Concurrently with any prepayment, in
the case of Offshore Rate Loans, the Borrower shall pay accrued interest on the amount prepaid and
all amounts required pursuant to Section 3.4.

20

 

     2.7 Repayment. The Borrower shall repay all Loans on the Termination Date.

     2.8 Interest. (a) Each Loan shall bear interest on the outstanding principal amount
thereof from the applicable Borrowing Date at a rate per annum equal to (i) the Offshore Rate plus
the Applicable Margin or (ii) the U.S. Base Rate, as the case may be (and subject to the Borrower’s
right to convert to the other Type of Loan under Section 2.4).

          (b) Interest on each Loan shall be paid in arrears on each Interest Payment Date. Interest
also shall be paid on the date of any conversion of Fixed Rate Loans under Section 2.4 and
prepayment of Fixed Rate Loans under Section 2.6, in each case for the portion of the Loans
so converted or prepaid.

          (c) Notwithstanding the foregoing provisions of this Section, upon notice to the Borrower from
the Agent (acting at the request or with the consent of the Required Lenders) during the existence
of any Event of Default, and for so long as such Event of Default continues, the Borrower shall pay
interest (after as well as before entry of judgment thereon to the extent permitted by law) on the
principal amount of all outstanding Loans and, to the extent permitted by Applicable Law, on any
other amount payable hereunder or under any other Loan Document, at a rate per annum which is
determined by adding 2% per annum to the rate otherwise applicable thereto pursuant to the terms
hereof or such other Loan Document (or, if no such rate is specified, the U.S. Base Rate. All such
interest shall be payable on demand.

          (d) Anything herein to the contrary notwithstanding, the obligations of the Borrower to any
Lender hereunder shall be subject to the limitation that payments of interest shall not be required
for any period for which interest is computed hereunder, to the extent (but only to the extent)
that contracting for or receiving such payment by such Lender would be contrary to the provisions
of any law applicable to such Lender limiting the highest rate of interest that may be lawfully
contracted for, charged or received by such Lender, and in such event the Borrower shall pay such
Lender interest at the highest rate permitted by Applicable Law.

     2.9 Facility Fees. The Borrower shall pay to the Agent for the account of each Lender
a facility fee computed at the Facility Fee Rate per annum on the amount of such Lender’s
Commitment as in effect from time to time (whether used or unused) or, if the Commitments have
terminated, on the sum (without duplication) of the principal amount of such Lender’s Loans. Such
facility fees shall accrue from the Effective Date to the Termination Date, and thereafter until
all Loans are paid in full and shall be due and payable quarterly in arrears on the last Business
Day of each calendar quarter, with the final payment to be made on the Termination Date (or, if
later, on the date all Loans are paid in full).

     2.10 Computation of Fees and Interest. (a) All computations of interest on U.S. Base
Rate Loans when the U.S. Base Rate is determined by Bank of America’s “prime rate” shall in each
case be made on the basis of a year of 365 or 366 days, as the case may be, and actual days
elapsed. All other computations of interest and fees shall be made on the basis of a 360-day year
and actual days elapsed. Interest and fees shall accrue during each period during which such
interest or such fees are computed from the first day thereof to the last day thereof.

21

 

          (b) Each determination of an interest rate by the Agent shall be conclusive and binding on the
Borrower and the Lenders in the absence of manifest error. The Agent will, at the request of the
Borrower or any Lender, deliver to the Borrower or such Lender, as the case may be, a statement
showing the quotations used by the the Agent in determining any interest rate and the resulting
interest rate.

     2.11 Payments by the Borrower. (a) All payments to be made by the Borrower shall be
made without set-off, recoupment or counterclaim. Except as otherwise expressly provided herein,
all payments by the Borrower shall be made to the Agent for the account of the Lenders at the
Agent’s Payment Office, and shall be made in U.S. Dollars and in immediately available funds, no
later than 2:00 p.m. Charlotte time on the date specified herein. The Agent will promptly
distribute to each Lender its Pro Rata Share (or other applicable share as expressly provided
herein) of such payment in like funds as received. Any payment received by the Agent later than
2:00 p.m. Charlotte time shall be deemed to have been received on the following Business Day and
any applicable interest or fee shall continue to accrue.

          (b) Whenever any payment is due on a day other than a Business Day, such payment shall be made
on the following Business Day (unless, in the case of a payment with respect to an Offshore Rate
Loan, the following Business Day is in another calendar month, in which case such payment shall be
made on the preceding Business Day), and such extension of time shall in such case be included in
the computation of interest or fees, as the case may be.

          (c) Unless the Agent receives notice from the Borrower prior to the date on which any payment
is due to the Lenders that the Borrower will not make such payment in full as and when required,
the Agent may assume that the Borrower has made such payment in full to the Agent on such date in
immediately available funds and the Agent may (but shall not be so required), in reliance upon such
assumption, distribute to each Lender on such due date an amount equal to the amount then due such
Lender. If and to the extent the Borrower has not made such payment in full to the Agent, each
Lender shall repay to the Agent on demand such amount distributed to such Lender, together with
interest thereon at (in the case of amounts in U.S. Dollars) the Federal Funds Rate for each day
from the date such amount is distributed to such Lender until the date repaid.

     2.12 Payments by the Lenders to the Agent. (a) Unless the Agent receives notice from
a Lender (i) at least one Business Day prior to the date of a Borrowing of Fixed Rate Loans, or
(ii) by 12:00 noon Charlotte time on the day of any Borrowing of U.S. Base Rate Loans, that such
Lender will not make available as and when required hereunder to the Agent for the account of the
Borrower the amount of such Lender’s applicable pro rata share of such Credit Extension, the Agent
may assume that such Lender has made such amount available to the Agent in immediately available
funds on the Borrowing Date and the Agent may (but shall not be so required), in reliance upon such
assumption, make available to the Borrower on such date a corresponding amount.

          (b) If and to the extent any Lender shall not have made its full amount of any Loan available
to the Agent in immediately available funds and the Agent in such circumstances has made available
to the Borrower such amount, such Lender shall on the Business Day

22

 

following such Borrowing Date make such amount available to the Agent, together with interest
at (in the case of amounts in U.S. Dollars) the Federal Funds Rate. If such amount is so made
available, such payment to the Agent shall constitute such Lender’s Loan on the date of Borrowing
for all purposes of this Agreement. If such amount is not made available to the Agent on the
Business Day following the Borrowing Date, the Agent will notify the Borrower of such failure to
fund and, upon demand by the Agent, the Borrower shall pay such amount to the Agent for the Agent’s
account, together with interest thereon for each day elapsed since the date of such Borrowing, at a
rate per annum equal to the interest rate applicable at the time to the Loans comprising such
Borrowing.

          (c) A notice of the Agent submitted to any Lender with respect to amounts owing under
subsection (b) above shall be conclusive absent manifest error.

          (d) The failure of any Lender to make any Loan on any Borrowing Date shall not relieve any
other Lender of any obligation hereunder to make a Loan on such Borrowing Date, but no Lender shall
be responsible for the failure of any other Lender to make the Loan to be made by such other Lender
on any Borrowing Date.

     2.13 Sharing of Payments. If, when an Event of Default occurs and is continuing, any
Lender shall obtain any payment or other recovery (whether voluntary, involuntary, by application
of setoff or otherwise) on account of any Loan (other than pursuant to the terms of Sections
3.1, 3.3 and 3.4) in excess of its pro rata share of payments
then or therewith obtained by all Lenders, such Lender shall purchase from the other Lenders such
participations in Loans made by them as shall be necessary to cause such purchasing Lender to share
the excess payment or other recovery ratably with each of them; provided, however,
that if all or any portion of the excess payment or other recovery is thereafter recovered from
such purchasing Lender, the purchase shall be rescinded and each Lender which has sold a
participation to the purchasing Lender shall repay to the purchasing Lender the purchase price to
the ratable extent of such recovery together with an amount equal to such selling Lender’s ratable
share (according to the proportion of

     (a) the amount of such selling Lender’s required repayment to the purchasing Lender

to

     (b) the total amount so recovered from the purchasing Lender)

of any interest or other amount paid or payable by the purchasing Lender in respect of the total
amount so recovered. The Borrower agrees that any Lender so purchasing a participation from
another Lender pursuant to this Section may, to the fullest extent permitted by law, exercise all
its rights of payment (including pursuant to Section 10.10) with respect to such
participation as fully as if such Lender were the direct creditor of the Borrower in the amount of
such participation. If under any applicable bankruptcy, insolvency or other similar law, any
Lender receives a secured claim in lieu of a setoff to which this Section applies, such Lender
shall, to the extent practicable, exercise its rights in respect of such secured claim in a manner
consistent with

23

 

the rights of the Lenders entitled under this Section to share in the benefits of any recovery on
such secured claim. The Lenders may, without the consent of the Borrower or any other Person, make
arrangements among themselves to amend or otherwise modify this subsection (b) and to
establish different sharing arrangements with respect to payments by or on behalf of the Borrower;
provided that any such amendment, modification or sharing arrangement shall be consented to by all
Lenders.

ARTICLE III

TAXES, YIELD PROTECTION AND ILLEGALITY

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

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

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

          (ii) the Borrower shall make such deductions and withholdings; and

          (iii) the Borrower shall pay the full amount deducted or withheld to the relevant
taxing authority or other authority in accordance with Applicable Law.

          (c) The Borrower agrees to indemnify and hold harmless each Lender and Agent for the full
amount of Taxes, Other Taxes and Further Taxes in the amount that such Lender specifies as
necessary to preserve the after-tax yield such Lender would have received if such Taxes, Other
Taxes or Further Taxes had not been imposed, and any liability (including penalties, interest,
additions to tax and expenses) arising therefrom or with respect thereto, whether or not such
Taxes, Other Taxes or Further Taxes were correctly or legally asserted. Payment under this
indemnification shall be made within 30 days after the date such Lender or Agent makes written
demand therefor.

          (d) Within 30 days after the date of any payment by the Borrower of any Taxes, Other Taxes or
Further Taxes, the Borrower shall furnish each applicable Lender and Agent the original or a
certified copy of a receipt evidencing payment thereof, or other evidence of payment satisfactory
to such Lender and Agent.

          (e) If the Borrower is required to pay any amount to any Lender or Agent pursuant to
subsection (b) or (c) of this Section, then such Lender shall use reasonable
efforts

24

 

(consistent with legal and regulatory restrictions) to change the jurisdiction of its Lending
Office so as to eliminate any such additional payment by the Borrower which may thereafter accrue,
if such change in the sole judgment of such Lender is not otherwise disadvantageous to such Lender.

          (f) Notwithstanding the foregoing provisions of this Section 3.1, if any Lender fails
to notify the Borrower of any event or circumstance which will entitle such Lender to compensation
pursuant to this Section 3.1 within 120 days after such Lender obtains knowledge of such
event or circumstance, then such Lender shall not be entitled to compensation from the Borrower for
any amount arising prior to the date which is 120 days before the date on which such Lender
notifies the Borrower of such event or circumstance.

     3.2 Illegality. (a) If any Lender determines that the introduction of any
Requirement of Law, or any change in any Requirement of Law, or in the interpretation or
administration of any Requirement of Law, has made it unlawful, or that any central bank or other
Governmental Authority has asserted that it is unlawful, for such Lender or its applicable Lending
Office to make Fixed Rate Loans, then, on notice thereof by such Lender to the Borrower through the
Agent, any obligation of such Lender to make Fixed Rate Loans shall be suspended until such Lender
notifies the Agent and the Borrower that the circumstances giving rise to such determination no
longer exist.

          (b) If a Lender determines that it is unlawful to maintain any Fixed Rate Loan, the Borrower
shall, upon its receipt of notice of such fact and demand from such Lender (with a copy to the
Agent), prepay in full such Fixed Rate Loan of such Lender then outstanding, together with interest
accrued thereon and amounts required under Section 3.4, either on the last day of the
Interest Period thereof, if such Lender may lawfully continue to maintain such Fixed Rate Loan to
such day, or immediately, if such Lender may not lawfully continue to maintain such Fixed Rate
Loan. If the Borrower is required to so prepay any Fixed Rate Loan, then concurrently with such
prepayment, the Borrower shall borrow from the affected Lender, in the amount of such repayment, a
U.S. Base Rate Loan.

          (c) If the obligation of any Lender to make or maintain Fixed Rate Loans has been so
terminated or suspended, all Loans which would otherwise be made by such Lender as Fixed Rate Loans
shall be instead U.S. Base Rate Loans.

          (d) Before giving any notice to the Agent under this Section, the affected Lender shall
designate a different Lending Office with respect to its Fixed Rate Loans if such designation will
avoid the need for giving such notice or making such demand and will not, in the judgment of such
Lender, be illegal or otherwise disadvantageous to such Lender.

     3.3 Increased Costs and Reduction of Return. (a) If any Lender determines that, due
to either (i) the introduction of or any change (other than any change by way of imposition of or
increase in reserve requirements included in the calculation of the Offshore Rate) in or in the
interpretation of any law or regulation or (ii) compliance by such Lender with any guideline or
request from any central bank or other Governmental Authority (whether or not having the force of
law), there shall be any increase in the cost to such Lender of agreeing to make or making,

25

 

funding or maintaining any Fixed Rate Loan, then the Borrower shall be liable for, and shall
from time to time, upon demand (with a copy of such demand to be sent to the Agent), pay to the
Agent for the account of such Lender, additional amounts as are sufficient to compensate such
Lender for such increased cost.

          (b) If any Lender shall have determined that (i) the introduction of any Capital Adequacy
Regulation, (ii) any change in any Capital Adequacy Regulation, (iii) any change in the
interpretation or administration of any Capital Adequacy Regulation by any central bank or other
Governmental Authority charged with the interpretation or administration thereof, or (iv)
compliance by such Lender (or its Lending Office) or any corporation controlling such Lender with
any Capital Adequacy Regulation affects or would affect the amount of capital required or expected
to be maintained by such Lender or any corporation controlling such Lender and (taking into
consideration such Lender’s or such corporation’s policies with respect to capital adequacy and
such Lender’s desired return on capital) determines that the amount of such capital is increased as
a consequence of its Commitment, Loans or obligations under this Agreement, then, upon demand of
such Lender to the Borrower through the Agent, the Borrower shall pay to such Lender, from time to
time as specified by such Lender, additional amounts sufficient to compensate such Lender for such
increase.

          (c) Notwithstanding the foregoing provisions of this Section 3.3, if any Lender fails
to notify the Borrower of any event or circumstance which will entitle such Lender to compensation
pursuant to this Section 3.3 within 60 days after such Lender obtains knowledge of such
event or circumstance, then such Lender shall not be entitled to compensation from the Borrower for
any amount arising prior to the date which is 60 days before the date on which such Lender notifies
the Borrower of such event or circumstance.

     3.4 Funding Losses. The Borrower shall reimburse each Lender and hold each Lender
harmless from any loss or expense which the Lender may sustain or incur as a consequence of:

          (a) the failure of the Borrower to make on a timely basis any payment of principal of any
Fixed Rate Loan;

          (b) the failure of the Borrower to borrow, continue or convert a Loan after the Borrower has
given (or is deemed to have given) a Notice of Borrowing or a Notice of Conversion/Continuation for
such Loan;

          (c) the failure of the Borrower to make any prepayment in accordance with any notice delivered
under Section 2.6; or

          (d) the prepayment (including after acceleration thereof) of a Fixed Rate Loan on a day that
is not the last day of the relevant Interest Period;

including any such loss or expense arising from the liquidation or reemployment of funds obtained
by it to maintain its Fixed Rate Loans or from fees payable to terminate the deposits from which
such funds were obtained. For purposes of calculating amounts payable by the Borrower to the
Lenders under this Section and under subsection 3.3(a), each Offshore Rate

26

 

Loan made by a Lender (and each related reserve, special deposit or similar requirement) shall be
conclusively deemed to have been funded at the LIBOR rate used in determining the Offshore Rate for
such Offshore Rate Loan by a matching deposit or other borrowing in the interbank eurodollar market
for a comparable amount and for a comparable period, whether or not such Offshore Rate Loan is in
fact so funded.

     3.5 Inability to Determine Rates. If (i) the Agent determines that for any reason
adequate and reasonable means do not exist for determining the Offshore Rate for any requested
Interest Period with respect to a proposed Offshore Rate Loan, or (ii) the Required Lenders
determine that the Offshore Rate applicable pursuant to Section 2.8 for any requested
Interest Period with respect to a proposed Offshore Rate Loan does not adequately and fairly
reflect the cost to such Lenders of funding such Loan, the Agent will promptly so notify the
Borrower and each Lender. Thereafter, the obligation of the Lenders to make or maintain Offshore
Rate Loans hereunder shall be suspended until the Agent (upon the instruction of the Required
Lenders in the case of clause (ii)) revokes such notice in writing. Upon receipt of such
notice, the Borrower may revoke any Notice of Borrowing or Notice of Conversion/Continuation then
submitted by it. If the Borrower does not revoke such Notice, the Lenders shall make, convert or
continue the Loans, as proposed by the Borrower, in the amount specified in the applicable notice
submitted by the Borrower, but such Loans shall be made, converted or continued as U.S. Base Rate
Loans instead of Offshore Rate Loans.

     3.6 Certificates of Lenders. Any Lender claiming reimbursement or compensation under
this Article III shall deliver to the Borrower (with a copy to the Agent) a certificate
setting forth in reasonable detail the amount payable to such Lender hereunder and the manner in
which such amount has been calculated, and such certificate shall be conclusive and binding on the
Borrower in the absence of manifest error.

     3.7 Substitution of Lenders. Upon the receipt by the Borrower from any Lender of a
claim for compensation under Section 3.1 or 3.3 or a notice of the type described
in Section 3.2, the Borrower may: (i) designate a replacement bank or financial
institution satisfactory to the Borrower (a “Replacement Lender”) to acquire and assume all
of such affected Lender’s Loans and Commitment; and/or (ii) request one or more of the other
Lenders to acquire and assume all of such affected Lender’s Loans and Commitment. Any designation
of a Replacement Lender under clause (i) shall be subject to the prior written consent of
the Agent (which consent shall not be unreasonably withheld or delayed).

     3.8 Survival. The agreements and obligations of the Borrower in this Article
III shall survive the termination of this Agreement and the payment of all other Obligations.

ARTICLE IV

CONDITIONS PRECEDENT

     4.1 Conditions to Effectiveness. The initial Borrowing under this Agreement shall
occur on the date (the “Effective Date”) occurring on or prior to November 30, 2005 on
which

27

 

the Agent shall have received all of the following, in form and substance satisfactory to the
Agent and each Lender, and (except for the Notes) in sufficient copies for each Lender:

          (a) Agreement and Notes. This Agreement and the Notes executed by each party hereto
and thereto.

          (b) Resolutions; Incumbency.

          (i) Copies of the resolutions of the board of directors of the Borrower authorizing
the execution and delivery of the Loan Documents to which such Person is a party and the
consummation of the transactions contemplated hereby, certified as of the Effective Date by
the Secretary or an Assistant Secretary of such Person; and

          (ii) a certificate of the Secretary or Assistant Secretary of the Borrower certifying
the names and true signatures of the officers of the Borrower authorized to execute and
deliver the Loan Documents, Notices of Borrowing, Notices of Conversion/Continuation,
Compliance Certificates and other documents in connection herewith.

          (c) Organization Documents. The articles or certificate of incorporation and the
bylaws of the Borrower as in effect on the Effective Date, certified by the Secretary or Assistant
Secretary of the Borrower as of the Effective Date.

          (d) Legal Opinions. An opinion of Kennedy Covington Lobdell & Hickman, L.L.P., U.S.
counsel to the Borrower, ,in form and substance satisfactory to the Agent and the Lenders; and

          (e) Payment of Fees. Evidence of payment by the Borrower of all accrued and unpaid
fees, costs and expenses to the extent then due and payable hereunder on the Effective Date,
together with Attorney Costs of Bank of America to the extent invoiced prior to or on the Effective
Date.

          (f) Certificate. A certificate signed by a Responsible Officer, dated as of the
Effective Date, stating that:

          (i) the representations and warranties contained in Article V are true and
correct on and as of such date, as though made on and as of such date;

          (ii) no Event of Default or Unmatured Event of Default exists or would result from the
effectiveness of this Agreement; and

          (iii) since December 25, 2004, no event or circumstance has occurred that has resulted
or could reasonably be expected to result in a Material Adverse Effect.

          (g) Bankruptcy Order; Tom’s Foods Acquisition. A true and complete copy of the order
of the Bankruptcy Court having jurisdiction in Tom’s Foods Inc.’s bankruptcy case approving the
Tom’s Foods Acquisition by the Borrower as a good faith purchaser free and clear

28

 

of claims; and evidence satisfactory to the Agent that the Tom’s Foods Acquisition is being
consummated concurrently with the funding of the initial Borrowing in compliance with applicable
law and regulatory approvals.

          (h) Other Documents. Such other approvals, opinions, documents or materials as the
Agent or any Lender may reasonably request.

     4.2 Conditions to All Credit Extensions. The obligation of each Lender to make any
Credit Extension to be made by it is subject to the satisfaction of the following conditions
precedent on the relevant Borrowing Date:

          (a) Notice, Application. The Agent shall have received a Notice of Borrowing as
required under Section 2.3.

          (b) Continuation of Representations and Warranties. The representations and
warranties in Article V shall be true and correct in all material respects on and of such
Borrowing Date with the same effect as if made on and as of such Borrowing Date (except to the
extent such representations and warranties expressly refer to an earlier date, in which case they
shall be true and correct as of such earlier date).

          (c) No Existing Default. No Event of Default or Unmatured Event of Default shall
exist or shall result from such Credit Extension.

Each Notice of Borrowing submitted by the Borrower hereunder shall constitute a representation and
warranty by the Borrower that, as of the date of each such notice and as of the relevant Borrowing
Date the conditions in this Section 4.2 are satisfied.

ARTICLE V

REPRESENTATIONS AND WARRANTIES

     The Borrower represents and warrants to the Agent and each Lender that:

     5.1 Corporate Existence and Power. The Borrower and each of its Subsidiaries:

          (a) is a corporation duly organized and validly existing and, if applicable in the
jurisdiction of its incorporation, in good standing under the laws of the jurisdiction of its
incorporation;

          (b) has the power and authority and all governmental licenses, authorizations, consents and
approvals (i) to own its assets and to carry on its business and (ii) to execute, deliver and
perform its obligations under the Loan Documents;

          (c) is duly qualified as a foreign corporation and is licensed and in good standing under the
laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its
business requires such qualification or license; and

29

 

          (d) is in compliance with all Requirements of Law;

except, in each case referred to in subclause (b)(i), clause (c) or clause
(d), to the extent that the failure to do so could not reasonably be expected to have a
Material Adverse Effect.

     5.2 Corporate Authorization; No Contravention. The execution, delivery and
performance by the Borrower of each Loan Document and the Tom’s Foods Acquisition have been duly
authorized by all necessary corporate action, and do not and will not:

          (a) contravene the terms of any of such Person’s Organization Documents;

          (b) conflict with or result in any breach or contravention of, or the creation of any Lien
under, any document evidencing any material Contractual Obligation to which the Borrower or any of
its Subsidiaries is a party or any order, injunction, writ or decree of any Governmental Authority
to which the Borrower or any of its Subsidiaries or any of its or their property is subject; or

          (c) violate any Requirement of Law.

     5.3 Governmental Authorization. No approval, consent, exemption, authorization or
other action by, or notice to, or filing with, any Governmental Authority is necessary or required
in connection with the execution, delivery or performance by, or enforcement against, the Borrower
of the Agreement or any other Loan Document.

     5.4 Binding Effect. This Agreement and each other Loan Document constitute the legal,
valid and binding obligations of the Borrower, enforceable against the Borrower in accordance with
their respective terms, except as enforceability may be limited by applicable bankruptcy,
insolvency or similar laws affecting the enforcement of creditors’ rights generally or by equitable
principles relating to enforceability.

     5.5 Litigation. Except as specifically disclosed in Part I of the Disclosure
Memorandum, there are no actions, suits, proceedings, claims or disputes pending or, to the best
knowledge of the Borrower, threatened or contemplated, at law, in equity, in arbitration or before
any Governmental Authority, against the Borrower or any Subsidiary or any of their respective
properties (a) which purport to affect or pertain to this Agreement or any other Loan Document, or
any of the transactions contemplated hereby or thereby; or (b) as to which there exists a
reasonable likelihood of an adverse determination, which determination would reasonably be expected
to have a Material Adverse Effect. No injunction, writ, temporary restraining order or other order
of any nature has been issued by any court or other Governmental Authority purporting to enjoin or
restrain the execution, delivery or performance of this Agreement or any other Loan Document, or
directing that the transactions provided for herein or therein not be consummated as herein or
therein provided.

     5.6 No Default. No Event of Default or Unmatured Event of Default exists or would
result from the incurring of any Obligations by the Borrower. As of the Effective Date, neither
the Borrower nor any Subsidiary is in default under or with respect to any Contractual Obligation

30

 

in any respect which, individually or together with all such defaults, could reasonably be
expected to have a Material Adverse Effect.

     5.7 ERISA Compliance. Except as specifically disclosed in Schedule 5.7:

          (a) Each Plan is in compliance in all material respects with the applicable provisions of
ERISA, the Code and other federal or state law. Each Plan which is intended to qualify under
Section 401(a) of the Code has received a favorable determination letter from the IRS and to the
best knowledge of the Borrower, nothing has occurred which would cause the loss of such
qualification. The Borrower and each ERISA Affiliate has made all required contributions to any
Plan subject to Section 412 of the Code, and no application for a funding waiver or an extension of
any amortization period pursuant to Section 412 of the Code has been made with respect to any Plan.

          (b) There are no pending or, to the best knowledge of Borrower, threatened claims, actions or
lawsuits, or action by any Governmental Authority, with respect to any Plan which has resulted or
could reasonably be expected to result in a Material Adverse Effect. There has been no prohibited
transaction or violation of the fiduciary responsibility rules with respect to any Plan which has
resulted or could reasonably be expected to result in a Material Adverse Effect.

          (c) (i) No ERISA Event has occurred or is reasonably expected to occur; (ii) no contribution
failure has occurred with respect to a Pension Plan sufficient to give rise to a Lien under Section
302(f) of ERISA; (iii) no Pension Plan has any Unfunded Pension Liability; (iv) neither the
Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability under
Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent
under Section 4007 of ERISA); (v) neither the Borrower nor any ERISA Affiliate has incurred, or
reasonably expects to incur, any liability (and no event has occurred which, with the giving of
notice under Section 4219 of ERISA, would result in such liability) under Section 4201 or 4243 of
ERISA with respect to a Multiemployer Plan; and (vi) neither the Borrower nor any ERISA Affiliate
has engaged in a transaction that could be subject to Section 4069 or 4212(c) of ERISA.

     5.8 Use of Proceeds; Margin Regulations. The proceeds of the Loans will be used
solely for the purposes set forth in and permitted by Section 6.12 and Section 7.8.
Neither the Borrower nor any Subsidiary is generally engaged in the business of purchasing or
selling Margin Stock or extending credit for the purpose of purchasing or carrying Margin Stock.

     5.9 Title to Properties. The Borrower and each Subsidiary have good record and
marketable title in fee simple to, or valid leasehold interests in, all real property necessary or
used in the ordinary conduct of their respective businesses, except for such liens, title defects
and other matters affecting title as could not, individually or in the aggregate, have a Material
Adverse Effect. As of the Effective Date, the property of the Borrower and its Subsidiaries is
subject to no Liens, other than Permitted Liens.

31

 

     5.10 Taxes. The Borrower and its Subsidiaries have filed all Federal and other
material tax returns and reports required to be filed, and have paid all Federal and other material
taxes, assessments, fees and other governmental charges levied or imposed upon them or their
properties, income or assets otherwise due and payable, except those which are being contested in
good faith by appropriate proceedings and for which adequate reserves have been provided in
accordance with GAAP. There is no proposed tax assessment against the Borrower or any Subsidiary
that would, if made, have a Material Adverse Effect.

     5.11 Financial Condition. (a) The audited consolidated financial statements of the
Borrower and its Subsidiaries dated as of December 25, 2004, and the related consolidated
statements of income or operations, stockholders’ equity and cash flows for the fiscal year ended
on that date:

          (i) were prepared in accordance with GAAP consistently applied throughout the periods
covered thereby, except as otherwise expressly noted therein;

          (ii) fairly present the financial condition of the Borrower and its Subsidiaries as of
the dates thereof and the results of operations for the periods covered thereby; and

          (iii) except as specifically disclosed in Part II of the Disclosure Memorandum, show
all material indebtedness and other liabilities, absolute or contingent, of the Borrower and
its consolidated Subsidiaries as of the dates thereof, including liabilities for all
material taxes and material Contingent Obligations.

          (b) Since December 25, 2004, there has been no Material Adverse Effect.

     5.12 Environmental Matters. Except as specifically disclosed in Part III of the
Disclosure Memorandum, the Borrower and its Subsidiaries are in material compliance with all
applicable Environmental Laws and are not (and, to the best of the Borrower’s knowledge, after
giving effect to the Tom’s Foods Acquisition, will not be) subject to Environmental Claims except
for such non-compliance and Environmental Claims that could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

     5.13 Regulated Entities. None of the Borrower, any Person controlling the Borrower,
or any Subsidiary is an “Investment Borrower” within the meaning of the Investment Borrower Act of
1940. The Borrower is not subject to regulation under the Public Utility Holding Borrower Act of
1935, the Federal Power Act, the Interstate Commerce Act, any state public utilities code, or any
other Applicable Law limiting the ability to incur Indebtedness.

     5.14 No Burdensome Restrictions. Neither the Borrower nor any Subsidiary is a party
to or bound by any Contractual Obligation, or subject to any restriction in any Organization
Document or any Requirement of Law, which could reasonably be expected to have a Material Adverse
Effect.

     5.15 Copyrights, Patents, Trademarks and Licenses, etc. The Borrower or its
Subsidiaries own or are licensed or otherwise have the right to use all of the material patents,

32

 

trademarks, service marks, trade names, copyrights, contractual franchises, authorizations and
other rights that are reasonably necessary for the operation of their respective businesses,
without conflict with the rights of any other Person. To the best knowledge of the Borrower, no
slogan or other advertising device, product, process, method, substance, part or other material now
employed, or now contemplated to be employed, by the Borrower or any Subsidiary, and which is
material to the business or operations of the Borrower and its Subsidiaries, infringes upon any
rights held by any other Person.

     5.16 Subsidiaries. As of the Effective Date, the Borrower has no Subsidiaries other
than those specifically disclosed in part (a) of Schedule 5.16 and has no equity
investments in any other corporation or entity other than those specifically disclosed in part
(b) of Schedule 5.16.

     5.17 Insurance. The properties of the Borrower and its Subsidiaries are insured with
financially sound and reputable insurance companies not Affiliates of the Borrower, in such
amounts, with such deductibles and covering such risks as are customarily carried by companies
engaged in similar businesses and owning similar properties in localities where the Borrower or
such Subsidiary operates.

     5.18 Swap Obligations. Neither the Borrower nor any of its Subsidiaries has incurred
any outstanding obligations under any Swap Contracts, other than Permitted Swap Obligations.

     5.19 Full Disclosure. The representations and warranties made by the Borrower in the
Loan Documents as of the date such representations and warranties are made or deemed made, and the
statements contained in any exhibit, report, statement or certificate furnished by or on behalf of
the Borrower in connection with the Loan Documents, taken as a whole, do not contain any untrue
statement of a material fact or omit any material fact required to be stated therein or necessary
to make the statements made therein, in light of the circumstances under which they are made, not
misleading as of the time when made or delivered.

ARTICLE VI

AFFIRMATIVE COVENANTS

     So long as any Lender shall have any Commitment hereunder, or any Loan or other Obligation
shall remain unpaid or unsatisfied, unless the Required Lenders waive compliance in writing:

     6.1 Financial Statements. The Borrower shall deliver to the Agent in form and detail
satisfactory to the Agent and the Required Lenders, with sufficient copies for each Lender.

          (a) as soon as available, but not later than 100 days after the end of each fiscal year, a
copy of the audited consolidated balance sheet of the Borrower and its Subsidiaries as at the end
of such year and the related consolidated statements of income or operations, stockholders’ equity
and cash flows for such year, setting forth in each case in comparative form the figures for the
previous fiscal year, and accompanied by the opinion of KPMG LLP or another nationally-recognized
independent public accounting firm (“Independent Auditor”),

33

 

which opinion (i) shall state that such consolidated financial statements present fairly the
Borrower’s consolidated financial position for the periods indicated in conformity with GAAP and
(ii) shall not be qualified or limited because of a restricted or limited examination by the
Independent Auditor of any material portion of the Borrower’s or any Subsidiary’s records (it being
agreed that the requirements of this subsection 6.1(a) may be satisfied by the delivery of
the applicable annual report on Form 10-K of the Borrower to the Agent by email to the extent that
it is delivered within the applicable time period noted herein); and

          (b) as soon as available, but not later than 45 days after the end of each of the first three
fiscal quarters of each fiscal year, a copy of the unaudited consolidated balance sheet of the
Borrower and its Subsidiaries as of the end of such quarter and the related consolidated statements
of income, stockholders’ equity and cash flows for the period commencing on the first day and
ending on the last day of such quarter, and certified by a Responsible Officer as fairly
presenting, in accordance with GAAP (subject to ordinary, good faith year-end audit adjustments),
the financial position and the results of operations of the Borrower and its Subsidiaries as of
such date and for such period (it being agreed that the requirements of this subsection
6.1(b) may be satisfied by the delivery of the applicable quarterly report on Form 10-Q of the
Borrower to the Agent by email to the extent that it is delivered within the applicable time period
noted herein).

     6.2 Certificates; Other Information. The Borrower shall furnish to the Agent, with
sufficient copies for each Lender:

          (a) concurrently with the delivery of the financial statements referred to in subsections
6.1(a) and (b), a Compliance Certificate executed by a Responsible Officer;

          (b) promptly, copies of all financial statements and reports that the Borrower sends to its
shareholders, and copies of all financial statements and regular, periodic or special reports
(including Forms 10-K, 10-Q and 8-K) that the Borrower or any Subsidiary may make to, or file with,
the SEC (it being agreed that the requirements of this subsection 6.2(b) may be satisfied
by the delivery of such financial statements and reports to the Agent by email); and

          (c) promptly, such additional information regarding the business, financial or corporate
affairs of the Borrower or any Subsidiary as the Agent, at the request of any Lender, may from time
to time reasonably request.

     6.3 Notices. The Borrower shall promptly (or, in the case of any event described in
clause (c)(ii) below, not less than 10 days prior to the occurrence of such event) notify
the Agent and each Lender:

          (a) of the occurrence of any Event of Default or Unmatured Event of Default known to the
Borrower;

          (b) of any of the following matters that has resulted or is reasonably expected to result in a
Material Adverse Effect: (i) breach or non-performance of, or any default under, a Contractual
Obligation of the Borrower or any Subsidiary; (ii) any dispute, litigation, investigation,
proceeding or suspension between the Borrower or any Subsidiary and any

34

 

Governmental Authority; or (iii) the commencement of, or any material development in, any
litigation or proceeding affecting the Borrower or any Subsidiary including pursuant to any
applicable Environmental Laws;

          (c) of the occurrence of any of the following events known to the Borrower which affect the
Borrower or any ERISA Affiliate, and deliver to the Agent and each Lender a copy of any notice with
respect to such event that is filed with a Governmental Authority and any notice delivered by a
Governmental Authority to the Borrower or any ERISA Affiliate with respect to such event:

          (i) an ERISA Event;

          (ii) a contribution failure with respect to a Pension Plan sufficient to give rise to
a Lien under Section 302(f) of ERISA;

          (iii) a material increase in the Unfunded Pension Liability of any Pension Plan;

          (iv) the adoption of, or the commencement of contributions to, any Plan subject to
Section 412 of the Code by the Borrower or any ERISA Affiliate; or

          (v) the adoption of any amendment to a Plan subject to Section 412 of the Code, if
such amendment results in a material increase in contributions or Unfunded Pension
Liability; and

          (d) of any material change in accounting policies or financial reporting practices by the
Borrower and its consolidated Subsidiaries.

     Each notice under this Section shall be accompanied by a written statement by a Responsible
Officer setting forth details of the occurrence referred to therein, and stating what action the
Borrower or any affected Subsidiary proposes to take with respect thereto. Each notice under
subsection 6.3(a) shall describe with particularity any and all clauses or provisions of
this Agreement or any other Loan Document that, to the best of such Responsible Officer’s
knowledge, have been breached or violated.

     6.4 Preservation of Corporate Existence, Etc. The Borrower shall, and shall cause
each Subsidiary to:

          (a) except as otherwise permitted with respect to any Subsidiary pursuant to Section
7.4, preserve and maintain in full force and effect its corporate existence and valid existence
under the laws of its jurisdiction of organization;

          (b) preserve and maintain in full force and effect all governmental rights, privileges,
qualifications, permits, licenses and franchises necessary in the normal conduct of its business
(except (i) in connection with transactions permitted by Section 7.4 and sales of assets
permitted by Section 7.3 and (ii) to the extent that failure to do so could not reasonably
be expected to have a Material Adverse Effect);

35

 

          (c) use reasonable efforts, in the ordinary course of business, to preserve its business
organization and goodwill; and

          (d) preserve or renew all of its registered patents, trademarks, trade names and service
marks, the non-preservation of which could reasonably be expected to have a Material Adverse
Effect.

     6.5 Maintenance of Property. The Borrower shall, and shall cause each Subsidiary to,
maintain and preserve all its property which is used or useful in its business in good working
order and condition, ordinary wear and tear excepted, except to the extent that failure to do so
would not reasonably be expected to have a Material Adverse Effect.

     6.6 Insurance. The Borrower shall, and shall cause each Subsidiary to, maintain, with
financially sound and reputable independent insurers, insurance with respect to its properties and
business against loss or damage of the kinds customarily insured against by Persons engaged in the
same or similar business, of such types and in such amounts as are customarily carried under
similar circumstances by such other Persons.

     6.7 Payment of Obligations. The Borrower shall, and shall cause each Subsidiary to,
pay and discharge, as the same shall become due and payable, all their respective material
obligations and liabilities, including:

          (a) all material tax liabilities, assessments and governmental charges or levies upon it or
its properties or assets, unless the same are being contested in good faith by appropriate
proceedings and adequate reserves in accordance with GAAP are being maintained by the Borrower or
such Subsidiary; and

          (b) all material claims which, if unpaid, would by law become a Lien upon its property unless
the same are contested in good faith by appropriate proceedings and adequate reserves in accordance
with GAAP are being maintained by the Borrower or such Subsidiary.

     6.8 Compliance with Laws. The Borrower shall, and shall cause each Subsidiary to,
comply in all material respects with all material Requirements of Law of any Governmental Authority
having jurisdiction over it or its business (including the Federal Fair Labor Standards Act),
except such as may be contested in good faith or as to which a bona fide dispute may exist.

     6.9 Compliance with ERISA. The Borrower shall, and shall cause each of its ERISA
Affiliates to: (a) maintain each Plan in compliance in all material respects with the applicable
provisions of ERISA, the Code and other federal or state law; (b) cause each Plan which is
qualified under Section 401(a) of the Code to maintain such qualification; and (c) make all
required contributions to any Plan subject to Section 412 of the Code.

     6.10 Inspection of Property and Books and Records. The Borrower shall, and shall
cause each Subsidiary to, maintain proper books of record and account, in which true and correct
entries (sufficient to permit the preparation of consolidated financial statements in conformity
with GAAP) shall be made of all financial transactions and matters involving the assets and
business of the Borrower and such Subsidiary. The Borrower shall permit, and shall cause each

36

 

Subsidiary to permit, the Agent or any Lender, at any reasonable time during normal business
hours upon advance request of the Agent or the relevant Lender, to visit and inspect the properties
of the Borrower or any Subsidiary and to examine their respective corporate, financial and
operating records, and make copies thereof or abstracts therefrom, and to discuss the affairs,
finances and accounts of the Borrower or any Subsidiary with the appropriate officers of the
Borrower or such Subsidiary.

     6.11 Environmental Laws. The Borrower shall, and shall cause each Subsidiary to,
conduct its operations and keep and maintain its property in material compliance with all material
Environmental Laws, except such as may be contested in good faith or as to which a bona fide
dispute may exist.

     6.12 Use of Proceeds. The Borrower shall use the proceeds of the Loans to finance the
Tom’s Foods Acquisition, for costs and expenses related to the Tom’s Foods Acquisition and for
working capital and other general corporate purposes not in contravention of any Requirement of Law
or of any Loan Document.

ARTICLE VII

NEGATIVE COVENANTS

     So long as any Lender shall have any Commitment hereunder, or any Loan or other Obligation
shall remain unpaid or unsatisfied, unless the Required Lenders waive compliance in writing:

     7.1 Financial Condition Covenants.

          (a) Total Debt to EBITDA Ratio. The Borrower shall not permit the Total Debt to
EBITDA Ratio for any Computation Period to be greater than 3.00 to 1.

          (b) Interest Coverage Ratio. The Borrower shall not permit, as of the last day of any
Computation Period, the Interest Coverage Ratio to be less than 2.50 to 1.

     7.2 Limitation on Liens. The Borrower shall not, and shall not suffer or permit any
Subsidiary to, directly or indirectly, make, create, incur, assume or suffer to exist any Lien upon
or with respect to any part of its property, whether now owned or hereafter acquired, other than
the following (“Permitted Liens”):

          (a) any Lien existing on property of the Borrower or any Subsidiary on the Effective Date and
set forth in Schedule 7.2 securing Indebtedness outstanding on such date, and any
extension, renewal or replacement of any such Lien so long as the principal amount secured thereby
is not increased and the scope of the property subject to such Lien is not extended;

          (b) any Lien created under any Loan Document;

          (c) Liens for taxes, fees, assessments or other governmental charges which are not delinquent
or remain payable without penalty, or to the extent that non-payment thereof is

37

 

permitted by Section 6.7, provided that no notice of lien has been filed or recorded
under the Code or any other Requirement of Law;

          (d) carriers’, warehousemen’s, mechanics’, landlords’, materialmen’s, repairmen’s or other
similar Liens arising in the ordinary course of business which are not delinquent or remain payable
without penalty or which are being contested in good faith and by appropriate proceedings, which
proceedings have the effect of preventing the forfeiture or sale of the property subject thereto;

          (e) Liens (other than any Lien imposed by ERISA) consisting of pledges or deposits required in
the ordinary course of business in connection with workers’ compensation, unemployment insurance
and other social security legislation;

          (f) Liens on the property of the Borrower or any Subsidiary securing (i) the non-delinquent
performance of bids, trade contracts (other than for borrowed money), leases, statutory
obligations, (ii) surety bonds (excluding appeal bonds and other bonds posted in connection with
court proceedings or judgments) and (iii) other non-delinquent obligations of a like nature; in
each case incurred in the ordinary course of business, provided all such Liens in the aggregate
would not (even if enforced) cause a Material Adverse Effect;

          (g) Liens consisting of judgment or judicial attachment liens and liens securing contingent
obligations on appeal bonds and other bonds posted in connection with court proceedings or
judgments, provided that all such liens in the aggregate at any time outstanding for the Borrower
and its Subsidiaries do not exceed U.S.$5,000,000 unless, in the case of judgment and judicial
attachment liens, the enforcement of such liens is effectively stayed;

          (h) easements, rights-of-way, restrictions and other similar encumbrances incurred in the
ordinary course of business which, individually or in the aggregate, do not materially detract from
the value of the property subject thereto or interfere with the ordinary conduct of the businesses
of the Borrower and its Subsidiaries;

          (i) purchase money security interests on any property acquired or held by the Borrower or its
Subsidiaries in the ordinary course of business, securing Indebtedness incurred or assumed for the
purpose of financing all or any part of the cost of acquiring such property; provided that
(i) any such Lien attaches to such property concurrently with or within 90 days after the
acquisition thereof, (ii) such Lien attaches solely to the property so acquired in such
transaction, (iii) the principal amount of the debt secured thereby does not exceed 100% of the
cost of such property, and (iv) the principal amount of the Indebtedness secured by any and all
such purchase money security interests shall not at any time exceed U.S.$5,000,000;

          (j) Liens securing obligations in respect of capital leases on assets subject to such leases,
provided that such capital leases are otherwise permitted hereunder;

          (k) Liens arising solely by virtue of any statutory or common law provision relating to
banker’s liens, rights of set-off or similar rights and remedies as to deposit accounts or other
funds maintained with a creditor depository institution; provided that (i) such deposit
account is not a dedicated cash collateral account and is not subject to restrictions against
access

38

 

by the Borrower in excess of those set forth by regulations promulgated by the FRB, and (ii)
such deposit account is not intended by the Borrower or any Subsidiary to provide collateral to the
depository institution;

          (l) Liens arising in connection with Securitization Transactions; provided that the
aggregate investment or claim held at any time by all purchasers, assignees or other transferees of
(or of interests in) receivables and other rights to payment in all Securitization Transactions
shall not exceed U.S.$25,000,000; and

          (m) other Liens securing Indebtedness not at any time exceeding in the aggregate
U.S.$10,000,000.

     7.3 Disposition of Assets. The Borrower shall not, and shall not permit any
Subsidiary to, directly or indirectly, sell, assign, lease, convey, transfer or otherwise dispose
of (whether in one or a series of transactions) any property (including accounts and notes
receivable, with or without recourse) or enter into any agreement to do any of the foregoing,
except:

          (a) dispositions of inventory, or used, worn-out or surplus equipment, all in the ordinary
course of business;

          (b) the sale, assignment or other transfer of accounts receivable, lease receivables or other
rights to payment pursuant to any Securitization Transaction; provided that the aggregate
investment or claim held at any time by all purchasers, assignees or other transferees of (or of
interests in) such receivables or other rights to payment shall not exceed U.S.$25,000,000;

          (c) the sale of assets that are leased back to the Borrower or a Subsidiary, involving amounts
not to exceed U.S.$10,000,000 in the aggregate in any fiscal year; and

          (d) dispositions not otherwise permitted hereunder which are made for fair market value;
provided that (i) at the time of any disposition, no Event of Default shall exist or shall
result from such disposition and (ii) the aggregate value of all assets so disposed of by the
Borrower and its Subsidiaries in any fiscal year shall not exceed U.S.$10,000,000.

     7.4 Consolidations and Mergers. The Borrower shall not, and shall not permit any
Subsidiary to, merge, consolidate or amalgamate with or into, or convey, transfer, lease or
otherwise dispose of (whether in one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter acquired) to or in favor of any
other Person, except:

          (a) any Subsidiary may merge or amalgamate with the Borrower, provided that the Borrower shall
be the continuing or surviving corporation or, in the case of an amalgamation, the resulting
corporation shall have entered into all assumption agreements and provided all further assurances
as the Agent may reasonably require, or with any one or more Subsidiaries, provided that if any
transaction shall be between a Subsidiary and a Wholly-Owned

39

 

Subsidiary, the Wholly-Owned Subsidiary shall be the continuing or surviving corporation, or
the continuing or surviving corporation shall be a Wholly-Owned Subsidiary;

          (b) any Subsidiary may sell all or substantially all of its assets (upon voluntary liquidation
or otherwise), to the Borrower or another Wholly-Owned Subsidiary; and

          (c) any merger, amalgamation, consolidation or disposition in connection with a transaction
permitted by Section 7.3 or an Acquisition permitted by Section 7.5;

provided that, notwithstanding the foregoing, so long as the HSW Mortgage Loan exists, the
Borrower shall not permit HSW Mortgage Corp. or any direct or indirect parent thereof, other than
the Borrower (each a “Restricted Subsidiary”) to merge, consolidate with or into, or
convey, transfer, lease or otherwise dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to
or in favor of any other Person, except that (w) any Restricted Subsidiary may merge or consolidate
with or into the Borrower, provided that the Borrower shall be the continuing or surviving
corporation, (x) any Restricted Subsidiary may convey, transfer, lease or otherwise dispose of all
or substantially all of its assets (upon voluntary liquidation or otherwise), to the Borrower, (y)
any Restricted Subsidiary may merge or consolidate with or into any Wholly-Owned Subsidiary of the
Borrower (whereupon such Restricted Subsidiary shall cease to be a Restricted Subsidiary and such
Wholly-Owned Subsidiary shall become a Restricted Subsidiary), and (z) any Restricted Subsidiary
may convey, transfer, lease or otherwise dispose of all or substantially all of its assets (upon
voluntary liquidation or otherwise), to any Wholly-Owned Subsidiary of the Borrower (whereupon such
Restricted Subsidiary shall cease to be a Restricted Subsidiary and such Wholly-Owned Subsidiary
shall become a Restricted Subsidiary).

     7.5 Loans and Investments. The Borrower shall not, and shall not permit any
Subsidiary to, purchase or acquire, or make any commitment to purchase or acquire, any capital
stock, equity interest or obligations or other securities of, or any interest in, any Person, or
make or commit to make any Acquisition, or make or commit to make any advance, loan, extension of
credit or capital contribution to or any other investment in any Person (including any Affiliate of
the Borrower)(any of the foregoing an “Investment”), except for:

          (a) Investments held by the Borrower or any Subsidiary in the form of cash equivalents or
short term marketable securities;

          (b) extensions of credit in the nature of accounts receivable or notes receivable arising from
the sale or lease of goods or services in the ordinary course of business;

          (c) Investments by the Borrower in any of its Subsidiaries or by any of its Subsidiaries to
another of its Subsidiaries;

          (d) other Investments (including those incurred in order to consummate Acquisitions not
otherwise prohibited herein), provided that no Event of Default or Unmatured Event of
Default exists or will result therefrom;

40

 

          (e) Investments constituting Permitted Swap Obligations or payments or advances under Swap
Contracts relating to Permitted Swap Obligations;

          (f) pledges or deposits required in the ordinary course of business in connection with
workmen’s compensation, unemployment insurance and other social security legislation;

          (g) advances, loans or extensions of credit to suppliers in the ordinary course of business by
the Borrower and its Subsidiaries;

          (h) advances, loans or extensions of credit in the ordinary course of business by the Borrower
and its Subsidiaries to employees of the Borrower and its Subsidiaries;

          (i) repurchases by the Borrower of its common stock to the extent permitted by Section
7.10; and

          (j) loans to an employee stock ownership plan established by the Borrower, the proceeds of
which are used solely to purchase stock of the Borrower.

     7.6 Limitation on Subsidiary Indebtedness. The Borrower shall not permit its
Subsidiaries to create, incur, assume or suffer to exist, or otherwise become or remain directly or
indirectly liable with respect to, any Indebtedness (other than Indebtedness owing to the Borrower
or another Subsidiary) (but including any deferred promissory notes (the “Deferred Notes”)
issued by a Subsidiary pursuant to the Borrower’s Agreement of Purchase and Sale with the
shareholders of Tamming Foods Ltd. in the original amount of C$21,000,000) at any time outstanding
in an aggregate amount not to exceed the excess of (i) U.S.$65,000,000 over (ii) to the extent not
constituting Indebtedness, obligations of its Subsidiaries in respect of Securitization
Transactions to the extent of the aggregate investment or claim held at any time by purchasers,
assignees or other transferees of (or of interests in) receivables and other rights to payment in
Securitization Transactions, provided that the Borrower shall not permit HSW Mortgage Corp.
to create, incur, assume or suffer to exist, or otherwise become or remain directly or indirectly
liable with respect to, any Indebtedness.

     7.7 Transactions with Affiliates. The Borrower shall not, and shall not permit any
Subsidiary to, enter into any transaction with any Affiliate of the Borrower (other than the
Borrower or a Subsidiary), except upon fair and reasonable terms no less favorable to the Borrower
or such Subsidiary than would obtain in a comparable arm’s-length transaction with a Person not an
Affiliate of the Borrower or such Subsidiary.

     7.8 Use of Proceeds. The Borrower shall not, and shall not suffer or permit any
Subsidiary to, use any portion of the Loan proceeds, directly or indirectly, (i) to purchase or
carry Margin Stock, (ii) to repay or otherwise refinance indebtedness of the Borrower or others
incurred to purchase or carry Margin Stock or (iii) to extend credit for the purpose of purchasing
or carrying any Margin Stock.

41

 

     7.9 Swap Contracts. The Borrower shall not, and shall not permit any Subsidiary to,
create, incur, assume or suffer to exist any obligations under Swap Contracts except for Permitted
Swap Obligations.

     7.10 Restricted Payments. The Borrower shall not (i) declare or make any dividend
payment or other distribution of assets, properties, cash, rights, obligations or securities on
account of any shares of any class of its capital stock or (ii) purchase, redeem or otherwise
acquire for value, or permit any Subsidiary to purchase or otherwise acquire for value, any shares
of the Borrower’s capital stock or any warrants, rights or options to acquire such shares, now or
hereafter outstanding, except that:

          (a) the Borrower may declare and make dividend payments or other distributions payable solely
in its common stock;

          (b) the Borrower may purchase, redeem or otherwise acquire shares of its common stock or
warrants or options to acquire any such shares with the proceeds received from the substantially
concurrent issue of new shares of its common stock;

          (c) so long as (1) no Event of Default or Unmatured Event of Default exists or would result
therefrom and (2) the Borrower’s consolidated stockholders’ equity, after giving effect thereto, is
not less than U.S.$125,000,000, the Borrower may (x) declare and pay cash dividends to its
stockholders; and (y) purchase, redeem or otherwise acquire shares of its common stock or warrants
or options to acquire such shares; and

          (d) HSW Mortgage Corp. may declare and pay cash dividends to the holders of its 10% Series A
Cumulative Preferred Stock in an aggregate amount not exceeding U.S.$15,000 in any fiscal year.

     7.11 ERISA. The Borrower shall not, and shall not permit any of its ERISA Affiliates
to: (a) engage in a prohibited transaction or violation of the fiduciary responsibility rules with
respect to any Plan which has resulted or could reasonably be expected to result in liability of
the Borrower in an aggregate amount in excess of U.S.$5,000,000; or (b) engage in a transaction
that could be subject to Section 4069 or 4212(c) of ERISA.

     7.12 Change in Business. The Borrower shall not, and shall not suffer or permit any
Subsidiary to, engage in any material line of business substantially different from those lines of
business carried on by the Borrower and its Subsidiaries on the date hereof.

     7.13 Accounting Changes. The Borrower shall not, and shall not permit any Subsidiary
to, make any significant change in accounting treatment or reporting practices, except as required
by GAAP.

     7.14 HSW Mortgage Loan. So long as the HSW Mortgage Loan exists, the Borrower shall
not, and shall not permit any Subsidiary to, sell or otherwise dispose of any of its interest in
any Restricted Subsidiary, except as permitted by Section 7.4. The Borrower shall not
permit HSW Mortgage Corp. to sell or otherwise dispose of or encumber any of its rights under or in
respect of the HSW Mortgage Loan or the related deed of trust existing on the date hereof,

42

 

except for releases of liens under the deed of trust securing the HSW Mortgage Loan in
connection with dispositions of assets otherwise permitted under Section 7.3.

ARTICLE VIII

EVENTS OF DEFAULT

     8.1 Event of Default. Any of the following shall constitute an “Event of Default”:

          (a) Non-Payment. The Borrower fails to pay, (i) when and as required to be paid
herein, any amount of principal of any Loan, or (ii) within three Business Days after the same
becomes due, any interest, fee or any other amount payable hereunder or under any other Loan
Document.

          (b) Representation or Warranty. Any representation or warranty by the Borrower or any
Subsidiary made or deemed made herein or in any other Loan Document, or which is contained in any
certificate, document or financial or other statement by the Borrower, any Subsidiary or any
Responsible Officer furnished at any time under this Agreement or under any other Loan Document, is
incorrect in any material respect on or as of the date made or deemed made.

          (c) Specific Defaults. The Borrower fails to perform or observe any term, covenant or
agreement contained in any of subsection 6.3(a), Section 7.2, 7.3,
7.4, 7.8, 7.11 or 7.13.

          (d) Other Defaults. The Borrower fails to perform or observe any other term or
covenant contained in this Agreement or any other Loan Document, and such failure shall continue
unremedied for a period of 30 days after the date upon which written notice thereof is given to the
Borrower by the Agent or any Lender.

          (e) Cross-Default. The Borrower or any Subsidiary (A) fails to make any payment in
respect of any Material Financial Obligations when due (whether by scheduled maturity, required
prepayment, acceleration, demand, or otherwise); or (B) fails to perform or observe any other
condition or covenant, or any other event shall occur or condition shall exist, under any agreement
or instrument relating to any such Material Financial Obligations, if the effect of such failure,
event or condition is to cause, or to permit the holder or holders of such Material Financial
Obligations or beneficiary or beneficiaries of such Material Financial Obligations (or a trustee or
agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, such Material
Financial Obligations to become due and payable prior to its stated maturity, or such Material
Financial Obligations to become payable or cash collateral in respect thereof to be demanded; or an
“Event of Default” as defined in the Existing Credit Agreement occurs and is continuing.

          (f) Insolvency; Voluntary Proceedings. The Borrower or any Subsidiary (i) ceases or
fails to be solvent, or generally fails to pay, or admits in writing its inability to pay, its
debts as they become due, subject to applicable grace periods, if any, whether at stated maturity
or otherwise; (ii) voluntarily ceases to conduct its business in the ordinary course;

43

 

(iii) commences any Insolvency Proceeding with respect to itself; or (iv) takes any action to
effectuate or authorize any of the foregoing.

          (g) Involuntary Proceedings. (i) Any involuntary Insolvency Proceeding is commenced
or filed against the Borrower or any Subsidiary, or any writ, judgment, warrant of attachment,
execution or similar process is issued or levied against a substantial part of the Borrower’s or
any Subsidiary’s properties, and such proceeding or petition shall not be dismissed, or such writ,
judgment, warrant of attachment, execution or similar process shall not be released, vacated or
fully bonded, within 60 days after commencement, filing or levy; (ii) the Borrower or any
Subsidiary admits the material allegations of a petition against it in any Insolvency Proceeding,
or an order for relief (or similar order under non-U.S. law) is ordered in any Insolvency
Proceeding with respect to the Borrower or such Subsidiary; or (iii) the Borrower or any Subsidiary
acquiesces in the appointment of a receiver, trustee, custodian, conservator, liquidator, mortgagee
in possession (or agent therefor), or other similar Person for itself or a substantial portion of
its property or business.

          (h) ERISA. (i) An ERISA Event shall occur with respect to a Pension Plan or
Multiemployer Plan which has resulted or could reasonably be expected to result in liability of the
Borrower under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an
aggregate amount in excess of U.S.$5,000,000; (ii) a contribution failure shall occur with respect
to a Pension Plan sufficient to give rise to a Lien under Section 302(f) of ERISA; (iii) the
aggregate amount of Unfunded Pension Liability among all Pension Plans at any time exceeds
U.S.$5,000,000; or (iv) the Borrower or any ERISA Affiliate shall fail to pay when due, after the
expiration of any applicable grace period (or any period during which (x) the Borrower is permitted
to contest its obligation to make such payment without incurring any liability (other than
interest) or penalty and (y) the Borrower is contesting such obligation in good faith and by
appropriate proceedings), any installment payment with respect to its withdrawal liability under
Section 4201 of ERISA or any contribution obligation under Section 4243 of ERISA, in each case
under a Multiemployer Plan in an aggregate amount in excess of U.S.$5,000,000.

          (i) Judgments. One or more non-interlocutory judgments, non-interlocutory orders,
decrees or arbitration awards is entered against the Borrower or any Subsidiary involving in the
aggregate a liability (to the extent not covered by independent third-party insurance as to which
the insurer does not dispute coverage) as to any single or related series of transactions,
incidents or conditions of U.S.$10,000,000 or more, and the same shall remain unvacated and
unstayed pending appeal for a period of 30 days after the entry thereof.

          (j) Change of Control. Any Change of Control occurs.

     8.2 Remedies. If any Event of Default occurs, the Agent shall, at the request of, or
may, with the consent of, the Required Lenders,

          (a) declare the commitment of each Lender to make any Credit Extension to be terminated,
whereupon such commitments and obligation shall be terminated;

44

 

          (b) declare the unpaid principal amount of all outstanding Loans, all interest accrued and
unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document
to be immediately due and payable, without presentment, demand, protest or other notice of any
kind, all of which are hereby expressly waived by the Borrower; and

          (c) exercise on behalf of itself and the Lenders all other rights and remedies available to it
and the Lenders under the Loan Documents or Applicable Law;

provided, however, that upon the occurrence of any event specified in
subsection (f) or (g) of Section 8.1 (in the case of clause (i) of
subsection (g), upon the expiration of the 60-day period mentioned therein), the obligation
of each Lender to make Credit Extensions shall automatically terminate and the unpaid principal
amount of all outstanding Loans and all other Obligations shall automatically become due and
payable, in each case without further act of the Agent or any Lender.

     8.3 Rights Not Exclusive. The rights provided for in this Agreement and the other
Loan Documents are cumulative and are not exclusive of any other rights, powers, privileges or
remedies provided by law or in equity, or under any other instrument, document or agreement now
existing or hereafter arising.

ARTICLE IX

THE AGENT

     9.1 Appointment and Authorization. Each Lender hereby irrevocably (subject to
Section 9.9) appoints, designates and authorizes the Agent to take such action on its
behalf under the provisions of this Agreement and each other Loan Document and to exercise such
powers and perform such duties as are expressly delegated to it by the terms of this Agreement or
any other Loan Document, together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere in this Agreement or in any other
Loan Document, the Agent shall have no duties or responsibilities, except those expressly set forth
herein, nor shall the Agent have or be deemed to have any fiduciary relationship with any Lender,
and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be
read into this Agreement or any other Loan Document or otherwise exist against the Agent. Without
limiting the generality of the foregoing sentence, the use of the term “agent” in this Agreement
with reference to the Agent is not intended to connote any fiduciary or other implied (or express)
obligations arising under agency doctrine of any Applicable Law. Instead, such term is used merely
as a matter of market custom, and is intended to create or reflect only an administrative
relationship between independent contracting parties.

     9.2 Delegation of Duties. The Agent may execute any of its duties under this
Agreement or any other Loan Document by or through agents, employees or attorneys-in-fact and shall
be entitled to advice of counsel concerning all matters pertaining to such duties. The Agent shall
not be responsible for the negligence or misconduct of any agent or attorney-in-fact that it
selects with reasonable care.

45

 

     9.3 Liability of Agent. None of the Agent-Related Persons shall (i) be liable to any
Lender for any action taken or omitted to be taken by any of them under or in connection with this
Agreement or any other Loan Document or the transactions contemplated hereby (except for its own
gross negligence or willful misconduct), or (ii) be responsible in any manner to any of the Lenders
for any recital, statement, representation or warranty made by the Borrower or any Subsidiary or
Affiliate of the Borrower, or any officer thereof, contained in this Agreement or in any other Loan
Document, 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 Agreement or any other Loan
Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of the Borrower or any other party to any
Loan Document to perform its obligations hereunder or thereunder. No Agent-Related Person shall
be under any obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this Agreement or any other
Loan Document, or to inspect the properties, books or records of the Borrower or any of the
Borrower’s Subsidiaries or Affiliates.

     9.4 Reliance by Agent. (a) The Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit,
letter, telegram, facsimile, telex or telephone message, statement 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 counsel to the
Borrower), 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 Agreement or any other Loan
Document unless it shall first receive such advice or concurrence of the Required Lenders as it
deems appropriate and, if it so requests, 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 from acting, under this Agreement or any other Loan Document in accordance with a
request or consent of the Required Lenders and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Lenders.

          (b) For purposes of determining compliance with the conditions specified in Section
4.1, each Lender that has executed this Agreement shall be deemed to have consented to,
approved or accepted or to be satisfied with, each document or other matter either sent by the
Agent to such Lender for consent, approval, acceptance or satisfaction, or required thereunder to
be consented to or approved by or acceptable or satisfactory to the Lender.

     9.5 Notice of Default. The Agent shall not be deemed to have knowledge or notice of
the occurrence of any Event of Default or Unmatured Event of Default, except with respect to
defaults in the payment of principal, interest and fees required to be paid to the Agent for the
account of the Lenders, unless the Agent shall have received written notice from a Lender or the
Borrower referring to this Agreement, describing such Event of Default or Unmatured Event of
Default and stating that such notice is a “notice of default”. If the Agent receives such a
notice, the Agent will notify the Lenders of its receipt of such notice. The Agent shall take such
action with respect to such Event of Default or Unmatured Event of Default as may be requested by
the Required Lenders in accordance with this Article IX; provided, however,
that unless and until the

46

 

Agent has received any such request, the Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Event of Default or Unmatured
Event of Default as it shall deem advisable or in the best interest of the Lenders.

     9.6 Credit Decision. Each Lender acknowledges that none of the Agent-Related Persons
has made any representation or warranty to it, and that no act by the Agent hereafter taken,
including any review of the affairs of the Borrower and their Subsidiaries, shall be deemed to
constitute any representation or warranty by any Agent-Related Person to any Lender. Each Lender
represents to the Agent that it has, independently and without reliance upon any Agent-Related
Person and based on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, prospects, operations, property, financial and
other condition and creditworthiness of the Borrower and their Subsidiaries, and all applicable
bank regulatory laws relating to the transactions contemplated hereby, and made its own decision to
enter into this Agreement and to extend credit to the Borrower hereunder. Each Lender also
represents that it will, independently and without reliance upon any Agent-Related Person 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 Agreement
and the other Loan Documents, and to make such investigations as it deems necessary to inform
itself as to the business, prospects, operations, property, financial and other condition and
creditworthiness of the Borrower. Except for notices, reports and other documents expressly herein
required to be furnished to the Lenders by the Agent, the Agent shall have no duty or
responsibility to provide any Lender with any credit or other information concerning the business,
prospects, operations, property, financial and other condition or creditworthiness of the Borrower
which may come into the possession of any Agent-Related Person.

     9.7 Indemnification. Whether or not the transactions contemplated hereby are
consummated, the Lenders shall indemnify upon demand the Agent-Related Persons (to the extent not
reimbursed by or on behalf of the Borrower and without limiting the obligation of the Borrower to
do so), pro rata, from and against any and all Indemnified Liabilities; provided,
however, that no Lender shall be liable for the payment to any Agent-Related Person of any
portion of the Indemnified Liabilities to the extent resulting from such Person’s gross negligence
or willful misconduct. Without limitation of the foregoing, each Lender shall reimburse the Agent
upon demand for its ratable share of any costs or out-of-pocket expenses (including Attorney Costs)
incurred by the Agent in connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal proceedings or
otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, any
other Loan Document, or any document contemplated by or referred to herein, to the extent that the
Agent is not reimbursed for such expenses by or on behalf of the Borrower. The undertaking in this
Section shall survive the termination of this Agreement, the payment of all Obligations and the
resignation or replacement of the Agent.

     9.8 Agent in Individual Capacity. Bank of America and its Affiliates may make loans
to, issue letters of credit for the account of, accept deposits from, acquire equity interests in
and generally engage in any kind of banking, trust, financial advisory, underwriting or other
business with the Borrower and their Subsidiaries and Affiliates as though Bank of America were not
the

47

 

Agent hereunder and without notice to or consent of the Lenders. The Lenders acknowledge
that, pursuant to such activities, Bank of America or its Affiliates may receive information
regarding the Borrower or their Affiliates (including information that may be subject to
confidentiality obligations in favor of the Borrower or such Subsidiary) and acknowledge that the
Agent shall be under no obligation to provide such information to them. With respect to their
respective Loans, Bank of America and its Affiliates shall have the same rights and powers under
this Agreement as any other Lender and may exercise the same as though it were not the Agent.

     9.9 Successor Agent. The Agent may, and at the request of the Required Lenders shall,
resign as Agent upon 30 days’ notice to the Lenders. If the Agent resigns under this Agreement,
the Required Lenders (with, so long as no Event of Default exists, the consent of the Borrower,
which shall not be unreasonably withheld or delayed) shall appoint from among the Lenders or
Affiliates of Lenders a successor Agent for the Lenders. If no successor agent is appointed prior
to the effective date of the resignation of the Agent, the Agent may appoint, after consulting with
the Lenders and the Borrower, a successor agent from among the Lenders or Affiliates of Lenders.
Upon the acceptance of its appointment as successor agent hereunder, such successor agent shall
succeed to all the rights, powers and duties of the retiring Agent and the term “Agent” shall mean
such successor agent and the retiring Agent’s appointment, powers and duties as Agent shall be
terminated. After any retiring Agent’s resignation hereunder as the Agent, the provisions of this
Article X and Sections 10.4 and 10.5 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was the Agent under this Agreement. If no
successor agent has accepted appointment as the Agent by the date which is 30 days following a
retiring Agent’s notice of resignation, the retiring Agent’s resignation shall nevertheless
thereupon become effective and the Lenders shall perform all of the duties of the Agent hereunder
until such time, if any, as the Required Lenders appoint a successor agent as provided for above.

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

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

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

48

 

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

Each such Lender agrees to promptly notify the Agent of any change in circumstances which would
modify or render invalid any claimed exemption or reduction.

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

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

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

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

ARTICLE X

MISCELLANEOUS

     10.1 Amendments and Waivers. No amendment or waiver of any provision of this
Agreement or any other Loan Document, and no consent with respect to any departure by the

49

 

Borrower or any applicable Subsidiary therefrom, shall be effective unless the same shall be
in writing and signed by the Required Lenders (or by the Agent at the written request of the
Required Lenders) and the Borrower and acknowledged by the Agent, and then any such waiver or
consent shall be effective only in the specific instance and for the specific purpose for which
given; provided, however, that no such waiver, amendment or consent shall, unless
in writing and signed by all Lenders and the Borrower and acknowledged by the Agent, do any of the
following:

          (a) increase or extend the Commitment of any Lender (or reinstate any Commitment terminated
pursuant to Section 8.2);

          (b) postpone or delay any date fixed by this Agreement or any other Loan Document for any
payment of principal, interest, fees or other amounts due to the Lenders (or any of them) hereunder
or under any other Loan Document;

          (c) reduce the principal of, or the rate of interest specified herein on, any Loan, or reduce
any fees or other amounts payable hereunder or under any other Loan Document;

          (d) change the percentage of the Commitments or of the aggregate unpaid principal amount of
the Loans which is required for the Lenders or any of them to take any action hereunder; or

          (e) amend this Section or any other provision herein expressly providing for consent or other
action by all Lenders;

and provided, further, that no amendment, waiver or consent shall, unless in
writing and signed by the Agent in addition to the Required Lenders or all Lenders, as the case may
be, affect the rights or duties of the Agent under this Agreement or any other Loan Document.

     10.2 Notices. (a) All notices, requests, consents, approvals, waivers and other
communications shall be in writing (including, unless the context expressly otherwise provides, by
facsimile transmission, provided that any matter transmitted by the Borrower by facsimile (i) shall
be immediately confirmed by a telephone call to the recipient at the number specified on
Schedule 10.2, and (ii) shall be followed promptly by delivery of a hard copy original
thereof) and mailed, faxed or delivered, to the address or facsimile number specified for notices
on Schedule 10.2; or to such other address as shall be designated by such party in a
written notice to the other parties.

          (b) All such notices, requests, consents, approvals, waivers and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered for overnight (next-day)
delivery, or transmitted in legible form by facsimile machine, respectively, or if mailed, upon the
third Business Day after the date deposited into the U.S. mail, or if delivered, upon delivery;
except that notices pursuant to Article II or IX to the Agent shall not be
effective until actually received by the Agent.

50

 

          (c) Any agreement of the Agent and the Lenders herein to receive certain notices by telephone
or facsimile is solely for the convenience and at the request of the Borrower. The Agent and the
Lenders shall be entitled to rely on the authority of any Person purporting to be a Person
authorized by the Borrower to give such notice and the Agent and the Lenders shall not have any
liability to the Borrower or any other Person on account of any action taken or not taken by the
Agent or the Lenders in reliance upon such telephonic or facsimile notice. The obligation of the
Borrower to repay the Loans shall not be affected in any way or to any extent by any failure by the
Agent and the Lenders to receive written confirmation of any telephonic or facsimile notice or the
receipt by the Agent and the Lenders of a confirmation which is at variance with the terms
understood by the Agent and the Lenders to be contained in the telephonic or facsimile notice.

          (d) For so long as Bank of America is designated as the “Administrative Agent” under the
Existing Credit Agreement, all such notices, requests, financial statements and communications
shall be deemed to have been delivered to both (i) the Agent and (ii) Bank of America, as
“Administrative Agent” under the Existing Credit Agreement, upon the delivery to either of them
(and not the other) in accordance with the terms of this Agreement.

     10.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of the Agent or any Lender, any right, remedy, power or privilege hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege.

     10.4 Costs and Expenses. The Borrower shall:

          (a) whether or not the transactions contemplated hereby are consummated, pay or reimburse the
Agent and the Arranger within ten Business Days after demand (subject to subsection 4.1(e))
for all reasonable costs and expenses incurred by the Agent and the Arranger in connection with the
negotiation, development, preparation, delivery, syndication, documentation, administration and
execution of, and any amendment, supplement, waiver or modification to (in each case, whether or
not consummated), this Agreement, any other Loan Document and any other document prepared in
connection herewith or therewith, and the consummation of the transactions contemplated hereby and
thereby, including Attorney Costs incurred by the Agent and the Arranger with respect thereto; and

          (b) pay or reimburse the Agent, the Arranger and each Lender within ten Business Days after
demand for all costs and expenses (including Attorney Costs) incurred by them in connection with
the enforcement, attempted enforcement, or preservation of any rights or remedies under this
Agreement or any other Loan Document (including in connection with any “workout” or restructuring
regarding the Loans, and including in any Insolvency Proceeding or appellate proceeding).

     10.5 Borrower Indemnification. Whether or not the transactions contemplated hereby
are consummated, the Borrower shall indemnify, defend and hold the Agent-Related Persons and each
Lender and each of their respective officers, directors, employees, counsel, Agent and

51

 

attorneys-in-fact (each an “Indemnified Person”) harmless from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, charges,
expenses and disbursements (including Attorney Costs) of any kind or nature whatsoever which may at
any time (including at any time following repayment of the Loans and the termination, resignation
or replacement of the Agent or replacement of any Lender) be imposed on, incurred by or asserted
against any such Person in any way relating to or arising out of this Agreement or any document
contemplated by or referred to herein, or the transactions contemplated hereby, or the Tom’s Foods
Acquisition, or any action taken or omitted by any such Person under or in connection with any of
the foregoing, including with respect to any investigation, litigation or proceeding (including any
Insolvency Proceeding or appellate proceeding) related to or arising out of this Agreement or the
Loans or the use of the proceeds thereof or the Tom’s Foods Acquisition, whether or not any
Indemnified Person is a party thereto (all the foregoing, collectively, the “Indemnified
Liabilities”); provided that the Borrower shall have no obligation hereunder to any
Indemnified Person with respect to Indemnified Liabilities resulting solely from the gross
negligence or willful misconduct of such Indemnified Person. The agreements in this Section shall
survive the termination of this Agreement and the payment of all other Obligations.

     10.6 Payments Set Aside. To the extent that the Borrower makes a payment to the Agent
or the Lenders, or the Agent or any Lender exercises its right of set-off, and such payment or the
proceeds of such set-off or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required (including pursuant to any settlement entered
into by the Agent or such Lender in its discretion) to be repaid to a trustee, a receiver or any
other party, in connection with any Insolvency Proceeding or otherwise, then (a) to the extent of
such recovery the obligation or part thereof originally intended to be satisfied shall be revived
and continued in full force and effect as if such payment had not been made or such set-off had not
occurred and (b) each Lender severally agrees to pay to the Agent upon demand its pro rata share of
any amount so recovered from or repaid by the Agent.

     10.7 Successors and Assigns. The provisions of this Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors and assigns, except
that the Borrower may not assign or transfer any of their rights or obligations under this
Agreement without the prior written consent of the Agent and each Lender.

     10.8 Assignments, Participations, etc. (a) Any Lender may, with the written consent
of the Borrower (which consent shall not be required during the existence of an Event of Default)
and the Agent, at any time assign and delegate to one or more Eligible Assignees (provided that no
written consent of the Borrower or the Agent shall be required in connection with any assignment
and delegation by a Lender to an Eligible Assignee that is an Affiliate of such Lender) (each an
“Assignee”) all, or any ratable part of all, of the Loans, the Commitments and the other
rights and obligations of such Lender hereunder, in a minimum amount of U.S.$5,000,000 (or, if
less, the amount of such Lender’s Commitment); provided, however, that the
Borrower, the Agent may continue to deal solely and directly with such Lender in connection with
the interest so assigned to an Assignee until (i) written notice of such assignment, together with
payment instructions, addresses and related information with respect to the Assignee, shall have
been given to the Borrower and the Agent by such Lender and the Assignee; (ii) such Lender and its
Assignee shall have delivered to the Borrower and the Agent an Assignment and

52

 

Acceptance in the form of Exhibit D (“Assignment and Acceptance”) together
with any Note or Notes subject to such assignment and (iii) such Lender or the Assignee has paid to
the Agent a processing fee in the amount of U.S.$3,500.

          (b) From and after the date that the Agent notifies the assignor Lender that it has received
and provided its consent (and, to the extent required, received the consent of the Borrower) with
respect to an executed Assignment and Acceptance and payment of the above-referenced processing
fee, (i) 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 and Acceptance, shall
have the rights and obligations of a Lender under the Loan Documents, and (ii) the assignor Lender
shall, to the extent that rights and obligations hereunder and under the other Loan Documents have
been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Loan Documents.

          (c) Within five Business Days after the effectiveness of any Assignment and Acceptance
pursuant to subsection 10.8(a)), the Borrower shall, upon request, execute and deliver to
the Agent a new Note evidencing the applicable Assignee’s assigned Loans and Commitment and, if the
assignor Lender has retained a portion of its Loans and its Commitment, a replacement Note in the
principal amount of the Commitment retained by the assignor Lender (such Notes to be in exchange
for, but not in payment of, the Note held by the assignor Lender). Immediately upon the
effectiveness of any Assignment and Acceptance, this Agreement shall be deemed to be amended to the
extent, but only to the extent, necessary to reflect the addition of the Assignee and/or the
resulting adjustment of the Commitments arising therefrom.

          (d) Any Lender may at any time, with notice to the Borrower, sell to one or more commercial
banks or other Persons not Affiliates of the Borrower (a “Participant”) participating
interests in any Loans, the Commitment of such Lender and the other interests of such Lender (the
“originating Lender”) hereunder and under the other Loan Documents; provided,
however, that (i) the originating Lender’s obligations under this Agreement shall remain
unchanged, (ii) the originating Lender shall remain solely responsible for the performance of such
obligations, (iii) the Borrower and the Agent shall continue to deal solely and directly with the
originating Lender in connection with the originating Lender’s rights and obligations under this
Agreement and the other Loan Documents, and (iv) no Lender shall transfer or grant any
participating interest under which a Participant has rights to approve any amendment to, or any
consent or waiver with respect to, this Agreement or any other Loan Document, except to the extent
such amendment, consent or waiver would require unanimous consent of the Lenders as described in
the first proviso to Section 10.1. In the case of any such participation, the
Participant shall be entitled to the benefit of Sections 3.1, 3.3, 3.4 and
10.5 as though it were also a Lender hereunder (provided that no Participant shall be
entitled to any greater amount pursuant to such Sections than the originating Lender would have
been entitled to receive if no such participation had been sold), and if amounts outstanding under
this Agreement are due and unpaid, or shall have been declared or shall have become due and payable
upon the occurrence of an Event of Default, each Participant shall be deemed to have the right of
set-off in respect of its participating interest in amounts owing under this Agreement to the same
extent as if the amount of its participating interest were owing directly to it as a Lender under
this Agreement.

53

 

          (e) Notwithstanding any other provision in this Agreement, any Lender may at any time create a
security interest in, or pledge, all or any portion of its rights under and interest in this
Agreement and any Note held by it in favor of any Federal Reserve Bank, and such Federal Reserve
Bank may enforce such pledge or security interest in any manner permitted under Applicable Law.

     10.9 Confidentiality. Each Lender agrees to take, and to cause its Affiliates to
take, normal and reasonable precautions and exercise due care to maintain the confidentiality of
all information identified as “confidential” or “secret” by the Borrower and provided to it by the
Borrower or any Subsidiary, or by the Agent on the Borrower’s or such Subsidiary’s behalf, under
this Agreement or any other Loan Document, and neither such Lender nor any of its Affiliates shall
use any such information other than in connection with or in enforcement of this Agreement and the
other Loan Documents or in connection with other business now or hereafter existing or contemplated
with the Borrower or any Subsidiary; except to the extent such information (i) was or becomes
generally available to the public other than as a result of disclosure by such Lender, or (ii) was
or becomes available on a non-confidential basis from a source other than the Borrower, provided
that such source is not bound by a confidentiality agreement with the Borrower or any Subsidiary
known to such Lender; provided, however, that any Lender may disclose such
information (A) at the request or pursuant to any requirement of any Governmental Authority to
which such Lender is subject or in connection with an examination of such Lender by any such
authority; (B) pursuant to subpoena or other court process; (C) when required to do so in
accordance with the provisions of any applicable Requirement of Law; (D) to the extent reasonably
required in connection with any litigation or proceeding to which the Agent or any Lender or any of
their respective Affiliates may be party; (E) to the extent reasonably required in connection with
the exercise of any remedy hereunder or under any other Loan Document; (F) to such Lender’s
independent auditors and other professional advisors on a confidential basis; (G) to any
Participant or Assignee, actual or potential, provided that such Person agrees in writing to keep
such information confidential to the same extent required of the Lenders hereunder; (H) as to any
Lender or any of its Affiliates, as expressly permitted under the terms of any other document or
agreement regarding confidentiality to which the Borrower or any Subsidiary is party or is deemed
party with such Lender or such Affiliate; and (I) to its Affiliates on a confidential basis.

     10.10 Set-off. In addition to any rights and remedies of the Lenders provided by law,
if an Unmatured Event of Default under subsection 8.1(a), (f) or (g) or any
Event of Default exists, each Lender is authorized at any time and from time to time, without prior
notice to the Borrower, any such notice being expressly waived by the Borrower to the fullest
extent permitted by law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held by, and other indebtedness at any time owing by,
such Lender to or for the credit or the account of the Borrower against any and all Obligations
owing to such Lender, now or hereafter existing, irrespective of whether or not the Agent or such
Lender shall have made demand under this Agreement or any other Loan Document and although such
Obligations may be contingent or unmatured. Each Lender agrees promptly to notify the Borrower and
the Agent after any such set-off and application made by such Lender; provided,
however, that the failure to give such notice shall not affect the validity of such set-off
and application.

54

 

     10.11 Notification of Addresses, Lending Offices, Etc. Each Lender shall notify the
Agent in writing of any change in the address to which notices to such Lender should be directed,
of addresses of any Lending Office, of payment instructions in respect of all payments to be made
to it hereunder and of such other administrative information as the Agent shall reasonably request.

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

     10.13 Severability. The illegality or unenforceability of any provision of this
Agreement or any instrument or agreement required hereunder shall not in any way affect or impair
the legality or enforceability of the remaining provisions of this Agreement or any instrument or
agreement required hereunder.

     10.14 No Third Parties Benefited. This Agreement is made and entered into for the
sole protection and legal benefit of the Borrower, the Lenders, the Agent and the Agent-Related
Persons, and their permitted successors and assigns, and no other Person shall be a direct or
indirect legal beneficiary of, or have any direct or indirect cause of action or claim in
connection with, this Agreement or any of the other Loan Documents.

     10.15 Governing Law and Jurisdiction. (a) THIS AGREEMENT AND THE NOTES SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NORTH CAROLINA WITHOUT
REGARD TO THE CONFLICTS OR CHOICE OF LAW PRINCIPLES THEREOF; PROVIDED THAT THE PARTIES HERETO SHALL
RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

          (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
MAY BE BROUGHT IN THE COURTS OF THE STATE OF NORTH CAROLINA OR OF THE UNITED STATES FOR THE WESTERN
DISTRICT OF NORTH CAROLINA, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE BORROWER,
THE AGENT AND THE LENDERS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF SUCH COURTS. EACH OF THE BORROWER, THE AGENT AND THE LENDERS IRREVOCABLY WAIVES
ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE BORROWER, THE AGENT
AND THE LENDERS EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY
BE MADE BY ANY OTHER MEANS PERMITTED BY NORTH CAROLINA LAW.

     10.16 Waiver of Jury Trial. TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, THE
BORROWER, THE LENDERS AND THE AGENT EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY
CLAIM OR CAUSE OF ACTION

55

 

BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY
TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT
OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. TO THE EXTENT
PERMITTED UNDER APPLICABLE LAW, THE BORROWER, THE LENDERS AND THE AGENT EACH AGREE THAT ANY SUCH
CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE
FOREGOING, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, THE PARTIES FURTHER AGREE THAT THEIR
RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR
ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF.
TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENT,
RENEWAL, SUPPLEMENT OR MODIFICATION TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.

     10.17 Pari Passu Obligations. The Borrower hereby acknowledges and agrees that the
obligations of the Borrower with respect to the Deferred Notes (including, without limitation,
under any guarantee thereof) shall be pari passu in right of payment, liens (if
any) or other security (if any) with the Obligations.

     10.18 Judgment. If, for the purposes of obtaining judgment in any court, it is
necessary to convert a sum due hereunder or under any other Loan Document in one currency into
another currency, the rate of exchange used shall be that at which in accordance with normal and
customary banking procedures the Agent could purchase the first currency with such other currency
on the Business Day preceding that on which final judgment is given. The obligation of the
Borrower in respect of any such sum due from it to the Agent or any Lender hereunder or under any
other Loan Document shall, notwithstanding any judgment in a currency (the “Judgment
Currency”) other than that in which such sum is denominated in accordance with the applicable
provisions of this Agreement (the “Agreement Currency”), be discharged only to the extent
that on the Business Day following receipt by the Agent or such Lender of any sum adjudged to be so
due in the Judgment Currency, the Agent or such Lender may in accordance with normal and customary
banking procedures purchase the Agreement Currency with the Judgment Currency. If the amount of
the Agreement Currency so purchased is less than the sum originally due to the Agent or such Lender
in the Agreement Currency, the Borrower agrees, as a separate obligation and notwithstanding any
such judgment, to indemnify the Agent or such Lender against such loss. If the amount of the
Agreement Currency so purchased is greater than the sum originally due to the Agent or such Lender
in such currency, the Agent or such Lender agrees to return the amount of any excess to the
Borrower (or to any other Person who may be entitled thereto under Applicable Law).

     10.19 Entire Agreement. This Agreement, together with the other Loan Documents,
embodies the entire agreement and understanding among the Borrower, the Lenders and the

56

 

Agent, and supersedes all prior or contemporaneous agreements and understandings of such Persons, verbal or written, relating to the subject matter hereof and thereof.

     10.20 USA Patriot Act Notice. Each Lender that is subject to the USA Patriot Act
(Title III of Pub.L. 107-56 (signed into law October 26, 2001))(the “Act”) and the Agent
hereby notifies the Borrower that pursuant to the requirements of the Act, it is required to
obtain, verify and record information that identifies the Borrower, which information includes the
name and address of the Borrower and other information that will allow such Lender or the Agent, as
applicable, to identify the Borrower in accordance with the Act.

57

 

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

	 	 	 	 	 	 	 
	 	 	LANCE, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	   /s/ David R. Perzinski
	 	 
	 

	 	 	 	 	 	 
	 	 	Title:    Treasurer	 	 

 

 

	 	 	 	 	 	 	 
	 	 	BANK OF AMERICA, NATIONAL
ASSOCIATION, as Lender and Agent	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	   /s/ William Sweeney
	 	 
	 

	 	 	 	 	 	 
	 	 	Title:    Senior Vice PresidentEX-10.26

 

Exhibit 10.1

CREDIT AGREEMENT

DATED OCTOBER 18, 2005

BY AND AMONG

SUPERIOR WELL SERVICES, INC.,

SUPERIOR WELL SERVICES, LTD.,

BRADFORD RESOURCES, LTD.

AND

CITIZENS BANK OF PENNSYLVANIA

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	ARTICLE I. DEFINITIONS AND INTERPRETATIONS	 	 	1	 
	 
	 	 	 	 	 	 
	Section 1.01
	 	Defined Terms and Interpretations	 	 	1	 
	Section 1.02
	 	Accounting Matters; Changes in GAAP	 	 	1	 
	Section 1.03
	 	Conflict in Loan Documents	 	 	1	 
	Section 1.04
	 	Legal Representation of Parties	 	 	2	 
	 
	 	 	 	 	 	 
	ARTICLE II. THE CREDIT FACILITIES	 	 	2	 
	 
	 	 	 	 	 	 
	Section 2.01
	 	Revolving Credit Loans	 	 	2	 
	Section 2.02
	 	The Revolving Credit Note	 	 	2	 
	Section 2.03
	 	Repayment of the Revolving Credit Loans	 	 	2	 
	Section 2.04
	 	Borrowing Procedures for Revolving Credit Loans	 	 	2	 
	Section 2.05
	 	Repayments and Prepayments of LIBOR Rate Tranches	 	 	3	 
	Section 2.06
	 	Letter of Credit Subfacility	 	 	4	 
	Section 2.07
	 	Issuance, Amendment and Renewal of Letters of Credit	 	 	5	 
	Section 2.08
	 	Drawings and Reimbursements	 	 	6	 
	Section 2.09
	 	Role of the Lender	 	 	6	 
	Section 2.10
	 	Obligations Absolute	 	 	7	 
	Section 2.11
	 	Cash Collateral	 	 	8	 
	Section 2.12
	 	Letter of Credit Fees	 	 	8	 
	 
	 	 	 	 	 	 
	ARTICLE III. INTEREST AND GENERAL LOAN PROVISIONS	 	 	8	 
	 
	 	 	 	 	 	 
	Section 3.01
	 	Interest	 	 	8	 
	Section 3.02
	 	Continuation and Conversion Elections	 	 	10	 
	Section 3.03
	 	LIBOR Rate Unlawful; Substitute Rate	 	 	11	 
	Section 3.04
	 	Indemnities	 	 	12	 
	Section 3.05
	 	Increased Costs	 	 	12	 
	Section 3.06
	 	Increased Capital Costs	 	 	13	 
	Section 3.07
	 	Taxes	 	 	13	 
	Section 3.08
	 	Payments to the Lender	 	 	14	 
	Section 3.09
	 	Unused Revolving Credit Commitment Fee	 	 	15	 
	Section 3.10
	 	Lender’s Records	 	 	15	 
	Section 3.11
	 	Survival	 	 	15	 
	Section 3.12
	 	Security	 	 	15	 
	 
	 	 	 	 	 	 
	ARTICLE IV. CONDITIONS OF LENDING	 	 	15	 
	 
	 	 	 	 	 	 
	Section 4.01
	 	Initial Conditions	 	 	15	 
	Section 4.02
	 	Subsequent Conditions	 	 	16	 
	 
	 	 	 	 	 	 
	ARTICLE V. REPRESENTATIONS AND WARRANTIES	 	 	17	 
	 
	 	 	 	 	 	 
	Section 5.01
	 	Organization, Subsidiaries and Authority	 	 	17	 
	Section 5.02
	 	Consent	 	 	18	 
	Section 5.03
	 	Litigation	 	 	18	 
	Section 5.04
	 	Financial Statements and Solvency	 	 	18	 
	Section 5.05
	 	Ownership and Management	 	 	19	 
	Section 5.06
	 	Adverse Occurrences	 	 	19	 

i

 

	 	 	 	 	 	 	 
	Section 5.07
	 	Existing Indebtedness	 	 	19	 
	Section 5.08
	 	Information	 	 	19	 
	Section 5.09
	 	Assets, Liens and Insurance	 	 	19	 
	Section 5.10
	 	Contractual Obligations	 	 	20	 
	Section 5.11
	 	Taxes	 	 	20	 
	Section 5.12
	 	Margin Stock; Investment Company	 	 	20	 
	Section 5.13
	 	Intellectual Property Rights	 	 	20	 
	Section 5.14
	 	Environmental Laws	 	 	21	 
	Section 5.15
	 	Collateral Documents	 	 	21	 
	Section 5.16
	 	Bankruptcy; Insolvency	 	 	21	 
	Section 5.17
	 	Compliance with Laws	 	 	22	 
	Section 5.18
	 	Locations	 	 	22	 
	Section 5.19
	 	ERISA Plans	 	 	22	 
	Section 5.20
	 	Eligible Accounts	 	 	23	 
	Section 5.21
	 	Eligible Inventory	 	 	23	 
	Section 5.22
	 	Business Operations	 	 	23	 
	Section 5.23
	 	Labor Relations	 	 	23	 
	Section 5.24
	 	Contemporaneous Exchange	 	 	23	 
	Section 5.25
	 	Anti-Terrorism Laws	 	 	23	 
	Section 5.26
	 	Disclosure	 	 	24	 
	 
	 	 	 	 	 	 
	ARTICLE VI. AFFIRMATIVE COVENANTS	 	 	24	 
	 
	 	 	 	 	 	 
	Section 6.01
	 	Use of Proceeds	 	 	24	 
	Section 6.02
	 	Financial Information and Compliance Certificates	 	 	24	 
	Section 6.03
	 	Books, Records and Visitation Rights	 	 	26	 
	Section 6.04
	 	Compliance with Laws	 	 	27	 
	Section 6.05
	 	Notices	 	 	27	 
	Section 6.06
	 	Insurance	 	 	28	 
	Section 6.07
	 	Taxes	 	 	29	 
	Section 6.08
	 	ERISA Compliance	 	 	29	 
	Section 6.09
	 	Maintenance of Properties	 	 	29	 
	Section 6.10
	 	Maintenance of Existence and Management	 	 	30	 
	Section 6.11
	 	Environmental Matters	 	 	30	 
	Section 6.12
	 	Reimbursable Costs and Expenses	 	 	31	 
	Section 6.13
	 	Further Assurances	 	 	31	 
	Section 6.14
	 	Payment of Liabilities	 	 	32	 
	Section 6.15
	 	True Disclosures	 	 	32	 
	Section 6.16
	 	Security Interests	 	 	32	 
	Section 6.17
	 	New Guarantors	 	 	33	 
	 
	 	 	 	 	 	 
	ARTICLE VII. NEGATIVE COVENANTS	 	 	33	 
	 
	 	 	 	 	 	 
	Section 7.01
	 	Financial Covenants	 	 	33	 
	Section 7.02
	 	Fundamental Changes	 	 	33	 
	Section 7.03
	 	Restricted Payments	 	 	34	 
	Section 7.04
	 	Indebtedness	 	 	34	 
	Section 7.05
	 	Investments, Acquisitions, Loans and Advances	 	 	35	 
	Section 7.06
	 	Liens	 	 	36	 
	Section 7.07
	 	Affiliate Transactions	 	 	38	 
	Section 7.08
	 	Business and Accounting Changes	 	 	38	 
	Section 7.09
	 	Insurance	 	 	38	 
	Section 7.10
	 	Intentionally Left Blank	 	 	38	 

ii

 

	 	 	 	 	 	 	 
	Section 7.11
	 	Hazardous Materials	 	 	38	 
	Section 7.12
	 	Disposition of Assets	 	 	38	 
	Section 7.13
	 	Intentionally Left Blank	 	 	39	 
	Section 7.14
	 	Anti-Terrorism Laws	 	 	39	 
	Section 7.15
	 	ERISA Compliance	 	 	39	 
	Section 7.16
	 	Changes in Organization Documents	 	 	39	 
	Section 7.17
	 	SWS	 	 	39	 
	 
	 	 	 	 	 	 
	ARTICLE VIII. EVENTS OF DEFAULT	 	 	39	 
	 
	 	 	 	 	 	 
	Section 8.01
	 	Failure to Make Payments	 	 	39	 
	Section 8.02
	 	Representations and Warranties	 	 	40	 
	Section 8.03
	 	Covenants and Agreements	 	 	40	 
	Section 8.04
	 	Defaults on Other Obligations	 	 	40	 
	Section 8.05
	 	Insolvency and Other Events	 	 	40	 
	Section 8.06
	 	Final Judgments	 	 	41	 
	Section 8.07
	 	Execution on Properties	 	 	41	 
	Section 8.08
	 	ERISA Events	 	 	41	 
	Section 8.09
	 	The Collateral	 	 	41	 
	Section 8.10
	 	Termination of Loan Documents	 	 	41	 
	Section 8.11
	 	Change of Control	 	 	41	 
	 
	 	 	 	 	 	 
	ARTICLE IX. REMEDIES	 	 	41	 
	 
	 	 	 	 	 	 
	Section 9.01
	 	Rights of the Lender Upon Default	 	 	41	 
	Section 9.02
	 	Warrant of Authority	 	 	42	 
	Section 9.03
	 	Cumulative Remedies	 	 	43	 
	Section 9.04
	 	Waiver of Right to Marshal	 	 	43	 
	 
	 	 	 	 	 	 
	ARTICLE X. MISCELLANEOUS	 	 	44	 
	 
	 	 	 	 	 	 
	Section 10.01
	 	Automatic Debits of  Fees	 	 	44	 
	Section 10.02
	 	Rights in Property held by the Lender	 	 	44	 
	Section 10.03
	 	Collateral	 	 	44	 
	Section 10.04
	 	No Third Party Rights	 	 	44	 
	Section 10.05
	 	Construction	 	 	44	 
	Section 10.06
	 	Amendment and Waiver	 	 	44	 
	Section 10.07
	 	Indemnification by the Borrower	 	 	44	 
	Section 10.08
	 	Marshaling; Payments Set Aside	 	 	45	 
	Section 10.09
	 	Waiver of Jury Trial	 	 	45	 
	Section 10.10
	 	Consent to Jurisdiction	 	 	46	 
	Section 10.11
	 	Survival	 	 	46	 
	Section 10.12
	 	Entire Agreement	 	 	46	 
	Section 10.13
	 	Notices	 	 	46	 
	Section 10.14
	 	Limitation of Liability	 	 	47	 
	Section 10.15
	 	Sale and Participation	 	 	47	 
	Section 10.16
	 	Applicable Law	 	 	47	 
	Section 10.17
	 	Binding Effect and Assignment	 	 	48	 
	Section 10.18
	 	Counterparts	 	 	48	 
	Section 10.19
	 	Headings	 	 	48	 
	Section 10.20
	 	Severability	 	 	48	 
	Section 10.21
	 	Sealed Document	 	 	48	 
	Section 10.22
	 	USA Patriot Act Notification	 	 	48	 

iii

 

	 	 	 	 	 	 	 
	ARTICLE XI. JOINT AND SEVERAL LIABILITY; AUTHORITY TO ACT	 	 	49	 
	 
	 	 	 	 	 	 
	Section 11.01
	 	Joint and Several Liability	 	 	49	 
	Section 11.02
	 	Authority to Act for the Borrowers	 	 	50	 

EXHIBITS

Exhibit “A”     Notice of Revolving Credit Borrowing

Exhibit “B”     Notice of Continuation/Conversion

Exhibit “C”     Pro Forma Balance Sheet

Exhibit “D”     Pro Forma Financial Projections

Exhibit “E”     Guaranty Agreement

Exhibit “F”     Applicable Margins

SCHEDULES

	 	 	 
	Schedule One

	 	Definitions
	Schedule Two

	 	Conditions Precedent
	Schedule 5.01

	 	Organization, Subsidiaries and Authority
	Schedule 5.03

	 	Litigation
	Schedule 5.05

	 	Ownership and Management
	Schedule 5.07

	 	Existing Indebtedness
	Schedule 5.09

	 	Assets and Insurance
	Schedule 5.13

	 	Intellectual Property Rights
	Schedule 5.14

	 	Environmental Matters
	Schedule 5.15

	 	Filing Offices
	Schedule 5.18

	 	Locations
	Schedule 5.19

	 	ERISA Plans
	Schedule 5.22

	 	Business Operations
	Schedule 5.23

	 	Labor Relations
	Schedule 6.01

	 	Use of Proceeds
	Schedule 7.05

	 	Existing Investments
	Schedule 7.06

	 	Permitted Liens
	Schedule 7.07

	 	Affiliate Transactions
	Schedule 7.14

	 	Rentals
	Schedule 10.13

	 	Notices

iv

 

CREDIT AGREEMENT

     THIS CREDIT AGREEMENT (this “Agreement”), is made effective as of the 18th day of
October, 2005, is by and among SUPERIOR WELL SERVICES, INC., a Delaware corporation
(“SWS”), SUPERIOR WELL SERVICES, LTD., a Pennsylvania limited partnership
(“Superior”), BRADFORD RESOURCES, LTD., a Pennsylvania limited partnership
(“Bradford”) (SWS, Superior and Bradford are each individually a “Borrower” and
collectively the “Borrowers”), and CITIZENS BANK OF PENNSYLVANIA, a Pennsylvania state
chartered bank (the “Lender”).

WITNESSETH:

     WHEREAS, to utilize the financial powers of each Borrower in the most efficient and economical
manner, to facilitate the financing of each Borrower’s needs, to enhance the aggregate borrowing
powers of the Borrowers and to ease the administration of a credit relationship with the Lender,
all to the mutual advantage of the Borrowers and the collective business enterprise of the
Borrowers, the Borrowers have requested that the Lender the make a credit facility available to the
Borrowers consisting of revolving credit loans, and the Lender is willing to make such a credit
facility available to the Borrowers upon the terms and conditions set forth in this Agreement.

     NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein,
and intending to be legally bound hereby, the Borrowers and the Lender covenant and agree as
follows:

ARTICLE I. DEFINITIONS AND INTERPRETATIONS

     Section 1.01 Defined Terms and Interpretations. In addition to other words and terms
defined elsewhere in this Agreement (including the preamble and recitals), when used in this
Agreement and in the exhibits and schedules to this Agreement, the capitalized words and terms set
forth in Schedule One attached hereto and incorporated herein by reference thereto shall
have the meanings set forth in Part I of Schedule One unless otherwise defined herein or
the context otherwise clearly requires. In addition, the provisions of Part II of Schedule
One shall, unless otherwise specified in this Agreement, apply to the interpretation of the
words and terms used herein.

     Section 1.02 Accounting Matters; Changes in GAAP. (a) For purposes of this Agreement
and each of the other Loan Documents, all accounting and financial terms used herein or therein
shall be interpreted, all accounting determinations and computations hereunder or thereunder shall
be made, and all financial statements required to be delivered hereunder or thereunder shall be
prepared, in accordance with GAAP.

          (b) In the event that any accounting changes relating to GAAP or other accounting principles
and policies occur after the Closing Date and such changes result in a change in the method of
calculation of financial covenants, standards or terms in this Agreement, then the Borrowers and
the Lender agree to enter into negotiations in order to amend such provisions of this Agreement to
compensate for the effect of such changes so that the restrictions, limitations and performance
standards effectively imposed by such covenants, as so amended, are substantially identical to the
restrictions, limitations and performance standards imposed by such covenants as in effect on the
Closing Date, provided, if the parties are unable to agree on an amendment within a reasonable
period of time, then calculation of compliance by the Borrowers with the covenants contained in
this Agreement shall be determined in accordance with GAAP as in effect immediately prior to such
change.

     Section 1.03 Conflict in Loan Documents. If there is any conflict between this
Agreement and any other Loan Document, this Agreement and such other Loan Document shall be
interpreted and

 

 

construed, if possible, so as to avoid or minimize such conflict but, to the extent
(and only to the extent) of such conflict, this Agreement shall prevail and control.

     Section 1.04 Legal Representation of Parties. This Agreement and the other Loan
Documents were negotiated by the parties with the benefit of legal representation and any rule of
construction or interpretation otherwise requiring this Agreement or any other Loan Document to be
construed or interpreted against any party shall not apply to any construction or interpretation
hereof or thereof.

ARTICLE II. THE CREDIT FACILITIES

     Section 2.01 Revolving Credit Loans. Subject to the conditions and on the terms set
forth in this Agreement, and in reliance upon the representations and warranties of the Borrowers
contained in Article V, the Lender agrees to make revolving credit loans to the Borrowers (each of
such loans being a “Revolving Credit Loan” and collectively being the “Revolving Credit
Loans”) from time to time on any Business Day during the period from the Closing Date up to the
Revolving Credit Commitment Termination Date, provided, however, the aggregate outstanding
principal amount of Revolving Credit Loans shall not at any time exceed the Revolving Credit
Availability. If the aggregate outstanding principal amount of Revolving Credit Loans shall at any
time exceed the Revolving Credit Availability, then the Borrowers shall immediately pay to the
Lender such amounts as may be necessary to eliminate such excess. Subject to the foregoing
limitations and the other terms and provisions of this Agreement, the Borrowers may, from time to
time, borrow, repay and reborrow Revolving Credit Loans.

     Section 2.02 The Revolving Credit Note. The Revolving Credit Loans shall be evidenced
by the Revolving Credit Note, appropriately completed, dated as of the Closing Date and signed by
the Borrowers. Interest shall accrue on the outstanding principal balance of the Revolving Credit
Loans at the rates and on the terms specified in Article III.

     Section 2.03 Repayment of the Revolving Credit Loans. The aggregate outstanding
principal amount of the Revolving Credit Loans and all accrued and unpaid interest and other
charges thereon shall be due and payable in full on the Revolving Credit Commitment Termination
Date (if not sooner paid as provided for in the Loan Documents), without demand or notice of any
kind whatsoever. The Lender shall have no further obligation to make Revolving Credit Loans from
and after the Revolving Credit Commitment Termination Date.

     Section 2.04 Borrowing Procedures for Revolving Credit Loans. (a) Requests for
Revolving Credit Loans. Each Revolving Credit Loan shall be made upon the Borrowers delivery to
the Lender of an irrevocable written notice in the form of Exhibit “A” attached hereto (a
“Notice of Revolving Credit Borrowing”) signed by a Responsible Officer of the Borrowers or
by telephonic notice confirmed on the same day in a Notice of Revolving Credit Borrowing signed by
a Responsible Officer of the Borrowers. Unless the Borrowers specifically direct the Lender in
writing not to accept or act upon telephonic or electronic requests for a Revolving Credit Loan,
the Lender shall not have any liability to the Borrowers for any loss or damage suffered by the
Borrowers as a result of the Lender honoring any request communicated to it telephonically or
electronically and purporting to have been sent to the Lender by a Responsible Officer of the
Borrowers, and the Lender shall not have any duty to verify the origin of any
such communication or the authority of the Person sending it. Each Notice of Revolving Credit
Borrowing shall constitute the representation and warranty of the Borrowers to the Lender that on
the date of delivery of such notice to the Lender, and after giving effect to the application of
the borrowing requested thereby, (i) all representations and warranties set forth in Article V are
true and correct in all material respects as though made on the date of such request, and (ii) no
Potential Default or Event of Default shall have occurred and be continuing.

2

 

          (b) Prime Rate Tranches. By delivering a Notice of Revolving Credit Borrowing to the
Lender on or before 2:00 p.m. (prevailing time in Pittsburgh, Pennsylvania) on the requested
Borrowing Date (which must be a Business Day), the Borrowers may from time to time irrevocably
request that a Revolving Credit Loan be made as a Prime Rate Tranche. On the terms and subject to
the conditions of this Agreement, each Prime Rate Tranche shall be made available to the Borrowers
on the requested Borrowing Date by deposit to the account of the Borrowers with the Lender or by
wire transfer in accordance with written instructions as shall have been delivered to the Lender by
the Borrowers prior to the making of the requested Prime Rate Tranche.

          (c) LIBOR Advantage Rate Tranches. By delivering a Notice of Revolving Credit
Borrowing to the Lender on or before 2:00 p.m. (prevailing time in Pittsburgh, Pennsylvania) on the
requested Borrowing Date (which must be a Business Day), the Borrowers may from time to time
irrevocably request that a Revolving Credit Loan be made as a LIBOR Advantage Rate Tranche. On the
terms and subject to the conditions of this Agreement, each LIBOR Advantage Rate Tranche shall be
made available to the Borrowers on the requested Borrowing Date by deposit to the account of the
Borrowers with the Lender or by wire transfer in accordance with written instructions as shall have
been delivered to the Lender by the Borrowers prior to the making of the requested LIBOR Advantage
Rate Tranche.

          (d) LIBOR Rate Tranches. By delivering a Notice of Revolving Credit Borrowing to the
Lender on or before 2:00 p.m. (prevailing time in Pittsburgh, Pennsylvania) on a Business Day, the
Borrowers may from time to time irrevocably request, on not less than two nor more than five (5)
Business Days’ notice, that a Revolving Credit Loan be made as a LIBOR Rate Tranche in a minimum
amount of $200,000 and integral multiples of $100,000 in excess of such amount and specifying the
applicable Interest Period which shall be three months if the Borrowers fail to make such a
specification. On the terms and subject to the conditions of this Agreement, each such LIBOR Rate
Tranche shall be made available to the Borrowers on the first day of the applicable Interest Period
by deposit to the account of the Borrowers with the Lender or by wire transfer in accordance with
written instructions as shall have been delivered to the Lender by the Borrowers prior to the
making of the requested LIBOR Rate Tranche.

          (e) Continuation and Conversion of Loans. Revolving Credit Loans may be continued or
converted into one or more Tranches bearing interest at the same or different Interest Rate Options
as the Borrowers may elect from time to time pursuant to Section 3.02.

     Section 2.05 Repayments and Prepayments of LIBOR Rate Tranches. (a)
Repayments. Prior to the termination of this Agreement, unless demand has been made prior
thereto in accordance with the terms of this Agreement, LIBOR Rate Tranches shall mature and become
payable in full on the last day of the Interest Period relating to such LIBOR Rate Tranche. Upon
maturity, a LIBOR Rate Tranche may be continued for an additional Interest Period or may be
converted as permitted under Section 3.02.

          (b) Voluntary Prepayment of LIBOR Rate Tranches. LIBOR Rate Tranches may be prepaid
upon the terms and conditions set forth herein. For LIBOR Rate Tranches in connection with which
the Borrowers have or may incur Hedging Obligations, additional obligations may be associated with
prepayment, in accordance with the terms and conditions of the applicable Hedging Contracts. The
Borrowers shall give the Lender, no later than 2:00 p.m. (prevailing time in Pittsburgh,
Pennsylvania), at
least four (4) Business Days notice of any proposed prepayment of a LIBOR Rate Tranche,
specifying the proposed date of payment of such LIBOR Rate Tranche and the principal amount to be
paid. Each partial prepayment of the principal amount of a LIBOR Rate Tranche shall be in a
minimum amount of $100,000 and integral multiples of $50,000 in excess of such amount and
accompanied by the payment of all charges outstanding on such LIBOR Rate Tranche and of all accrued
interest on the principal repaid to the date of payment. The Borrowers acknowledge that prepayment
or acceleration of a LIBOR Rate Tranche during an Interest Period shall result in the Lender
incurring additional costs, expenses and/or liabilities and that it is extremely difficult and
impractical to ascertain the extent of such costs, expenses and/or

3

 

liabilities. Therefore, all
full or partial prepayments of LIBOR Rate Tranches shall be accompanied by, and the Borrowers
promise to pay on each date a LIBOR Rate Tranche is prepaid or the date all sums payable hereunder
become due and payable, by acceleration or otherwise, in addition to all other sums then owing, an
amount (the “LIBOR Rate Prepayment Fee”) determined by the Lender pursuant to the following
formula:

          (i) the then current rate for United States Treasury securities (bills on a
discounted basis shall be converted to a bond equivalent) with a maturity date
closest to the end of the Interest Period as to which prepayment is made,
subtracted from

          (ii) the LIBOR Lending Rate plus the Applicable Margin applicable to the LIBOR
Rate Tranche being prepaid.

If the result of this calculation is zero or a negative number, then there shall be no LIBOR Rate
Prepayment Fee. If the result of this calculation is a positive number, then the resulting
percentage shall be multiplied by the amount of the LIBOR Rate Tranche being prepaid, and the
resulting amount shall be divided by 360, and multiplied by the number of days remaining in the
Interest Period as to which the prepayment is being made. Said amount shall be reduced to present
value calculated by using the referenced United States Treasury securities rate and the number of
days remaining on the Interest Period for the LIBOR Rate Tranche being prepaid. The resulting
amount of these calculations shall be the LIBOR Rate Prepayment Fee.

     Section 2.06 Letter of Credit Subfacility. (a) Subject to the conditions and on the
terms hereinafter set forth in this Agreement, and in reliance upon the representations and
warranties of the Borrowers contained in Article V, the Lender agrees (i) from time to time on any
Business Day, during the period from the Closing Date to the day which is five (5) Business Days
prior to the Revolving Credit Commitment Termination Date, to Issue Letters of Credit for the
account of the Borrowers in an aggregate Stated Amount at any one time that, together with the
aggregate Stated Amount of all other outstanding Letters of Credit Issued pursuant hereto, does not
exceed the L/C Commitment, and to amend or renew Letters of Credit previously Issued by it, and
(ii) to honor drafts under Letters of Credit; provided, that the Lender shall not be obligated to
Issue any Letter of Credit if as of the date of Issuance of such Letter of Credit (the
“Issuance Date”) and after giving effect to such Issuance, (A) the Stated Amount of the
requested Letter of Credit exceeds the Revolving Credit Availability, or (B) the L/C Obligations
exceed the L/C Commitment. If on any date the L/C Obligations exceed the L/C Commitment, the
Borrowers shall immediately, without further notice or demand by the Lender, prepay the outstanding
principal amount of the Revolving Credit Loans by an amount equal to the applicable excess. Within
the foregoing limits and subject to the other terms and conditions hereof, the Borrowers’ ability
to obtain Letters of Credit shall be fully revolving, and, accordingly, the Borrowers may, during
the foregoing period, obtain Letters of Credit to replace Letters of Credit which have expired or
which have been drawn upon and reimbursed.

          (b) The Lender is under no obligation to, and shall not, Issue any Letter of Credit if:

          (i) any order, judgment or decree of any Authority or arbitrator shall by its
terms purport to enjoin or restrain the Lender from Issuing such Letter of Credit,
or any Law applicable to the Lender or any request or directive (whether or not having
the force of law) from any Authority with jurisdiction over the Lender shall
prohibit, or request that the Lender refrain from, the Issuance of letters of credit
generally or such Letter of Credit in particular or shall impose upon the Lender
with respect to such Letter of Credit any restriction, reserve or capital
requirement (for which the Lender is not otherwise compensated hereunder) not in
effect on the Closing Date, or shall impose upon the Lender any unreimbursed loss,
cost or expense which was not applicable on the Closing Date and which the Lender in
good faith deems material to it;

4

 

          (ii) on or prior to the Business Day prior to the requested date of Issuance of
such Letter of Credit, one or more of the applicable conditions contained in Article
IV is not then satisfied or effectively waived in writing by the Lender;

          (iii) unless the Lender has otherwise approved in writing, the expiration date
of the requested Letter of Credit is (A) more than one year after the date of
Issuance, or (B) a date more than six (6) months after the Revolving Credit
Commitment Termination Date;

          (iv) any requested Letter of Credit does not provide for drafts, or is not
otherwise in form and substance acceptable to the Lender, or the Issuance of a
Letter of Credit shall violate any applicable policies of the Lender; or

          (v) such Letter of Credit is to be denominated in a currency other than U.S.
Dollars.

     Section 2.07 Issuance, Amendment and Renewal of Letters of Credit. (a) Each Letter of
Credit shall be Issued upon the irrevocable written request of the Borrowers received by the Lender
at least three (3) Business Days (or such shorter time as the Lender may agree in a particular
instance in its sole discretion) prior to the proposed date of issuance. Each such request for
issuance of a Letter of Credit shall be by facsimile, confirmed immediately in an original writing,
in the form of an L/C Application (or such other form as shall be acceptable to the Lender), and
shall specify in form and detail satisfactory to the Lender: (i) the proposed date of issuance of
the Letter of Credit (which shall be a Business Day); (ii) the face amount of the Letter of Credit;
(iii) the expiration date of the Letter of Credit; (iv) the name and address of the beneficiary
thereof; (v) the documents to be presented by the beneficiary of the Letter of Credit in case of
any drawing thereunder; (vi) the full text of any certificate to be presented by the beneficiary in
case of any drawing thereunder; and (vii) such other matters as the Lender may require.

          (b) Unless such issuance is not then permitted under Section 2.06(b) or one or more conditions
specified in Section 4.02 are not then satisfied or effectively waived in writing by the Lender,
the Lender shall, subject to the terms and conditions hereof, Issue a Letter of Credit for the
account of the Borrowers on the requested Issuance Date in accordance with the Lender’s usual and
customary business practices.

          (c) From time to time while a Letter of Credit is outstanding and prior to the Revolving
Credit Commitment Termination Date, the Lender will, upon the written request of the Borrowers
received by the Lender at least three (3) Business Days (or such shorter time as the Lender may
agree in a particular instance in its sole discretion) prior to the proposed date of amendment,
amend any Letter of Credit Issued by it. Each such request for amendment of a Letter of Credit
shall be made by facsimile, confirmed immediately in an original writing, made in the form of an
L/C Amendment Application and shall specify in form and detail satisfactory to the Lender the
following: (i) the Letter of Credit to be amended; (ii) the proposed date of amendment of the
Letter of Credit (which shall be a Business Day); (iii) the nature of the proposed amendment; and
(iv) such other matters as the Lender may
require. The Lender shall be under no obligation to amend any Letter of Credit if (x) the
Lender would have no obligation at such time to Issue such Letter of Credit in its amended form
under the terms of this Agreement; or (y) the beneficiary of any such Letter of Credit does not
accept the proposed amendment to the Letter of Credit.

          (d) The Lender agrees that, while a Letter of Credit is outstanding and prior to the Revolving
Credit Commitment Termination Date, at the option of the Borrowers and upon the written request of
the Borrowers received by the Lender at least three (3) Business Days (or such shorter time as

5

 

the
Lender may agree in a particular instance in its sole discretion) prior to the proposed date of
notification of renewal, the Lender may renew a Letter of Credit Issued by it as requested by the
Borrowers. Each such request for renewal of a Letter of Credit shall be made by facsimile,
confirmed immediately in an original writing, in the form of an L/C Amendment Application, and
shall specify in form and detail satisfactory to the Lender: (i) the Letter of Credit to be
renewed; (ii) the proposed date of notification of renewal of the Letter of Credit (which shall be
a Business Day); (iii) the revised expiration date of the Letter of Credit; and (iv) such other
matters as the Lender may require. The Lender shall not renew any Letter of Credit if (A) the
Lender would have no obligation at such time to Issue or amend such Letter of Credit in its renewed
form under the terms of this Agreement; or (B) the beneficiary of any such Letter of Credit does
not accept the proposed renewal of the Letter of Credit. If any outstanding Letter of Credit shall
provide that it shall be automatically renewed unless the beneficiary thereof receives notice from
the Lender that such Letter of Credit shall not be renewed, and if at the time of renewal the
Lender would be entitled to authorize the automatic renewal of such Letter of Credit in accordance
with this Section 2.07 upon the request of the Borrowers but the Lender shall not have received any
L/C Amendment Application from the Borrowers with respect to such renewal or other written
direction by the Borrowers with respect thereto, the Lender shall nonetheless be permitted to allow
such Letter of Credit to renew, and the Borrowers and the Lender hereby authorize such renewal,
and, accordingly, the Lender shall be deemed to have received an L/C Amendment Application from the
Borrowers requesting such renewal.

          (e) The Lender may, at its election, deliver any notices of termination or other
communications to any Letter of Credit beneficiary or transferee, and take any other action as
necessary or appropriate, at any time and from time to time, in order to cause the expiration date
of such Letter of Credit to be a date not later than the date which is five (5) Business Days prior
to the Revolving Credit Commitment Termination Date.

          (f) This Agreement shall control in the event of any irreconcilable conflict with any
L/C-Related Document (other than an Issued Letter of Credit).

     Section 2.08 Drawings and Reimbursements. (a) In the event of any request for a
drawing under a Letter of Credit by the beneficiary or transferee thereof, the Lender will promptly
notify the Borrowers. The Borrowers shall reimburse the Lender prior to 4:00 p.m. (prevailing time
in Pittsburgh, Pennsylvania), on each date that any amount is paid by the Lender under any Letter
of Credit (each such date, an “Honor Date”), in the amount so paid by the Lender. In the
event the Borrowers fail to reimburse the Lender in the full amount of any drawing under any Letter
of Credit by 4:00 p.m. (prevailing time in Pittsburgh, Pennsylvania) on the Honor Date, the
Borrowers shall be deemed to have requested that a Revolving Credit Loan in an amount equal to such
unreimbursed amount be made by the Lender to be disbursed on the Honor Date under such Letter of
Credit to make such reimbursement, subject to the amount of the unutilized portion of the Revolving
Credit Commitment and subject to the conditions set forth in Section 4.02.

          (b) With respect to any unreimbursed drawing that is not converted into a Revolving Credit
Loan because of the Borrowers’ failure to satisfy the conditions set forth in Section 4.02 or for
any other reason under this Agreement, the Borrowers shall be deemed to have incurred from the
Lender an L/C Borrowing in the amount of such drawing, which L/C Borrowing shall be due and payable
on demand (together with interest) and shall bear interest at a rate per annum equal to the Prime
Rate plus the highest Applicable Margin for Prime Rate Tranches plus three percent (3.0%).

     Section 2.09 Role of the Lender. (a) The Lender and the Borrowers agree that, in
paying any drawing under a Letter of Credit, the Lender shall not have any responsibility to obtain
any document (other than any sight draft, other documents and certificates expressly required by
the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such
document or the authority of the Person executing or delivering any such document (other than to
determine that the sight draft, other documents

6

 

and certificates required to be delivered
substantially comply on their face with the requirements of the applicable Letter of Credit).

          (b) The Borrowers hereby assume all risks of the acts or omissions of any beneficiary or
transferee with respect to its use of any Letter of Credit; provided, however, that this assumption
is not intended to, and shall not, preclude the Borrowers’ pursuing such rights and remedies as it
may have against the beneficiary or transferee at law or under any other agreement. No
Lender-Related Person, nor any of the respective correspondents, participants or assignees of the
Lender, shall be liable or responsible for any of the matters described in clauses (i) through
(vii) of Section 2.10; provided, however, anything in such clauses to the contrary notwithstanding,
that the Borrowers may have a claim against the Lender and any Lender-Related Person, and the
Lender may be liable to the Borrowers, to the extent, but only to the extent, of any direct, as
opposed to consequential or exemplary, damages as determined by a final judgment of a court of
competent jurisdiction to have been caused by the Lender’s willful misconduct or gross negligence
or the Lender’s willful failure to pay under any Letter of Credit after the presentation to it by
the beneficiary of a sight draft, other documents and certificates strictly complying with the
terms and conditions of a Letter of Credit. In furtherance and not in limitation of the foregoing:
(i) the Lender may accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or information to the contrary;
and (ii) the Lender shall not be responsible for the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason.

     Section 2.10 Obligations Absolute. The obligations of the Borrowers under this
Agreement and any L/C-Related Document to reimburse the Lender for a drawing under a Letter of
Credit, and to repay any L/C Borrowing and any drawing under a Letter of Credit converted into
Revolving Credit Loans, shall be unconditional and irrevocable, and shall be paid strictly in
accordance with the terms of this Agreement and each such other L/C-Related Document under all
circumstances, including the following:

          (i) any lack of validity or enforceability of this Agreement or any L/C-Related
Document;

          (ii) any change in the time, manner or place of payment of, or in any other
term of, all or any of the obligations of the Borrowers in respect of any Letter of
Credit or any other amendment or waiver of or any consent to departure from all or
any of such obligation;

          (iii) the existence of any claim, set-off, defense or other right that the
Borrowers may have at any time against any beneficiary or any transferee of any
Letter of Credit (or any Person for whom any such beneficiary or any such transferee
may be acting), the Lender or any other Person, whether in connection with this
Agreement, the transactions contemplated hereby or by the L/C-Related Documents or
any unrelated transaction;

          (iv) any draft, demand, certificate or other document presented under any
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any respect; or any
loss or delay in the transmission or otherwise of any document required in order to
make a drawing under any Letter of Credit;

          (v) any payment by the Lender under any Letter of Credit against presentation
of a draft or certificate that does not strictly comply with the terms of any Letter
of Credit; or any payment made by the Lender under any Letter of Credit to any

7

 

Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for
the benefit of creditors, liquidator, receiver or other representative of or
successor to any beneficiary or any transferee of any Letter of Credit, including
any arising in connection with any Insolvency Proceeding;

          (vi) any exchange, release or non-perfection of any collateral, or any release
or amendment or waiver of or consent to departure from any other guarantee, for all
or any of the obligations of the Borrowers in respect of any Letter of Credit; or

          (vii) any other circumstance or happening whatsoever, whether or not similar to
any of the foregoing, including any other circumstance that might otherwise
constitute a defense available to, or a discharge of, the Borrowers or a guarantor;

provided, however, the foregoing shall not be construed to restrict or otherwise limit any claim
the Borrowers may have against the Lender or any Lender-Related Person permitted under Section
2.09(b).

     Section 2.11 Cash Collateral. Upon (i) the request of the Lender, (A) if the Lender
has honored any full or partial drawing request on any Letter of Credit and such drawing has
resulted in an L/C Borrowing hereunder, or (B) if, as of the Revolving Credit Commitment
Termination Date, any Letters of Credit may for any reason remain outstanding and partially or
wholly undrawn, or (ii) the termination of the Revolving Credit Commitment, then, the Borrowers
shall immediately upon demand from the Lender, pledge and deposit with or deliver to the Lender
cash or deposit account balances in separate blocked accounts pursuant to documentation in form and
substance satisfactory to the Lender in an amount equal to the L/C Obligations (“Cash
Collateral”). The Lender shall have exclusive dominion and control over such account,
including the exclusive right to withdraw Cash Collateral for application to the L/C Obligations.
Other than any interest earned on the investment of such deposit, which investments shall be made
at the option and sole discretion of the Lender, such deposits shall not bear interest. Interest
or profits, if any, on such investments shall accumulate in such account. Any Cash Collateral
provided by the Borrowers hereunder (to the extent not applied as aforesaid) shall be returned to
the Borrowers within three (3) Business Days after all Events of Default have been cured or waived.

     Section 2.12 Letter of Credit Fees. (a) The Borrowers shall pay to the Lender the
following fees with respect to each Letter of Credit (the “Letter of Credit Fees”): (i)
For each Issuance or renewal of a standby Letter of Credit hereunder, the Borrowers will pay to the
Lender an Issuance or renewal fee on a per annum basis in an amount equal to the Applicable Margin
then in effect for a LIBOR Rate Tranche multiplied by the Stated Amount of such standby Letter of
Credit, payable coincident with and as a condition of the Issuance or renewal of such standby
Letter of Credit, and (ii) for each Issuance or renewal of a merchandise letter of credit
hereunder, the Borrowers will pay to the Lender the Lender’s standard and customary Issuance or
renewal fee for merchandise Letter of Credits, payable coincident with and as a condition of the
issuance or renewal of such merchandise Letter of Credit.

          (b) The Borrowers shall also pay to the Lender from time to time on demand the normal
issuance, presentation, amendment and other processing fees, and other standard costs and charges,
of the Lender relating to Letters of Credit as from time to time are in effect.

ARTICLE III. INTEREST AND GENERAL LOAN PROVISIONS

     Section 3.01 Interest. (a) Each Loan shall bear interest on the outstanding principal
amount thereof for each day until paid (whether by demand, at stated maturity, by acceleration, or
otherwise), as follows:

          (i) Interest on the outstanding principal amount of each LIBOR Advantage Rate
Tranche shall accrue during the Interest Period applicable thereto at a

8

 

rate per
annum equal to the sum of the LIBOR Advantage Rate for such Interest Period plus the
Applicable Margin thereto (the “LIBOR Advantage Rate Option”); and

          (ii) Interest on the outstanding principal amount of each LIBOR Rate Tranche
shall accrue during the Interest Period applicable thereto at a rate per annum equal
to the LIBOR Lending Rate for such Interest Period plus the Applicable Margin
thereto (the “LIBOR Rate Option”); and

          (iii) Interest on the outstanding principal amount of each LIBOR-Reference
Banks Tranche shall accrue during the Interest Period applicable thereto at a rate
per annum equal to the LIBOR-Reference Banks Lending Rate for such Interest Period
plus the Applicable Margin thereto (the “LIBOR-Reference Banks Lending Rate
Option”); and

          (iv) Interest on the outstanding principal amount of each Prime Rate Tranche
shall accrue at a rate per annum equal to the Prime Rate for such Interest Period
plus the Applicable Margin thereto (the “Prime Rate Option”), and each time
the Prime Rate shall change, such rate shall change automatically with the change in
the Prime Rate. The Prime Rate shall be determined by the Lender each day based
upon the Prime Rate as in effect each day. In the event the Prime Rate is no longer
posted by the Lender, the Lender shall have the right to substitute a new rate that
shall be based upon a comparable rate of interest announced by the Lender.

          (b) Each determination of an interest rate by the Lender shall be conclusive and binding on
the Borrowers in the absence of manifest error.

          (c) Interest on each Loan shall be calculated on the basis of a 360-day year, counting the
actual number of days elapsed in the period during which it accrues. The Borrowers shall pay
interest, in arrears, on each Interest Payment Date as applicable to each outstanding Loan, on any
date on which such Loan is prepaid, at maturity (whether by demand, at stated maturity, by
acceleration, or otherwise), and, during the existence of any Event of Default, on demand by the
Lender. In computing interest, the borrowing date or the first day of an Interest Period or, with
respect to a Prime Rate Tranche or LIBOR Advantage Rate Tranche being converted from a LIBOR Rate
Tranche, the date of conversion of such LIBOR Rate Tranche to a Prime Rate Tranche or LIBOR
Advantage Rate Tranche, as the case may be, shall be included, and the date of payment of a Loan or
the expiration date of an Interest Period or, with respect to a Prime Rate Tranche or LIBOR
Advantage Rate Tranche being converted to a LIBOR Rate Tranche, the date of conversion of such
Prime Rate Tranche to a LIBOR Rate Tranche, as the case may be, shall be excluded, provided, that
if a Tranche is repaid on the same day on which it is made, one day’s interest shall be paid on
that Tranche.

          (d) Notwithstanding anything to the contrary in this Agreement, after the occurrence and
during the continuance of an Event of Default or after maturity (whether by demand, stated maturity
or otherwise), the Borrowers shall pay interest (after as well as before entry of judgment thereon
to the extent permitted by law) at the following rates:

          (i) LIBOR Rate Tranches shall bear interest at the LIBOR Lending Rate plus the
highest Applicable Margin for LIBOR Rate Tranches plus three percent (3.0%),
provided, however, that, on and after the expiration of any Interest
Period applicable to any LIBOR Rate Tranche outstanding on the date of occurrence of
such Event of Default or acceleration, the principal amount of such Loan shall,
during the continuation of such Event of Default or after acceleration, bear
interest at a rate per annum equal to the Prime Rate plus the highest Applicable
Margin for Prime Rate Tranches plus three percent (3.0%)

9

 

          (ii) Prime Rate Tranches and LIBOR Advantage Rate Tranches shall bear interest
at the Prime Rate plus the highest Applicable Margin for Prime Rate Tranches plus
three percent (3.0%), and

          (iii) All other Obligations shall bear interest at the Prime Rate plus the
highest Applicable Margin for Prime Rate Tranches plus three percent (3.0%).

          (e) It is the intention of the parties hereto to conform strictly to usury laws applicable to
such parties. Accordingly, if the transactions contemplated hereby would be usurious under
applicable law then, in that event, notwithstanding anything to the contrary contained in this
Agreement or in any other agreement entered into in connection with this Agreement, it is agreed as
follows: the aggregate of all consideration that constitutes interest under law applicable to each
party hereto that is contracted for, taken, reserved, charged or received under this Agreement or
under any of the other aforesaid agreements or otherwise in connection with this Agreement shall
under no circumstances exceed the maximum amount allowed by such applicable law, and any such
excess shall be credited by the party receiving such interest on other amounts payable to such
party hereunder, with any remaining portion of such excess interest being refunded to the party
paying such excess interest. All sums paid or agreed to be paid to any party hereto for the use,
forbearance or detention of sums due hereunder shall, to the extent permitted by applicable law, be
amortized, prorated, allocated and spread throughout the full term over which such amounts are
payable so that the rate or amount of interest on account of any extensions of credit evidenced
hereby does not exceed any applicable usury limit.

     Section 3.02 Continuation and Conversion of Loans. (a) Subject to the terms and
conditions of this Section 3.02, any Loan may be continued or converted into one or more Tranches
bearing interest at the same or different Interest Rate Options as the Borrowers may elect from
time to time pursuant to this Section 3.02.

          (b) By delivering an irrevocable written notice of continuation/conversion to the Lender in
the form of Exhibit “B” attached hereto (a “Notice of Continuation/Conversion”)(or
telephonic notice confirmed on the same day in a Notice of Continuation/Conversion), the Borrowers
may irrevocably elect to convert an outstanding Tranche to a Tranche bearing interest at a
different Interest Rate Option or having a different Interest Period, or continue on the last day
of an Interest Period a Loan as a Tranche bearing interest at the same Interest Rate Option with a
similar Interest Period, subject to the following conditions:

          (i) Each Notice of Conversion/Continuation must be received by the Lender (A)
not later than 3:00 p.m. (prevailing time in Pittsburgh, Pennsylvania) at least two
(2) Business Days in advance of the date of the requested continuation/conversion
(the “Continuation/Conversion Date”) if the Loan is to be converted into or
continued as
a LIBOR Rate Tranche, and (B) not later than 3:00 p.m. (prevailing time in
Pittsburgh, Pennsylvania) on the Continuation/Conversion Date if the Loan is to be
converted into a Prime Rate Tranche or a LIBOR Advantage Rate Tranche;

          (ii) A Prime Rate Tranche or a LIBOR Advantage Rate Tranche may be converted
into a LIBOR Rate Tranche at any time;

          (iii) A LIBOR Rate Tranche may only be converted to a Tranche bearing interest
at a different Interest Rate Option or having a different Interest Period at the end
of the then applicable Interest Period therefor;

10

 

          (iv) Any Tranche to be continued as, or converted into, a LIBOR Rate Tranche
must be in a minimum amount of $200,000 and integral multiples of $100,000 in excess
of such amount;

          (v) No Tranche may be converted to, or continued as, a LIBOR Rate Tranche or a
LIBOR Advantage Rate Tranche when a Potential Default or Event of Default has
occurred and is continuing;

          (vi) No LIBOR Rate Tranche may be converted to a LIBOR Rate Tranche of a
different duration if such LIBOR Rate Tranche relates to any Hedging Obligations;
and

          (vii) No more than four (4) LIBOR Rate Tranches may be outstanding at any time.

          (c) In the absence of a timely delivery of a Notice of Continuation/Conversion with respect to
any LIBOR Rate Tranche, such Tranche shall, on the last day of the Interest Period relating to such
Tranche, automatically convert to a LIBOR Advantage Rate Tranche.

          (d) In the absence of a timely delivery of a Notice of Continuation/Conversion with respect to
any LIBOR Advantage Rate Tranche, such Tranche shall continue on the last day of the Interest
Period as a LIBOR Advantage Rate Tranche with a similar Interest Period.

          (e) Upon the occurrence and during the continuance of an Event of Default, any outstanding
LIBOR Rate Tranche shall be automatically converted to a Prime Rate Tranche on the last day of the
Interest Period relating thereto ending during the continuance of such Event of Default.

     Section 3.03 LIBOR Rate Unlawful; Substitute Rate. (a) If the Lender shall determine
(which determination shall, upon notice thereof to the Borrowers be conclusive and binding on the
Borrowers) that the introduction of or any change in or in the interpretation of any Law, rule,
regulation or guideline (whether or not having the force of law) makes it unlawful, or any central
bank or other Authority asserts that it is unlawful, for the Lender to make, continue or maintain
any LIBOR Rate Tranche or LIBOR Advantage Rate Tranche as, or to convert any loan into, a LIBOR
Rate Tranche or LIBOR Advantage Rate Tranche of a certain duration, the obligations of the Lender
to make, continue, maintain or convert into any such LIBOR Rate Tranches or LIBOR Advantage Rate
Tranches shall, upon such determination, forthwith be suspended until the Lender shall notify the
Borrowers that the circumstances causing such suspension no longer exist, and all LIBOR Rate
Tranches or LIBOR Advantage Rate Tranches of such type shall automatically convert into
LIBOR-Reference Banks Rate Tranches at the end of the then current Interest Periods with respect
thereto or sooner, if required by such law or assertion. For purposes of this Agreement, in the
event of such a conversion, all LIBOR-Reference Banks Rate Tranches shall be treated (except as to
interest rate) as equivalent to a LIBOR Rate Tranche of similar amount and Interest Period. For
greater
certainty, all provisions of this Agreement relating to LIBOR Rate Tranches shall apply equally to
LIBOR-Reference Banks Rate Tranches, including, but not limited to the manner in which
LIBOR-Reference Banks Rate Tranches are requested, continued, converted, the manner in which
interest accrues, is payable, principal payments are made, whether voluntary or involuntary, as
well as any penalties, increased costs or taxes associated with any of the foregoing.

          (b) If the Lender shall have determined that:

          (i) US dollar deposits in the relevant amount and for the relevant Interest
Period are not available to the Lender in the London interbank market,

11

 

          (ii) by reason of circumstances affecting the Lender in the London interbank,
adequate means do not exist for ascertaining the LIBOR Rate applicable hereunder to
LIBOR Rate Tranches, or

          (iii) the LIBOR Rate no longer adequately reflects the Lender’s cost of funding
loans,

then, all LIBOR Rate Tranches shall automatically convert into LIBOR-Reference Banks Rate Tranches
and the obligation of the Lender to make or continue any Loans as, or to convert any Loans into,
LIBOR Rate Tranches shall forthwith be suspended until the Lender shall notify the Borrowers that
the circumstances causing such suspension no longer exist.

          (c) If the obligation of the Lender to make or maintain LIBOR Rate Tranches has been so
terminated or suspended, all Loans which would otherwise be made by the Lender as LIBOR Rate
Tranches shall instead be made as Prime Rate Tranches.

     Section 3.04 Indemnities. In addition to the LIBOR Rate Prepayment Fee, the Borrowers
agree to reimburse the Lender (without duplication) for any increase in the cost to the Lender, or
reduction in the amount of any sum receivable by the Lender, in respect, or as a result of:

          (i) any conversion or repayment or prepayment of the principal amount of any
LIBOR Rate Tranches on a date other than the scheduled last day of the Interest
Period applicable thereto, whether pursuant to Section 3.03 or otherwise;

          (ii) any Loans not being made as LIBOR Rate Tranches in accordance with the
borrowing request thereof;

          (iii) any LIBOR Rate Tranche not being continued as, or converted into, a LIBOR
Rate Tranche in accordance with the Notice of Continuation/Conversion thereof, or

          (iv) any costs associated with marking to market any Hedging Obligations that
(in the reasonable determination of the Lender) are required to be terminated as a
result of any conversion, repayment or prepayment of the principal amount of any
LIBOR Rate Tranche on a date other than the scheduled last day of the Interest
Period applicable thereto, whether pursuant to Section 3.02 or otherwise.

The Lender shall promptly notify the Borrowers in writing of the occurrence of any such event, such
notice to state, in reasonable detail, the reasons therefor and the additional amount required
fully to compensate the Lender for such increased cost or reduced amount. Such additional amounts
shall be payable by the Borrowers to the Lender within five days of its receipt of such notice, and
such notice
shall, in the absence of manifest error, be conclusive and binding on the Borrowers. The Borrowers
understand, agree and acknowledge that (i) the Lender does not have any obligation to purchase,
sell and/or match funds in connection with the use of LIBOR Rate as a basis for calculating the
rate of interest on a LIBOR Rate Tranche, (ii) the LIBOR Rate may be used merely as a reference in
determining such rate, and (iii) the Borrowers have accepted the LIBOR Rate as a reasonable and
fair basis for calculating such rate, the LIBOR Rate Prepayment Fee, and other funding losses
incurred by the Lender. The Borrowers further agree to pay the LIBOR Rate Prepayment Fee and other
funding losses, if any, whether or not the Lender elects to purchase, sell and/or match funds.

     Section 3.05 Increased Costs. If on or after the date hereof the adoption of any
applicable Law, rule or regulation or guideline (whether or not having the force of law), or any
change therein, or any change in the interpretation or administration thereof by any Authority,
central bank or comparable

12

 

agency charged with the interpretation or administration thereof, or
compliance by the Lender with any request or directive (whether or not having the force of law) of
any such authority, central bank or comparable agency:

          (i) shall subject the Lender to any tax, duty or other charge with respect to
its LIBOR Rate Tranches or its obligation to make LIBOR Rate Tranches, or shall
change the basis of taxation of payments to the Lender of the principal of or
interest on its LIBOR Rate Tranches or any other amounts due under this agreement in
respect of its LIBOR Rate Tranches or its obligation to make LIBOR Rate Tranches
(except for the introduction of, or change in the rate of, tax on the overall net
income of the Lender or franchise taxes, imposed by the jurisdiction (or any
political subdivision or taxing authority thereof) under the laws of which the
Lender is organized or in which the Lender’s principal executive office is located),
or

          (ii) shall impose, modify or deem applicable any reserve, special deposit or
similar requirement (including, without limitation, any such requirement imposed by
the Board of Governors of the Federal Reserve System of the United States) against
assets of, deposits with or for the account of, or credit extended by, the Lender or
shall impose on the Lender or on the London interbank market any other condition
affecting its LIBOR Rate Tranches or its obligation to make LIBOR Rate Tranches,

and the result of any of the foregoing is to increase the cost to the Lender of making or
maintaining any Loan as a LIBOR Rate Tranche, or to reduce the amount of any sum received or
receivable by the Lender under this Agreement with respect thereto, by an amount deemed by the
Lender to be material, then, within 15 days after demand by the Lender, the Borrowers shall pay to
the Lender such additional amount or amounts as will compensate the Lender for such increased cost
or reduction.

     Section 3.06 Increased Capital Costs. If any change in, or the introduction,
adoption, effectiveness, interpretation, reinterpretation or phase-in of, any Law or regulation,
directive, guideline, decision or request (whether or not having the force of law) of any court,
central bank, regulator or other Authority affects or would affect the amount of capital required
or expected to be maintained by the Lender, or person controlling the Lender, and the Lender
determines (in its sole and absolute discretion) that the rate of return on its or such controlling
person’s capital as a consequence of its commitments or the loans made by the Lender is reduced to
a level below that which the Lender or such controlling person could have achieved but for the
occurrence of any such circumstance, then, in any such case upon notice from time to time by the
Lender to the Borrowers, the Borrowers shall immediately pay directly to the Lender additional
amounts sufficient to compensate the Lender or such controlling person for such reduction in rate
of return. A statement of the Lender as to any such additional amount or amounts (including
calculations thereof in reasonable detail) shall, in the absence of manifest error, be conclusive
and binding on the Borrowers. In determining such
amount, the Lender may use any method of averaging and attribution that it (in its sole and
absolute discretion) shall deem applicable.

     Section 3.07 Taxes. (a) All payments by the Borrowers of principal of, and interest
on, the LIBOR Rate Tranches and all other amounts payable hereunder shall be made free and clear of
and without deduction for any present or future income, excise, stamp or franchise taxes and other
taxes, assessments, imposts, duties, deductions, fees, withholdings or similar charges, and all
liabilities with respect thereto of any nature whatsoever imposed by any taxing authority, but
excluding franchise taxes and taxes imposed on or measured by the Lender’s net income or receipts
(such non-excluded items being called “Taxes”). In the event that any withholding or
deduction from any payment to be made by the Borrowers hereunder is required in respect of any
Taxes pursuant to any applicable law, rule or regulation, then the Borrowers will

13

 

          (i) pay directly to the relevant authority the full amount required to be so
withheld or deducted;

          (ii) promptly forward to the Lender an official receipt or other documentation
satisfactory to the Lender evidencing such payment to such authority; and

          (iii) pay to the Lender such additional amount or amounts as is necessary to
ensure that the net amount actually received by the Lender will equal the full
amount the Lender would have received had no such withholding or deduction been
required.

          (b) If any Taxes are directly asserted against the Lender with respect to any payment received
by the Lender hereunder, the Lender may pay such Taxes and the Borrowers will promptly pay such
additional amount (including any penalties, interest or expenses) as is necessary in order that the
net amount received by the Lender after the payment of such Taxes (including any Taxes on such
additional amount) shall equal the amount the Lender would have received had not such Taxes been
asserted.

          (c) If the Borrowers fail to pay any Taxes when due to the appropriate taxing authority or
fails to remit to the Lender the required receipts or other required documentary evidence, the
Borrowers shall indemnify the Lender for any incremental Taxes, interest or penalties that may
become payable by the Lender as a result of any such failure.

     Section 3.08 Payments to the Lender. (a) All payments (including prepayments) made by
the Borrowers shall be made in Dollars and in immediately available funds, without set-off,
counterclaim, recoupment or other deduction of any nature and without presentment, demand, protest
or notice of any kind, all of which are hereby expressly waived by the Borrowers, and any action
therefor shall immediately accrue. Except as otherwise expressly provided herein, all payments by
the Borrowers shall be made to the Lender at the Lender’s Office no later than 3:00 p.m.
(prevailing time in Pittsburgh, Pennsylvania) on the date specified herein. Any payment received
by the Lender later than 3:00 p.m. (prevailing time in Pittsburgh, Pennsylvania) shall be deemed to
have been received on the following Business Day and any applicable interest or fee shall continue
to accrue. Any payment required to be made by the Borrowers to the Lender under this Agreement or
any other Loan Document may, at the Lender’s option, be deducted when due from any deposit or other
account (general or special, time or demand, provisional or final) of the Borrowers with the
Lender.

          (b) So long as no Event of Default shall have occurred and be continuing, payments matching
specific scheduled payments then due will be applied to those scheduled payments. As to each other
payment and all payments made after an Event of Default shall have occurred and be continuing, the
Borrowers irrevocably agree that the Lender shall have the continuing exclusive right to apply any
and all such payments against such of the Obligations as the Lender may deem advisable in its sole
discretion.

          (c) The Lender is authorized to, and at its sole election may, on behalf of the Borrowers,
charge to the Revolving Credit Loans balance and cause to be paid all fees, Reimbursable Costs and
Expenses, charges, costs, interest and principal (other than principal of the Revolving Credit
Loans) owing by the Borrowers under this Agreement or any of the other Loan Documents if and to the
extent the Borrowers fail to promptly pay any such amounts as and when due, but it is expressly
acknowledged and agreed that the Lender shall be under no obligation to do any of the foregoing.
At the Lender’s option and to the extent permitted by Law, any charges so made shall constitute
part of the Revolving Credit Loans.

          (d) Whenever any payment is due on a day other than a Business Day, such payment shall be made
on the following Business Day, and such extension of time shall in such case be included in the
computation of interest or fees, as the case may be.

14

 

          (e) If the Borrowers fail to pay any installment of principal, interest or other amount under
this Agreement within ten (10) days of when due, in addition to making payment of the installment
then due, the Borrowers shall pay to the Lender a late charge in an amount equal to two percent
(2.0%) of such overdue installment.

     Section 3.09 Unused Revolving Credit Commitment Fee . The Borrowers agree to pay to
the Lender a fee (the “Unused Revolving Credit Commitment Fee”) for each day (based upon a
360-day year and counting the actual number of days elapsed) in an amount equal to the Applicable
Margin thereto multiplied by the average daily unused portion of the Revolving Credit Commitment,
computed in arrears on the last Business Day of each calendar month based upon the daily
utilization for that calendar month as calculated by the Lender. The Unused Revolving Credit
Commitment Fee shall be payable quarterly in arrears on the last day of each calendar quarter for
the immediately preceding calendar quarter (or portion thereof), with the first such payment being
due and payable on September 30, 2005, with a final payment on the Revolving Commitment Termination
Date or such earlier date upon which the Revolving Credit Commitment shall terminate. For purposes
of calculating utilization under this Section, the Revolving Credit Commitment shall be deemed used
to the extent of the Revolving Credit Loans then outstanding. The Unused Revolving Credit
Commitment Fee shall accrue at all times after the Closing Date, including at any time during which
one or more of the conditions in Article IV have not been satisfied.

     Section 3.10 Lender’s Records. The Lender is authorized to record in its books and
records the amount of all loans, advances, repayments, interest due and paid, and all other
charges, fees and expenses paid, or due, and the like, in connection with this Agreement and the
other Loan Documents, and, except in the case of manifest error in posting or computation, such
books and records shall be presumptively true, correct and binding as to the amounts at any time
due to the Lender from the Borrowers under this Agreement and the other Loan Documents. Any
failure so to record or any error in doing so shall not, however, limit or otherwise affect the
obligation of the Borrowers hereunder to pay any amount owing with respect to the Loans.

     Section 3.11 Survival. The agreements and obligations of the Borrowers in this
Article III shall survive the payment of all other Obligations.

     Section 3.12 Security. The prompt and full satisfaction of the Obligations shall be
secured by the Collateral Documents.

ARTICLE IV. CONDITIONS OF LENDING

     Section 4.01 Initial Conditions. The Lender’s obligation under this Agreement to make
the initial Revolving Credit Loan and to Issue the initial Letter of Credit is subject to the prior
or concurrent satisfaction of each of the following conditions precedent unless waived in writing
by the Lender:

          (i) Contemporaneously with, or prior to, the execution and delivery of this
Agreement, the Borrowers shall deliver or cause to be delivered to the Lender each
of the items listed in Schedule Two attached hereto and incorporated herein
by reference thereto.

          (ii) The Collateral Documents shall be in full force and effect and the
Borrowers shall have taken or caused to be taken such actions so that, on the
Closing Date the Lender shall have valid and perfected liens on and security
interests in the Collateral having priority over all other Liens in such Collateral
except Permitted Liens.

          (iii) The representations and warranties contained in Article V shall be true
and correct on the Closing Date.

15

 

          (iv) No Potential Default or Event of Default shall have occurred and be
continuing on the Closing Date.

          (v) No litigation, arbitration, proceeding or investigation by or before any
Authority shall be pending, or to the knowledge of the Borrowers, threatened which
seeks to enjoin or otherwise prevent the consummation of, or to recover any damages
or obtain relief as a result of, the transactions contemplated by or in connection
with this Agreement or the other Loan Documents or which might, in the opinion of
the Lender, if adversely determined, be reasonably expected to have a Material
Adverse Effect or be detrimental to the interests of the Lender with respect to the
transactions contemplated hereby.

          (vi) All legal details and proceedings in connection with the transactions
contemplated by this Agreement shall be satisfactory to counsel for the Lender, and
the Lender shall have received originals or certified copies of such documents and
proceedings in connection herewith and therewith as the Lender may request, all in
form and substance satisfactory to counsel for the Lender.

          (vii) No event or events shall have occurred and be continuing on the Closing
Date which, individually or in the aggregate, has or reasonably could be expected to
have a Material Adverse Effect.

          (viii) The Lender shall have completed all business, environmental and legal
due diligence deemed necessary or appropriate by the Lender (including without
limitation, collateral audits of the Collateral) and the results of such due
diligence shall be satisfactory to the Lender and its counsel.

          (ix) The capital structure and ownership of the Borrowers shall be satisfactory
to the Lender.

     Section 4.02 Subsequent Conditions. The Lender’s obligation to make subsequent
Revolving Credit Loans or to Issue any Letter of
Credit is subject to the satisfaction of each of the following conditions on and as of the date of
disbursement of each such subsequent Revolving Credit Loan or the issuance of each such Letter of
Credit, as applicable, unless waived in writing by the Lender:

          (i) The Lender shall have received the a Notice of Revolving Credit Borrowing,
an L/C Application and/or an L/C Amendment Application, as applicable.

          (ii) The representations and warranties contained in Article V shall be true
and correct in all material respects as though made on and as of the date of the
applicable Borrowing Date or Issuance Date for a Letter of Credit (except to the
extent such representations and warranties expressly refer to an earlier date, in
which case they shall be true and correct in all material respects as of such
earlier date).

          (iii) No event or events shall have occurred which, individually or in the
aggregate, has had or reasonably could be expected to have a Material Adverse
Effect.

          (iv) No Potential Default or Event of Default shall have occurred and be
continuing.

16

 

          (v) The Collateral Documents shall be in full force and effect and the Lender
shall have a first priority lien on and security interest in the Collateral
described therein having priority over all other Liens in the Collateral except
Permitted Liens.

ARTICLE V. REPRESENTATIONS AND WARRANTIES

As an inducement to the Lender to enter into this Agreement, make each of the Loans and Issue each
Letter of Credit, each Borrower represents and warrants to the Lender as follows:

     Section 5.01 Organization, Subsidiaries and Authority. (a) Each Loan Party is a
corporation, limited liability company or limited partnership or organized, as the case may be,
validly existing and (to the extent such concept applies to such entity) in good standing or in
full force and effect under the laws of jurisdiction of incorporation or organization. All
Subsidiaries of the Loan Parties are set forth on Schedule 5.01, and except as set forth on
Schedule 5.01, no Loan Party is engaged in any joint venture or partnership with any other
Person. The jurisdiction of formation of each Loan Party and each Subsidiary is set forth on
Schedule 5.01.

          (b) Except as disclosed on Schedule 5.01, no Loan Party uses, or has used within the
past five (5) years, any corporate or partnership name or assumed or fictitious name other than its
existing corporate or partnership name. The federal employer identification number and state
organizational identification number of each Loan Party are set forth on Schedule 5.01.

          (c) Each Loan Party has the lawful power to own or lease its assets and properties and to
engage in the business it conducts. Each Loan Party is duly licensed and qualified and in good
standing in the jurisdictions wherein the character or location of the assets and properties owned
or leased by it, or the nature of the business transacted by it, make such licensing or
qualification necessary and the failure to be so licensed or qualified may result in, or could
reasonably be expected to have, a Material Adverse Effect. The jurisdictions in which the Loan
Parties are qualified to do business as a foreign corporation or partnership as of the Closing Date
are set forth in Schedule 5.01.

          (d) Each Loan Party has the power and authority to enter into and perform the provisions of
this Agreement and the other Loan Documents to which it is a party, to incur the
Indebtedness and obligations provided for herein and therein and to carry out the transactions
contemplated herein and therein, and each Loan Party has taken all proper and necessary corporate
or partnership action to authorize the borrowings hereunder. The execution, delivery and
performance by the Borrowers of this Agreement, the Notes, the Collateral Documents and the other
Loan Documents to which they are a party, the issuance, delivery and payment of the Revolving
Credit Note by the Borrowers, the consummation of the transactions contemplated hereby and thereby
and the creation and grant of the Liens contemplated by the Collateral Documents (i) have been duly
authorized by all requisite corporate or partnership action, and (ii) will not (A) violate the
Organization Documents of any Loan Party, (B) violate any Law, notes, indentures, contracts,
instruments or agreements to which any of the Borrowers is a party except where such violation
could not reasonably be expected to have a Material Adverse Effect, or (C) result in the creation
or imposition of any Lien other than those in favor of the Lender on any property (now owned or
hereafter acquired) of the Borrowers. No Loan Party is in violation of (x) its Organization
Documents, or (y) any instrument or agreement to which it is a party or by which it or any of its
properties (now owned or hereafter acquired) may be subject or bound except where such violation
could not reasonably be expected to have a Material Adverse Effect.

          (e) This Agreement, the Revolving Credit Note, the Collateral Documents and the other Loan
Documents to which the Borrowers and the other Loan Parties are a party have been duly and validly
executed and delivered by the Borrowers and such other Loan Parties and constitute, and the other
Loan Documents to be executed and delivered by the Borrowers and such other Loan Parties when

17

 

delivered will constitute, valid and binding obligations of the Borrowers and such other Loan
Parties enforceable in accordance with their respective terms.

     Section 5.02 Consent. Except for recordings or filings in connection with the Liens
granted to the Lender under the Collateral Documents, no consent, approval, authorization, permit
or license of, or other action by, or filing, registration or qualification with, any Authority or
any Person (including shareholders or partners of the Borrowers) is necessary or required in
connection with the execution and delivery of this Agreement and the other Loan Documents by the
Borrowers and the other Loan Parties, the undertaking or performance of any of the Borrowers’
obligations thereunder or the enforcement of the Lender’s rights and remedies thereunder.

     Section 5.03 Litigation. Except as disclosed on Schedule 5.03 attached hereto,
there is no order, notice, claim, litigation, judgment, proceeding or investigation existing,
pending or, to the best knowledge of the Borrowers, threatened or contemplated, at law, in equity,
in arbitration or by or before any Authority, against or affecting the Borrowers, the other Loan
Parties or their respective properties, individually or in the aggregate, which, if determined
adversely to the interests of the Borrowers and the other Loan Parties, could reasonably be
expected to have a Material Adverse Effect. No injunction, writ, temporary restraining order or
any order of any nature has been issued by any court or other Authority purporting to enjoin or
restrain the execution, delivery or performance of this Agreement or any other Loan Document or
directing that the transactions provided for herein or therein not be consummated as herein or
therein provided

     Section 5.04 Financial Statements and Solvency. (a) The Borrowers have furnished the
Lender with the following financial information (collectively the “Historical Financial
Statements”):

          (i) the consolidated balance sheet of Superior and its Subsidiaries for the
Fiscal Year ended December 31, 2004, and the related consolidated statements of
income, shareholders equity and cash flows for the periods then ended;

          (ii) the consolidated balance sheet of Bradford and its Subsidiaries for the
Fiscal Year ended December 31, 2004, and the related consolidated statements of
income, partners equity and cash flows for the periods then ended;

          (ii) internally prepared unaudited consolidated balance sheets of Superior and
Bradford and their respective Subsidiaries for the period ended March 31, 2005 and
the related consolidated statements of income and cash flows for the period then
ended (collectively the “Interim Balance Sheets”).

The Historical Financial Statements (A) were prepared in all material respects in accordance with
GAAP consistently applied throughout the periods covered thereby (except for, with respect to the
Interim Balance Sheets only, the absence of footnotes and ordinary, good faith year end
adjustments), (B) fairly present in all material respects the financial condition of Superior and
Bradford and their respective Subsidiaries as of the dates thereof and results of operations for
the periods covered thereby, and (C) except for liabilities not required to be disclosed in a
balance sheet prepared in accordance with GAAP, show all material indebtedness and other
liabilities, direct or contingent, of Superior and Bradford and their respective Subsidiaries as of
the dates thereof, including liabilities for taxes, material commitments and contingent obligations
subject to ordinary, good faith year end adjustments.

          (b) The Borrowers have furnished to the Lender a pro forma balance sheet of SWS and its
Subsidiaries as of the Closing Date on a consolidated basis, a copy of which is attached hereto as
Exhibit “C” (the “Pro Forma Balance Sheet”), together with projected income
statements of SWS and its Subsidiaries on a consolidated basis through the period ending December
31, 2005, a copy of which is attached hereto as Exhibit “D” (the “Pro Forma Financial
Projections”). The Pro Forma Balance Sheet

18

 

was prepared by SWS in accordance with GAAP and
fairly presents the pro forma financial condition of the Borrowers for the periods depicted
therein. The Pro Forma Financial Projections represent the reasonable and best estimate of the
Borrowers of the future operations of the Borrowers and are based upon past operations of the
businesses of Superior and Bradford, good faith estimates of the future financial performance of
the Borrowers and assumptions believed by the Borrowers to be reasonable based on current
reasonably foreseeable economic conditions.

          (c) As of the Closing Date, each Loan Party is Solvent and will be Solvent after (i) the
making of each Revolving Credit Loan, (ii) the execution and delivery of this Agreement and the
other Loan Documents to which it is a party, and (iii) the perfection of the Liens granted to the
Lender in connection with the Collateral Documents.

     Section 5.05 Ownership and Management. Schedule 5.05 attached hereto sets
forth, as of the Closing Date, (i) each record, and to the knowledge of the Borrowers, beneficial
owner of five percent (5.0%) or more of the outstanding shares of each class of equity securities
of SWS registered under Section 12 of the Securities Exchange Act of 1934, as amended, and (ii) the
authorized capitalization, the number of each class of capital stock issued and outstanding and the
names of the record and beneficial owners of all of the issued and outstanding shares of capital
stock of Superior, Bradford and the other Loan Parties excluding SWS. As of the Closing Date,
except as disclosed in Schedule 5.05, there are no outstanding subscriptions, warrants,
calls, options, rights, commitments or agreements by which the Borrowers and the other Loan Parties
are bound providing for the issuance of shares of capital stock of Superior or Bradford, or for the
issuance of any securities convertible or exchangeable, actually or contingently, into shares of
capital stock of Superior or Bradford. Schedule 5.05 contains a complete list of all
officers and directors of each Loan Party as of the Closing Date.

     Section 5.06 Adverse Occurrences. Since March 31, 2005, no event or events have
occurred which, individually or in the aggregate, have had, or could reasonably be expected to
have, a Material Adverse Effect. No Event of Default or Potential Default exists or would result
from the incurring of any obligations by the Borrowers under the Loan Documents or from the grant
or perfection of the Liens of the Lender on the Collateral.

     Section 5.07 Existing Indebtedness. All existing Indebtedness of the Loan Parties as
of the Closing Date is set forth on Schedule 5.07 attached hereto.

     Section 5.08 Information. All information furnished or to be furnished by the Loan
Parties to the Lender is and will be in all material respects true and accurate and the Borrowers
have disclosed to the Lender in writing any fact known to the Borrowers which could reasonably be
expected to have a Material Adverse Effect.

     Section 5.09 Assets, Liens and Insurance. (a) With respect to all of the properties
and assets of the Loan Parties reflected in the Interim Balance Sheets and all other assets and
properties of the Loan Parties necessary for the ordinary conduct of their respective businesses,
the Loan Parties have (i) good, sufficient and legal title thereto (in the case of all fee
interests in real property), (ii) valid leasehold interests therein (in the case of all leasehold
interests in real or personal property), (iii) valid licenses therein (in the case of licensed
intangible properties), and (iv) good title thereto (in the case of all other personal property).
All such properties and assets are free and clear of all Liens except Permitted Liens.

          (b) Schedule 5.09 attached hereto contains a true, accurate and complete list as of
the Closing Date of (i) all real property owned in fee simple by the Loan Parties, and (ii) all
leases, subleases or assignments of leases (together with all amendments, modifications,
supplements, renewals or extensions of any thereof) affecting each real property asset of the Loan
Parties, regardless of whether a Loan Party is the landlord or tenant (whether directly or as an
assignee or successor in interest) under such lease, sublease or assignment. As of the Closing
Date, except as specified in Schedule 5.09, each

19

 

agreement referenced in clause (ii) of the
immediately preceding sentence is in full force and effect and the Borrowers do not have knowledge
of any default that has occurred and is continuing thereunder (except where the consequences,
direct or indirect, of such default or defaults, if any, would not reasonably be expected to have a
Material Adverse Effect), and each such material agreement constitutes the legally valid and
binding obligation of the Loan Parties, enforceable against the Loan Parties in accordance with its
terms.

          (c) Schedule 5.09 attached hereto lists as of the Closing Date all insurance policies
and other bonds to which the Loan Parties are a party, all of which are valid and in full force and
effect. No notice has been given or claim made and no grounds exist to cancel or avoid any of such
policies or bonds or to reduce the coverage provided thereby. Such policies and bonds provide
adequate coverage from reputable and financially sound insurers in amounts sufficient to insure the
assets and risks of the Loan Parties in accordance with prudent business practice in the industry
of the Loan Parties.

     Section 5.10 Contractual Obligations. Each Loan Party is in material compliance with
the provisions of all contracts, licenses, instruments and other commitments of any kind material
to the financial condition, properties, assets or prospects of such Loan Party, and no event has
occurred which, but for the passage of time or the giving of notice, or both, would constitute a
default thereunder except to the extent that such failure to comply or such default could not
reasonably be expected to have a Material Adverse Effect. No Loan Party is a party to, or is it
otherwise subject to, any agreement, instrument or any charter or other internal restrictions
compliance with which, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

     Section 5.11 Taxes. All tax returns required to be filed by the Loan Parties have
been properly prepared, executed and filed and all taxes, assessments, fees and other governmental
charges upon the Loan Parties or upon any of their properties, income, sales or franchises which
are due and payable have been paid except (i) to the extent that the validity or amount thereof is
being contested in good faith and by appropriate proceedings with adequate reserves maintained
in accordance with GAAP or (ii) to the extent that the failure to make such payments could not
reasonably be expected to have a Material Adverse Effect. The Borrowers do not know of any
proposed additional assessment or basis for any material assessment for additional taxes against
the Loan Parties (whether or not reserved against by the Loan Parties) that would be material to
the condition (financial or otherwise) of the Loan Parties.

     Section 5.12 Margin Stock; Investment Company. None of the proceeds of the Revolving
Credit Loans will be used by the Borrowers for the purpose of buying or carrying any margin stock
(“Margin Stock”) as such term is defined in Regulation U, Regulation X or Regulation G
promulgated by the Board of Governors of the Federal Reserve System, as amended from time to time,
or to reduce or retire any loan or advance incurred to purchase or carry Margin Stock. The
Borrowers are not and will not become engaged in the business of extending credit for the purpose
of buying or carrying Margin Stock, and no part of the proceeds of any borrowing hereunder will be
used to extend credit to others for the purpose of purchasing or carrying any Margin Stock. No
Loan Party is, or will become, an “investment company” or a company “controlled” by an “investment
company”, as each of such terms are defined in the Investment Company Act of 1940, as amended. No
Loan Party is subject to regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act, the Interstate Commerce Act, any state public utilities code, or any other
federal or state statute or regulation limiting its ability to incur Indebtedness.

     Section 5.13 Intellectual Property Rights. Each Loan Party owns or possesses rights
to use all patents, trademarks, trade names, service marks, copyrights, licenses, permits and
franchises, and all rights in respect of the foregoing (collectively, “Intellectual Property
Rights”) required to conduct its business as now conducted, or as presently contemplated to be
conducted, without any conflict with, or infringement upon rights of, other Persons, and to the
best of the Borrowers’ knowledge, such Loan Party is not in violation of any valid rights of others
with respect to any of the foregoing.

20

 

     Section 5.14 Environmental Laws. (a) Except as disclosed on Schedule 5.14
attached hereto, each Loan Party and its Environmental Affiliates are in compliance with all
applicable Environmental Laws, except for such non-compliance which, individually or in the
aggregate, has not, and reasonably could not be expected to have, a Material Adverse Effect.

          (b) Except as disclosed on Schedule 5.14 attached hereto, each Loan Party and its
Environmental Affiliates have obtained all Environmental Approvals necessary or desirable for the
ownership and operation of their respective properties, facilities and businesses as presently
owned and operated and as presently proposed to be owned and operated except where the failure to
obtain such Environmental Approvals could not reasonably be expected to have a Material Adverse
Effect . Except as disclosed on Schedule 5.14 attached hereto, each of such Environmental
Approvals is in good standing and each Loan Party and its Environmental Affiliates are in
compliance with all material terms of such Environmental Approvals except for such non-compliance
which, individually or in the aggregate, has not, and reasonably could not be expected to have, a
Material Adverse Effect.

          (c) Except as disclosed on Schedule 5.14, there is no Environmental Claim pending, or
to the knowledge of the Borrowers, threatened or contemplated, and there are no past or present
acts, omissions, events or circumstances (including any dumping, leaching, deposition, removal,
abandonment, escape, emission, discharge or release of any Hazardous Materials at, on or under any
facility or property now or previously owned, operated or leased by the Loan Parties or any of
their respective Environmental Affiliates) that could form the basis of any Environmental Claim
against the Loan Parties or their Environmental Affiliates, except for matters which, if adversely
decided, individually or in the aggregate, could not reasonably be expected to have a Material
Adverse Effect. Except as disclosed on Schedule 5.14, neither the Loan Parties nor any of
their Environmental Affiliates has any underground
storage tanks that are not properly registered or permitted under applicable Environmental
Laws or that are leaking or disposing of Hazardous Materials off-site. Each Loan Party and its
Environmental Affiliates have notified all of their employees of the existence, if any, of any
health hazard arising from the conditions of their employment and have met all notification
requirements under Title III of CERCLA and all other Environmental Laws.

          (d) Except as disclosed on Schedule 5.14, no facility or property now or previously
owned, operated or leased by the Loan Parties or any of their Environmental Affiliates is an
Environmental Cleanup Site. Except as disclosed on Schedule 5.14 attached hereto, neither
the Loan Parties nor any of their Environmental Affiliates has directly transported or directly
arranged for the transportation of any Hazardous Materials to any Environmental Cleanup Site. No
Lien exists, and no condition exists which could result in the filing of a Lien under any
Environmental Law against any property of the Loan Parties or any of their Environmental
Affiliates.

     Section 5.15 Collateral Documents. The provisions of the Security Agreement and the
other Collateral Documents create legal and valid Liens on all of the Collateral in favor of the
Lender, and such Liens, after the filing of all necessary UCC-1 financing statements and any
continuation statements relating thereto, as necessary, constitute perfected and continuing Liens
on such Collateral, securing the Obligations, enforceable against the Loan Parties and all other
Persons, and having priority over all other Liens on the Collateral except in the case of (i)
Permitted Liens, to the extent any such Permitted Liens would have priority over the Liens in favor
of the Lender pursuant to any applicable Law or agreement, and (ii) Liens perfected only by
possession (including possession of any certificate of title) to the extent the Lender has not
obtained or does not maintain possession of such Collateral.

     Section 5.16 Bankruptcy; Insolvency. No Loan Party has applied for or consented to
the appointment of a receiver, trustee, custodian or liquidator for itself or any of its
properties, admitted in writing its inability to pay its debts as they mature, made a general
assignment for the benefit of creditors, been adjudicated a bankrupt or insolvent or filed a
voluntary petition in bankruptcy, or a petition or an

21

 

answer seeking reorganization or an
arrangement with creditors or to take advantage of any bankruptcy, reorganization, insolvency,
readjustment of debt, dissolution or liquidation law or statute, or an answer admitting the
material allegations of a petition filed against it in any proceeding under any such law, and no
action has been taken by the Loan Parties for the purpose of effecting any of the foregoing.

     Section 5.17 Compliance with Laws. Neither the operation of the businesses of the
Loan Parties nor the development, manufacture, assembly or sale of the products or services of the
Loan Parties violate any Law applicable to the Loan Parties, including, without limitation, the
Fair Labor Standards Act of 1938, 29 U.S.C. § 201, et. seq., as amended, except to the extent that
any such violation has not, and reasonably could not be expected to have, a Material Adverse
Effect. No Loan Party has been indicted under any criminal statute, nor has any criminal or civil
proceedings been commenced against a Loan Party pursuant to which statute or proceedings the
penalties or remedies sought or available include forfeiture of any of the property of such Loan
Party except to the extent that such forfeiture has not, and reasonably could not be expected to
have, a Material Adverse Effect.

     Section 5.18 Locations. As of the Closing Date, Schedule 5.18 attached hereto
sets forth the location of (i) the chief executive office of each Borrower, (ii) the offices where
each Borrower keeps its records concerning its Inventory, Accounts, contracts and other properties,
(iii) each place of business of the Borrowers, including the location of the Borrowers’ Inventory
and equipment, together with the name and address of each Person having possessory rights (as
owner, landlord, warehouseman, processor or otherwise) to such locations. Except as disclosed on
Schedule 5.18, none of the foregoing locations has changed within 12 months preceding the
Closing Date.

     Section 5.19 ERISA Plans. Except as disclosed in Schedule 5.19:

          (i) Each Plan is in compliance in all material respects with the applicable
provisions of ERISA, the Code and other federal or state law. Each Plan which is
intended to qualify under Section 401(a) of the Code has received a favorable
determination letter from the IRS and to the best knowledge of the Borrowers,
nothing has occurred which would cause the loss of such qualification. The
Borrowers and each ERISA Affiliate have made all required contributions to any Plan
subject to Section 412 of the Code, and no application for a funding waiver or an
extension of any amortization period pursuant to Section 412 of the Code has been
made with respect to any Plan;

          (ii) There are no pending or, to the knowledge of the Borrowers, threatened
claims, actions or lawsuits, or action by any Authority, with respect to any Plan
which has or could reasonably be expected to have a Material Adverse Effect. There
has been no prohibited transaction or violation of the fiduciary responsibility
rules with respect to any Plan which has or could reasonably be expected to have a
Material Adverse Effect; and

          (iii) (A) No ERISA Event has occurred or is reasonably expected to occur; (B)
no Pension Plan has any Unfunded Pension Liability; (C) neither the Borrowers nor
any ERISA Affiliate has incurred, or reasonably expects to incur, any liability
under Title IV of ERISA with respect to any Pension Plan (other than premiums due
and not delinquent under Section 4007 of ERISA); (D) neither the Borrowers nor any
ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no
event has occurred which, with the giving of notice under Section 4219 of ERISA,
would result in such liability) under Section 4201 or 4243 of ERISA with respect to
a Multiemployer Plan; and (E) neither the Borrowers nor any ERISA Affiliate has
engaged in a transaction that could be subject to Section 4069 or 4212(c) of ERISA.

22

 

     Section 5.20 Eligible Accounts. Each Account scheduled, listed or referred to as an
Eligible Account in a Borrowing Base calculation, a Borrowing Base Certificate or any other
certificate, statement or report prepared by or for the Borrowers and delivered to the Lender and
upon which the Borrowers are basing availability to obtain a Revolving Credit Loan satisfies all of
the criteria necessary to qualify such Account as an Eligible Account.

     Section 5.21 Eligible Inventory. All Inventory scheduled, listed or referred to as
Eligible Inventory in a Borrowing Base calculation, a Borrowing Base Certificate or any other
certificate, statement or report prepared by or for the Borrowers and delivered to the Lender and
upon which the Borrowers are basing availability to obtain a Revolving Credit Loan satisfies all of
the criteria necessary to qualify such Inventory as Eligible Inventory.

     Section 5.22 Business Operations. The principal business operations of the Borrowers
as presently conducted, and as intended to be conducted after the date hereof, is set forth on
Schedule 5.22 attached hereto. There is no strike, lockout, labor dispute, embargo,
condemnation, act of God or public enemy, or other event or circumstance, not covered by business
interruption insurance which, individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect

     Section 5.23 Labor Relations. None of the Loan Parties is a party to any collective
bargaining agreement, there is no strike or request for union representation, no material labor
dispute, grievance or controversy pending, or, to the knowledge of the
Borrowers, threatened against the Loan Parties, including without limitation, any work stoppages,
slowdowns or lockouts. There are no matters relating to the Loan Parties pending before the
National Labor Relations Board or any similar state or local labor agency, nor, to the best of the
Borrowers’ knowledge, is any Loan Party engaged in any unfair labor practices, and the Borrowers
believe the Loan Parties have good labor relations with their employees.

     Section 5.24 Contemporaneous Exchange. The attachment and perfection of the security
interests in the Collateral effected on the Closing Date by virtue of the Collateral Documents
executed and delivered pursuant to this Agreement are intended by the Lender and the Borrowers to
be a contemporaneous exchange for new value given to the Borrowers by virtue of the consummation of
the transactions contemplated by this Agreement and are, in fact, a substantially contemporaneous
exchange for such new value.

     Section 5.25 Anti-Terrorism Laws. (a) None of the Loan Parties nor, to the Borrowers’
knowledge, any Affiliate of a Loan Party, is in violation of any Anti-Terrorism Law or engages in
or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or
avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law.

     (b) None of the Loan Parties nor, to the Borrowers’ knowledge, any Affiliate of a Loan Party,
or their respective agents acting or benefiting in any capacity in connection with the Revolving
Credit Loans, Letters of Credit or other transactions hereunder, is any of the following (each a
“Blocked Person”):

          (i) a Person that is listed in the annex to, or is otherwise subject to the
provisions of, Executive Order No. 13224;

          (ii) a Person owned or controlled by, or acting for or on behalf of, any Person
that is listed in the annex to, or is otherwise subject to the provisions of,
Executive Order No. 13224;

          (iii) a Person or entity with which any Lender is prohibited from dealing or
otherwise engaging in any transaction by any Anti-Terrorism Law;

23

 

          (iv) a Person or entity that commits, threatens or conspires to commit or
supports “terrorism” as defined in Executive Order No. 13224;

          (v) a Person or entity that is named as a “specially designated national” on
the most current list published by the U.S. Treasury Department Office of Foreign
Asset Control at its official website or any replacement website or other
replacement official publication of such list, or

          (vi) a person or entity who is affiliated or associated with a person or entity
listed above.

     (c) No Loan Party or, to the knowledge of any Loan Party, any of its agents acting in any
capacity in connection with the Loans, Letters of Credit or other transactions hereunder (i)
conducts any business or engages in making or receiving any contribution of funds, goods or
services to or for the benefit of any Blocked Person, or (ii) deals in, or otherwise engages in any
transaction relating to, any property or interests in property blocked pursuant to Executive Order
No. 13224.

     Section 5.26 Disclosure. No representation or warranty made by the Loan Parties in
the Loan Documents, no statement made or to be made by the Loan
Parties in any financial information, certificate, report, exhibit or document furnished or to be
furnished by the Loan Parties to the Lender pursuant to or in connection herewith or therewith
contains or will contain any untrue material statement or omits or will omit to state any material
fact necessary to make the statements contained therein not misleading in light of the
circumstances under which they were made provided that, with respect to any projected
financial information, the Borrowers represent only that such information was prepared in good
faith based upon assumptions believed to be reasonable at the time. The Borrowers have made full
and true disclosure of all information known to the Borrowers, financial or otherwise, relating to
the Loan Parties or in connection with the transactions contemplated hereby which has resulted, or
which could reasonably be expected to result, in a Material Adverse Effect provided that,
with respect to any projected financial information, the Borrowers represent only that such
information was prepared in good faith based upon assumptions believed to be reasonable at the
time.

ARTICLE VI. AFFIRMATIVE COVENANTS

Until payment in full of all of the Revolving Credit Loans and other Obligations, cancellation or
expiration of all Letters of Credit and termination of all commitments of the Lender to make
Revolving Credit Loans, the Borrowers covenant and agree to perform each of the covenants set forth
below in this Article VI unless the Lender waives compliance in writing.

     Section 6.01 Use of Proceeds. The Borrowers will use the proceeds of the Revolving
Credit Loans for the purposes set forth on Schedule 6.01 attached hereto and for no other
purposes. No portion of the proceeds of the Revolving Credit Loans will be used directly or
indirectly for the purpose of purchasing or carrying any Margin Stock. The Borrowers will furnish
the Lender such evidence as the Lender may reasonably require with respect to the use of the
proceeds of the Revolving Credit Loans.

     Section 6.02 Financial Information and Compliance Certificates. (a) The Borrowers
shall deliver to the Lender, in form and detail satisfactory to the Lender, all of the following:

          (i) As soon as available and in any event within one hundred twenty (120) days
after the end of each Fiscal Year of SWS, the consolidated balance sheets of SWS and
its Subsidiaries, and the related consolidated statements of income, equity and cash
flow for such Fiscal Year, with accompanying footnotes, in reasonable detail and
stating in comparative form the respective figures for the corresponding date and
period

24

 

in the prior Fiscal Year, and certified by Schneider Downs & Co., Inc. or
such other independent certified public accounting firm acceptable to the Lender
(the “Independent Accountants”). The report of the Independent Accountants
shall be free of exceptions or qualifications not acceptable to the Lender
(including any exception, qualification or explanation relating to the ability to
continue as a going concern or independence), and a copy of such certificate or
report signed by the Independent Accountants shall be delivered to the Lender, and
shall in any event contain a written statement of the Independent Accountants
substantially to the effect that (A) the Independent Accountants examined such
financial statements and balance sheets in accordance with generally accepted
auditing standards and accordingly made such tests of accounting records and such
other auditing procedures as the Independent Accountants considered necessary under
the circumstances, (B) the Independent Accountant performed the audit in full and
complete compliance with Statement on Auditing Standards No. 82, “Consideration of
Fraud in a Financial Statement Audit”, and any successor standards, interpretations
or amendments thereto, and their audit included such procedures that, in their
opinion, were sufficient to have a reasonable assurance to detect material fraud,
(C) such financial statements present fairly the consolidated financial position of
SWS and its Subsidiaries
for the periods indicated in conformity with GAAP applied on a basis consistent with
that of the preceding Fiscal Year (except for changes in application in which the
Independent Accountants concur), and (D) in making the examination necessary for
their audit, the Independent Accountants did not become aware of any Event of
Default or Potential Default, or if they did become so aware, such certificate or
report shall state the nature and period of existence thereof. To the extent that
SWS’s annual report on Form 10-K filed with the Securities and Exchange Commission
contains any of the foregoing items, the Lender will accept SWS’s annual report on
Form 10-K in lieu of such items;

          (ii) As soon as available and in any event within forty five (45) days after
the close of each of the first three Fiscal Quarters in each Fiscal Year of SWS, a
consolidated balance sheet of SWS and its Subsidiaries as of the end of such Fiscal
Quarter and the related consolidated statements of income and changes in financial
position of SWS and its Subsidiaries for the period commencing at the end of the
previous Fiscal Year and ending with the end of such Fiscal Quarter, fairly
presenting the financial condition of SWS and its Subsidiaries as at such date and
the results of operations of SWS and its Subsidiaries for such period and setting
forth in each case in comparative form the corresponding figures for the
corresponding period of the preceding Fiscal Year, all in reasonable detail and duly
certified (subject to year-end audit adjustments) by a Responsible Officer of SWS as
having been prepared on a basis consistent with the most recent annual financial
statements delivered pursuant to Section 6.02(a) (i) except as disclosed therein.
To the extent that SWS’s quarterly report on Form 10-Q filed with the Securities and
Exchange Commission contains any of the foregoing items, the Lender will accept
SWS’s quarterly report on Form 10-Q in lieu of such items;

          (iii) As soon as practicable and in any event within ten (10) days of delivery
to a Borrower, a copy of (A) any management letter prepared by the Independent
Accountant and delivered to a Borrower in connection with the financial statements
referred to in Section 6.02(a)(i), and (B) any letter issued by the Independent
Accountants or other management consultants with respect to recommendations relating
to the Borrowers’ financial or accounting systems or controls;

          (iv) No later than twenty-five (25) days after the end of each calendar month,
and upon request by the Lender at any time after a Potential Default or an Event of
Default has occurred and is continuing, a duly completed Borrowing Base Certificate

25

 

signed by a Responsible Officer of the Borrowers together with such supporting
information related thereto as the Lender shall reasonably request;

          (v) Not later than forty five (45) days after the end of each Fiscal Quarter, a
compliance certificate (a “Compliance Certificate”) dated the date thereof,
signed by a Responsible Officer of the Borrowers, demonstrating in reasonable detail
compliance for the applicable period with the financial maintenance covenants set
forth in Section 7.01;

          (vi) promptly upon their becoming available, copies of: (A) all 10-K, 10-Q and
8-K reports filed by a Borrower with the Securities and Exchange Commission and
other financial statements, reports, notices and proxy statements made publicly
available by any Borrower to its security holders; (B) all regular and periodic
reports and all registration statements and prospectuses, if any, filed by any
Borrower with any securities exchange or with the Securities and Exchange Commission
or any governmental or private regulatory authority; and (C) all press releases and
other statements made available by any Borrower to the public concerning material
changes or developments in the business of any such Person;

          (vii) Promptly, any supplemental disclosures as required from time to time
under Section 6.15; and

          (viii) Promptly after the request of the Lender, such additional information
regarding the business, financial, corporate or partnership affairs of the Borrowers
or any Subsidiary as the Lender may from time to time reasonably request.

          (b) Concurrently with the delivery of the financial information required under Section
6.02(a)(i) and (ii), the Borrowers shall furnish to the Lender a certificate dated the date
thereof, signed by a Responsible Officer of the Borrowers and stating that to the knowledge of such
Responsible Officer (after due and diligent inquiry), (i) the representations and warranties set
forth in Article V of this Agreement are true and correct in all material respects as of the date
of the delivery of such financial information, except to the extent such representations and
warranties expressly refer to an earlier date, in which case they shall be true and correct in all
material respect as of such earlier date and (ii) no Event of Default or Potential Default has
occurred and is continuing as of such date, or if any such Event of Default or Potential Default
exists, specifying the nature and period of its existence and the action the Borrowers have taken,
are taking and propose to take with respect thereto.

     Section 6.03 Books, Records and Visitation Rights. Each Borrower shall, and shall
cause each of the other Loan Parties to, maintain proper books of record and account, in which
full, true and correct entries shall be made of all financial transactions and matters involving
the assets and business of such Borrower in order to permit financial statements to be prepared in
accordance with GAAP. Each Borrower shall, and shall cause each of the other Loan Parties to,
permit representatives and independent contractors of the Lender to visit and inspect any of its
properties during normal business hours after reasonable notice and in accordance with applicable
safety rules, to examine and audit its financial and operating records, and make copies thereof or
abstracts therefrom, and to discuss its affairs, finances and accounts with its directors,
officers, employees, agents and servants and with the Independent Accountant, and in furtherance
thereof, each Borrower hereby authorizes all of such Persons to discuss the same with
representatives and independent contractors of the Lender at such times and as often as the Lender
may reasonably request, all at the reasonable expense of the Borrowers. If the Loan Parties now or
at any time hereafter maintain any records (including without limitation computer generated records
and computer software programs for the generation of such records) in the possession of a third
party, the Borrowers, upon request of the Lender, shall notify such party to permit the Lender free
access to such records at all reasonable times and to provide the Lender with copies of any records
it may request, all at the

26

 

Borrowers’ reasonable expense. After the occurrence and during the
continuance of a Potential Default or an Event of Default, the Lender may do any of the foregoing
as often and at such times as the Lender may determine in its sole discretion without advance
notice.

     Section 6.04 Compliance with Laws. Each Borrower shall, and shall cause each of the
other Loan Parties to, conduct its business in compliance with all applicable Laws, including,
without limitation, the Fair Labor Standards Act of 1938, 29 U.S.C. §201 et seq., as amended, and
the Immigration Reform and Control Act of 1986, 8 U.S.C. §1324a, as amended, except to the extent
that the failure to be in compliance with any applicable Law could not reasonably be expected to
have a Material Adverse Effect.

     Section 6.05 Notices. (a) The Borrowers shall promptly notify the Lender of the
following events:

          (i) The occurrence of a Potential Default, an Event of Default or any event or
events which, individually or in the aggregate, have had, or could reasonably be
expected to have, a Material Adverse Effect;

          (ii) The entry of a Lien against the Collateral or the other assets and
properties of the Loan Parties;

          (iii) Any litigation, arbitration or investigation or proceeding of any
Authority not previously disclosed by the Borrowers to the Lender which has been
instituted or, to the knowledge of the Borrowers, is threatened against the Loan
Parties or to which any of their properties, assets or revenues are subject which
(A) if adversely determined, could reasonably be expected to have a Material Adverse
Effect, or (B) relates to this Agreement, any Collateral Document or any other Loan
Document;

          (iv) Any development which could reasonably be expected to have a Material
Adverse Effect shall occur in any litigation, arbitration or investigation or
proceeding of any Authority against (or, to the knowledge of the Borrowers
affecting) the Loan Parties or any of their assets or properties which has
previously been disclosed by the Borrowers to the Lender;

          (v) The occurrence of any default under any lease, bailment agreement or other
agreement relating to the location where Collateral may be stored or any other
business locations of the Loan Parties or the receipt by the Borrowers of notice of
the alleged occurrence of a default under any such Contractual Obligation, in each
case which could reasonably be expected to have, individually or together with other
similar occurrences, a Material Adverse Effect;

          (vi) The occurrence of any of the following events except to the extent
disclosed on Schedule 5.14: (A) any and all enforcement, cleanup, removal
or other governmental or regulatory actions instituted, completed or threatened
against the Loan Parties or any of their respective Environmental Affiliates or
properties pursuant to any applicable Environmental Laws, (B) any other
Environmental Claims against the Loan Parties or any of their respective
Environmental Affiliates, or any past or present acts, omissions, events or
circumstances (including but not limited to any Release at, on or under any facility
or property now or previously owned, operated or leased by the Loan Parties or any
of their respective Environmental Affiliates) that is known to the Borrowers and
could form the basis of such Environmental Claim, which Environmental Claim
individually or in the aggregate, could reasonably be expected to have a Material
Adverse Effect, and (C) any environmental or similar condition on any real property

27

 

adjoining or in the vicinity of the property of the Loan Parties that is known to
the Borrowers and could reasonably be anticipated to cause such property or any part
thereof to be subject to any restrictions on the ownership, occupancy,
transferability or use of such property under any Environmental Laws which could
reasonably be expected to have a Material Adverse Effect;

          (vii) Any breach or non-performance of, or any default under, any Contractual
Obligation of the Loan Parties which could reasonably be expected to have a Material
Adverse Effect;

          (viii) The occurrence of any of the following events affecting the Borrowers or
any ERISA Affiliate, and the Borrowers shall also deliver to the Lender a copy of
any notice with respect to such event that is filed with an Authority and any notice
delivered by an Authority to the Borrowers or any ERISA Affiliate with respect to
such event:

               (A) an ERISA Event involving $50,000 or more;

               (B) a material increase in the Unfunded Pension Liability of any Pension Plan;

               (C) the adoption of, or the commencement of contributions to, any Plan subject
to Section 412 of the Code by the Borrowers or any ERISA Affiliate; or

               (D) the adoption of any amendment to a Plan subject to Section 412 of the Code,
if such amendment results in a material increase in contributions or Unfunded
Pension Liability;

          (ix) Any material change in accounting policies or financial reporting
practices by the Loan Parties;

          (x) Any change in the location of any of its places of business, or the
establishment of any new, or the discontinuance of any existing, place of business
or location of Collateral comprising more than ten percent (10.0%) of the total
value of all Collateral in the aggregate, and such notice shall contain details of
the new location and the name and address of the landlord or bailee (as applicable),
if any, of such new location; and

          (xi) Any material casualty or force majeure affecting the value of the
Collateral which could reasonably be expected to have a Material Adverse Effect.

        (b) Each notice under Section 6.05(a) shall be accompanied by a written statement by a
Responsible Officer of the Borrowers setting forth details of the occurrence referred to in such
notice, and stating what action the affected Loan Parties propose to take with respect thereto and
at what time.

     Section 6.06 Insurance. (a) Each Borrower shall, and shall cause each of the other
Loan Parties to, maintain insurance with respect to its business and properties (including the
Collateral) of such types, in such amounts and against such risks, hazards, loss, damage,
liabilities, casualties and contingencies as are customarily maintained by Persons engaged in the
same or similar business, such insurance to be with financially sound and reputable independent
insurers and to include, but not be limited to, comprehensive public liability, property and
casualty insurance, fire insurance with extended

28

 

coverage, flood insurance (where appropriate) and
worker’s compensation insurance, and in addition, will carry business interruption insurance in
such amounts as may be required by the Lender. In the case of insurance on any of the Collateral,
the Borrowers shall carry insurance in the full insurable value thereof. In no event shall any of
such insurance be maintained in an amount less than that which may reasonably be required by the
Lender. Such insurance shall include a noncontributory, standard loss payee or mortgagee
endorsement, as appropriate, naming the Lender as loss payee and an additional insured, as its
interests may appear, and provide for written notice to the Lender at least thirty (30) days prior
to any cancellation, non-renewal or amendment thereof. Upon request of the Lender, the Borrowers
shall deliver to the Lender original or duplicate policies of such insurance. If a Loan Party
fails to maintain the aforementioned insurance, the Lender may do so and such cost may, at the
Lender’s option, constitute a Revolving Credit Loan disbursed to the Borrowers.

          (b) The Borrowers assign and set over to the Lender all monies which may become payable on
account of any insurance on the Collateral (“Insurance Proceeds”). The Borrowers shall
promptly notify the Lender of any loss, damage, or destruction to the Collateral, whether or not
covered by insurance. So long as no Event of Default has occurred and is continuing, if the
Insurance Proceeds are not greater than $1,000,000, then the Lender will permit the Borrowers to
apply such proceeds to
either (i) repair the damaged Collateral, or (ii) replace the destroyed Collateral with Collateral
of the same or similar type and function and of at least equivalent value (in the reasonable
business judgment of the Lender), provided such replacement Collateral is made subject to the lien
and security interest created by the Collateral Documents and constitutes a perfected first
priority lien on and security interest in such Collateral (subject only to Permitted Liens). If an
Event of Default has occurred and is continuing or the Insurance Proceeds are greater than
$1,000,000, the Lender may, in its reasonable discretion, require the Borrowers to use such
proceeds to prepay the Loans or agree to permit the Borrowers to apply such proceeds to either (x)
repair the damaged Collateral, or (y) replace the destroyed Collateral with Collateral of the same
or similar type and function and of at least equivalent value (in the sole judgment of the Lender),
provided such replacement Collateral is made subject to the lien and security interest created by
the Collateral Documents and constitutes a perfected first priority lien on and security interest
in such Collateral (subject only to Permitted Liens). To the extent not used to replace, repair,
restore or rebuild the Collateral, the Insurance Proceeds shall be applied to the Obligations in
such order as the Lender shall determine in its sole discretion. Any balance of Insurance Proceeds
remaining in the possession of the Lender after payment in full of the Obligations shall be paid
over to the Borrowers.

     Section 6.07 Taxes. Except to the extent that the validity or amount thereof is being
contested in good faith and by appropriate proceedings with adequate reserves maintained in
accordance with GAAP, the Borrowers shall, and shall cause each of the other Loan Parties to, pay
and discharge or cause to be paid and discharged, all taxes, assessments and governmental charges
and social security and wage tax withholdings imposed upon the Loan Parties and their respective
properties prior to the date when any penalty would accrue for the nonpayment thereof.

     Section 6.08 ERISA Compliance. The Borrowers shall, and shall cause each of their
ERISA Affiliates to, (i) maintain each Plan in compliance in all material respects with the
applicable provisions of ERISA, the Code and other federal or state law, (ii) cause each Plan which
is qualified under Section 401(a) of the Code to maintain such qualification, and (iii) make all
required contributions to any Plan subject to Section 412 of the Code.

     Section 6.09 Maintenance of Properties. Subject to Dispositions permitted under
Section 7.12, the Borrowers shall, and shall cause each of the other Loan Parties to, maintain and
preserve the Collateral and their other properties (including, without limitation, its leased
properties) in good repair, working order and condition (ordinary wear and tear excepted), and make
all necessary or appropriate repairs, renewals, replacements, substitutions, additions, betterments
and improvements thereto so that the efficiency for all such properties shall at all times be
properly preserved and maintained.

29

 

     Section 6.10 Maintenance of Existence; Management. (a) The Borrowers shall, and shall
cause each of the other Loan Parties to, maintain their corporate, partnership or limited liability
company existence in good standing, and maintain in effect all licenses, permits, franchises and
privileges necessary for the normal conduct of their respective businesses other than those
licenses, permits, franchises and privileges, the failure of which to maintain, could not
reasonably be expected to have a Material Adverse Effect.

          (b) Each Borrower will promptly notify the Lender in writing of any change in its board of
directors or executive officers.

     Section 6.11 Environmental Matters. (a) The Borrowers shall, and shall cause each of
the other Loan Parties to, conduct their operations and keep and maintain their properties in
compliance in all material respects with all Environmental Laws.

          (b) Upon the written request of the Lender, the Borrowers shall submit to the Lender, at the
Borrowers’ sole cost and expense, at reasonable intervals, a report providing an update of the
status of any environmental, health or safety compliance, hazard or liability issue identified in
any notice or report that could, individually or in the aggregate, result in liability in excess of
$1,000,000, provided, that so long as no Potential Default or Event of Default exists and is
continuing, the Borrowers shall not be obligated to prepare more than one (1) such report per
Fiscal Year.

          (c) The Borrowers shall deliver to the Lender, as soon as practicable following the sending or
receipt thereof by the Borrowers and the other Loan Parties, a copy of any and all written
communications with respect to (i) any Environmental Claims that, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect, (ii) any Release required to be
reported to any federal, state or local governmental or regulatory agency unless such Release could
not reasonably be expected to have a Material Adverse Effect, and (iii) any request for information
from any governmental agency that suggests such agency is investigating whether the Loan Parties
may be potentially subject to an Environmental Claim unless such Environmental Claim could not
reasonably be expected to have a Material Adverse Effect.

          (d) The Borrowers shall deliver to the Lender prompt written notice describing in reasonable
detail (i) any proposed acquisition of stock, assets, or property by the Loan Parties that could
reasonably be expected to (A) expose the Loan Parties to, or result in, Environmental Claims that
could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect;
or (B) affect the ability of the Loan Parties to maintain in full force and effect all material
governmental authorizations required under any Environmental Laws for their respective operations,
and (ii) any proposed action to be taken by the Loan Parties to modify current operations in a
manner that would reasonably be expected to subject the Loan Parties to any material additional
obligations or requirements under any Environmental Laws where such obligations or reimbursements
could reasonably be expected to have a Material Adverse Effect.

          (e) The Borrowers shall promptly undertake any and all investigations, studies, sampling,
testing, abatement, cleanup, removal, remediation or other response actions necessary to remove,
remediate, clean up or abate any Hazardous Materials on, under or about any property or facility
that is in violation of any Environmental Laws or that presents a material risk of giving rise to
an Environmental Claim that could, in either case, reasonably be expected to have a Material
Adverse Effect. In the event the Borrowers undertake any such action with respect to any Hazardous
Materials, the Borrowers shall conduct and complete such action in material compliance with all
applicable Environmental Laws and in accordance in all material respects with the policies, orders
and directives of all federal, state and local governmental Authorities except when, and only to
the extent that, the liability of the Borrowers with respect to such Hazardous Materials is being
contested in good faith by the Borrowers.

30

 

          (f) The Borrowers shall promptly take any and all reasonable actions necessary to (i) cure any
violation of applicable Environmental Laws by the Loan Parties where such violation could
reasonably be expected to have a Material Adverse Effect, and (ii) make an appropriate response to
any Environmental Claim against the Loan Parties (of which the Borrowers have notice) where such
Environmental Claim could reasonably be expected to have a Material Adverse Effect, and discharge
any material obligations it may have to any Person thereunder.

     Section 6.12 Reimbursable Costs and Expenses. The Borrowers shall pay all
Reimbursable Costs and Expenses of the Lender incurred in connection with, or incident to:

          (i) the preparation, administration, amendment, modification or waiver of, or
consent with respect to, this Agreement and the other Loan Documents, including any
workout or other restructuring of the Obligations;

          (ii) any litigation, suit, proceeding, contest, dispute or action (whether
instituted by the Lender or any other Person) in any way relating to the Collateral,
this Agreement, the Collateral Documents and the other Loan Documents, including any
litigation, suit, proceeding, contest, dispute or action taken by or on behalf of
the Lender under the Bankruptcy Code or any other similar Law now or hereafter in
effect;

          (iii) the inspection and audit of the books and records of the Loan Parties;

          (iv) the inspection, management, protection, custody, appraisement, sale or
collection of, or realization upon, the Collateral and any other assets or
properties securing the payment of the Obligations;

          (v) the collection or attempted collection of the Obligations; and

          (vi) the perfection, protection, continuation, enforcement or termination of
any Liens granted to the Lender to secure payment of the Obligations.

In the event the Lender pays any Reimbursable Costs and Expenses, upon payment thereof, all such
Reimbursable Costs and Expenses may, at the Lender’s option, constitute a Revolving Credit Loan
disbursed to the Borrowers as a Prime Rate Tranche.

     Section 6.13 Further Assurances. (a) Promptly upon request by the Lender, the
Borrowers shall, and shall cause each of the other Loan Parties to, take such further actions and
execute, acknowledge, deliver, record, re-record, file, re-file, register and re-register, any and
all such further, security agreements, mortgages, assignments, estoppel certificates, financing
statements and continuations thereof, termination statements, notices of assignment, transfers,
certificates, assurances and other instruments the Lender may reasonably require from time to time
in order to (i) subject to the Liens created by any of the Collateral Documents any of the
properties, rights or interests covered by any of the Collateral Documents, (ii) perfect and
maintain the validity, effectiveness and priority of any of the Collateral Documents and the Liens
intended to be created thereby, and (iii) better assure, convey, grant, assign, transfer, preserve,
protect and confirm to the Lender the rights granted or now or hereafter intended to be granted to
the Lender under any Loan Document or under any other document executed in connection therewith.
The Borrowers further agree that a carbon, photographic, facsimile or other reproduction of any
financing statement or the Collateral Documents shall be sufficient as a financing statement and
amendments, renewals and continuations thereof, and may be filed as such. EACH BORROWER AUTHORIZES
THE LENDER TO FILE AND RECORD, AND EACH BORROWER FURTHER IRREVOCABLY APPOINTS THE LENDER, ITS
AGENTS AND EMPLOYEES, AS ITS ATTORNEY-IN-FACT TO EXECUTE, DELIVER, FILE AND RECORD

31

 

IN THE NAME OF
SUCH BORROWER, ANY FINANCING STATEMENTS OR ANY OF THE OTHER AFOREMENTIONED ITEMS AT ANY TIME AFTER
SUCH BORROWER HAS FAILED TO DELIVER THE SAME TO THE LENDER AFTER REQUEST THEREFOR BY THE LENDER.

          (b) The Borrowers shall, and shall cause each of the other Loan Parties to, provide such
additional documents, and perform such additional acts, as the Lender may reasonably deem necessary
to effectively carry out the purposes of, or to confirm, this Agreement, the Collateral Documents
and the other Loan Documents, or to enable the Lender to enforce any of its rights hereunder or
thereunder.

     Section 6.14 Payment of Liabilities. Except to the extent the validity or amount
thereof is being contested in good faith and by appropriate proceedings with adequate reserves
maintained in accordance with GAAP, the Borrowers shall, and shall cause each of the other Loan
Parties to, pay or discharge or cause to be paid or discharged:

            (i) on or prior to the date when due, all lawful claims of materialmen,
mechanics, carriers, warehousemen, landlords and other like Persons which, if
unpaid, might result in the creation of a Lien upon any property of the Loan
Parties;

            (ii) on or prior to the date when due, all other lawful claims which, if
unpaid, might result in the creation of a Lien upon any property of the Loan
Parties; and

            (iii) all other current liabilities of the Loan Parties which are overdue more
than sixty (60) days.

     Section 6.15 True Disclosures. The Borrowers shall ensure that all written
information, exhibits and reports furnished to the Lender by the Loan Parties do not and will not
contain any untrue statement of a material fact and do not and will not omit to state any material
fact or any fact necessary to make the statements contained therein not misleading in light of the
circumstances that existed at the time such statement was made provided that, with respect
to any projected financial information, the Borrowers represent only that such information was
prepared in good faith based upon assumptions believed to be reasonable at the time. From time to
time as may be requested by the Lender (which request will not be made more frequently than once
each year absent the occurrence and continuance of a Potential Default or an Event of Default), the
Borrowers shall supplement each disclosure schedule provided by the Borrowers to the Lender in
connection with the representations of the Borrowers contained in Article V, or each representation
herein or in any other Loan Document, with respect to any matter hereafter arising which, if
existing or occurring at the Closing Date, would have been required to be set forth or described in
such disclosure schedule or as an exception to such representation or which is necessary to correct
any information in such disclosure schedule or representation which has been rendered inaccurate
thereby (and, in the case of any supplements to any disclosure schedule, such disclosure schedule
shall be appropriately marked to show the changes made therein); provided that (i) no such
supplement to any such disclosure schedule or representation shall be deemed a waiver of any
Potential Default or Event of Default resulting from the matters disclosed therein, except as
consented to by the Lender in writing; and (ii) no supplement shall be required as to
representations and warranties that relate solely to the Closing Date.

     Section 6.16 Security Interests. (a) The Borrowers shall defend the Collateral
against all claims and demands of all Persons at any time claiming the same or any interest
therein. The Borrowers shall comply with the requirements of all state and federal laws in order
to grant to the Lender valid and perfected first priority security interests in the Collateral,
subject to Permitted Liens. Each Borrower irrevocably authorizes the Lender at any time and from
time to time to file in any jurisdiction any initial financing statements, amendments thereto and
continuations thereof that (i) indicate the Collateral as

32

 

described in the Collateral Documents,
regardless of whether any particular asset comprised in the Collateral falls within the scope of
Article 9 of the UCC of the state or such jurisdiction, and (ii) contain any other information
required by part 5 of Article 9 of the applicable UCC for the sufficiency or filing office
acceptance of any financing statement or amendment, including whether a Borrower is an
organization, the type of organization and any organization identification number issued to such
Borrower, or in the case of a financing statement filed as a fixture filing or indicating
Collateral as as-extracted collateral or timber to be cut, a sufficient description of real
property to which the Collateral relates. Each Borrower also ratifies its authorization for the
Lender to have filed in any jurisdiction any like initial financing statements or amendments
thereto if filed prior to the Closing Date.

          (b) Upon request of the Lender after the occurrence of a Potential Default or Event of
Default, the Borrowers shall use commercially reasonable efforts to obtain a landlord’s agreement,
mortgagee agreement or bailee letter, as applicable, from the lessor of each leased property or
mortgagee of owned property or with respect to any warehouse, processor or other location where
Collateral is located, which agreement or letter shall contain a waiver or subordination of all
Liens or claims that the landlord, mortgagee or bailee may assert against the Collateral at that
location, and shall otherwise be satisfactory in form and substance to the Lender (each such
agreement or letter being a “Collateral Access Agreement”).

     Section 6.17 New Guarantors. The Borrowers will cause each Subsidiary of the
Borrowers created, acquired or otherwise existing on or after the Closing Date to immediately
execute and deliver a Guaranty Agreement, and shall execute and deliver, and cause each such
Subsidiary to execute and deliver, to the Lender, all such Loan Documents and other documents, and
take all such actions, and cause each such Subsidiary to take all such actions, as may reasonably
be required by the Lender in connection therewith.

ARTICLE VII. NEGATIVE COVENANTS

Until payment in full of all of the Revolving Credit Loans and other Obligations, cancellation or
expiration of all Letters of Credit and termination of all commitments of the Lender to make
Revolving Credit Loans, the Borrowers covenant and agree to perform each of the covenants set forth
below in this Article VII unless the Lender waives compliance in writing.

     Section 7.01 Financial Covenants. (a) Leverage Ratio. The Borrowers will not permit
the Leverage Ratio of SWS and its Subsidiaries, on a consolidated basis, to exceed 3.0 to 1.0 at
any time. The Leverage Ratio of SWS and its Subsidiaries, on a consolidated basis, shall be tested
at the end of each Fiscal Quarter of SWS, and calculated for the four (4) consecutive Fiscal
Quarters then ended, treating each such rolling period of four (4) consecutive Fiscal Quarters as
one accounting period; and

          (b) Adjusted Tangible Net Worth. The Borrowers will not permit the Adjusted Tangible Net
Worth of SWS and its Subsidiaries, on a consolidated basis, to be less than $75,000,000 at any time
through April 30, 2006, and after that date, in an amount to be agreed upon by the Borrowers and
Lenders on or before May 31, 2006. If the Borrowers and the Lender fail to so agree, the Adjusted
Tangible Net Worth shall be in an amount required by the Lender. Adjusted Tangible Net Worth shall
be tested at the end of each Fiscal Quarter of SWS. From April 30, 2006 until a new amount is
established as aforesaid either by agreement of the Borrowers and the Lender or by the Lender
alone, the required Adjusted Tangible Net Worth shall continue to be $75,000,000.

     Section 7.02 Fundamental Changes. The Borrowers will not, and will not permit any
other Loan Party to, merge, consolidate or amalgamate with or into, or convey, transfer, lease or
otherwise dispose of (whether in one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter acquired) to or in favor of any
Person, or dissolve, liquidate, reorganize or adopt a plan of exchange as to their equity interests
except that any Loan Party may, so long as no

33

 

Potential Default or Event of Default shall have
occurred or be continuing or result therefrom, be merged or combined with or into any Borrower or
any wholly-owned Subsidiary of a Borrower, provided that if such merger involves a Borrower, (i)
such Borrower shall be the surviving entity and (ii) no Change of Control shall result therefrom.

     Section 7.03 Restricted Payments. The Borrowers will not, and will not permit any
other Loan Party to, declare or make any dividend payment or other distribution of assets,
properties, cash, rights, obligations or securities on account of any
shares of any class of its capital stock, or purchase, redeem or otherwise acquire for value any
shares of its capital stock or any warrants, rights or options to acquire such shares, now or
hereafter outstanding, provided, however, so long as no Potential Default or Event of Default has
occurred and is continuing or would be caused thereby, (i) the Borrowers may make dividend payments
or other distributions to their shareholders, and (ii) the other Loan Parties may make dividend
payments or other distributions to the Borrowers.

     Section 7.04 Indebtedness. The Borrowers will not, and will not permit any other Loan
Party to, create, incur, assume, suffer to exist, or otherwise become or remain directly or
indirectly liable with respect to, any Indebtedness, except:

          (i) Indebtedness outstanding to the Lender or its Affiliates, including
Indebtedness incurred pursuant to this Agreement, Hedging Contracts or otherwise;

          (ii) Indebtedness consisting of Guarantees permitted pursuant to Section 7.05;

          (iii) Indebtedness existing on the Closing Date and set forth on Schedule
5.07; and any extensions, refinancing, renewals or replacements of any such
Indebtedness; provided that the principal amount of such Indebtedness is not
increased in connection therewith or secured by any additional assets;

          (iv) Indebtedness owing by any Loan Party to any other Loan Party with respect
to intercompany loans, provided, that:

          (A) the applicable Loan Parties shall have executed and
delivered to such Loan Party, a demand note (collectively, the
“Intercompany Notes”) to evidence any such intercompany Indebtedness
owing at any time by any Loan Party to any other Loan Party, which
Intercompany Notes shall be in form and substance reasonably
satisfactory to the Lender and shall be pledged and delivered to the
Lender as additional collateral security for the Obligations;

          (B) there are no restrictions whatsoever on the ability of the
applicable Loan Party to repay such loan;

          (C) the Loan Parties shall record all intercompany transactions
on their books and records in a manner reasonably satisfactory to
the Lender;

          (D) at the time any such intercompany loan or advance is made
by a Loan Party and after giving effect thereto, such Loan Party
shall be Solvent; and

          (E) no Event of Default would occur and be continuing after
giving effect to any such proposed intercompany loan;

34

 

          (v) accounts payable to trade creditors on ordinary and customary terms arising
out of transactions (other than borrowings) in the ordinary course of business,
provided that such accounts payable shall be promptly paid and discharged within
ninety (90) days from the date when due, except those accounts which are validly
being contested;

          (vi) purchase money Indebtedness (including Capital Lease Obligations)
representing the portion of the purchase price of any office equipment, data
processing equipment (including, without limitation, computer and computer
peripheral equipment), trucks, tractors, trailers and other transportation equipment
which may be secured by Liens permitted under Section 7.06(iii), provided such
purchase money Indebtedness shall not exceed, in the aggregate, $7,500,000
outstanding at any time;

          (vii) Guarantees of Indebtedness of any other Loan Party;

          (viii) Indebtedness consisting of surety bonds that a Loan Party is required to
obtain in order to comply with applicable Law or the requirements of any Authority;

          (ix) contingent liabilities arising from the endorsement of negotiable or other
instruments for deposit or collection or similar transactions in the ordinary course
of business; and

          (x) Other Indebtedness incurred after the Closing Date provided that, at the
time of the creation, incurrence or assumption of such other Indebtedness and after
giving effect thereto, the aggregate amount of all such other Indebtedness of the
Loan Parties does not exceed an amount equal to $7,500,000.

     Section 7.05 Investments, Acquisitions, Loans and Advances. The Borrowers will not,
and will not permit any other Loan Party to, purchase or acquire any capital stock, equity
interest, or obligations or other securities of, or any interest in, any Person, including, without
limitation, becoming a partner in any partnership or joint venture, or make any Acquisition of any
Person or any advance, loan, extension of credit or capital contribution to any Person, or create,
incur, assume or suffer to exist any Guarantee, or make any commitment for any of the foregoing,
except:

          (i) those existing on the Closing Date and described on Schedule 7.05
provided that the Loan Parties may not increase the amount thereof (as reduced from
time to time by any sale thereof), other than increases due solely to any change in
the valuation thereof.;

          (ii) investments in cash and Cash Equivalents;

          (iii) extensions of credit in the nature of accounts receivable or notes
receivable arising from the sale or lease of goods or services in the ordinary
course of business;

          (iv) loans and advances for travel and entertainment expenses, relocation costs
and similar purposes to officers and employees of the Loan Parties, all of which are
incurred in the ordinary course of business, up to a maximum of $100,000 to any
officer or employee and up to a maximum of $300,000 in the aggregate at any one time
outstanding; and

35

 

          (v) Loans and advances by a Loan Party to any other Loan Party permitted under
Section 7.04(iv);

          (vi) Acquisitions, provided that (A) immediately before and after giving effect
to such Acquisition, no Default or Potential Default shall exist or shall have
occurred and be continuing and the representations and warranties contained in
Article V shall be true and correct on and as of the date thereof (both before and after such
Acquisition is consummated) as if made on the date such Acquisition is consummated,
(B) at least five (5) Business Days’ prior to the consummation of such Acquisition,
the Borrowers shall have provided to the Lender an opinion of counsel as to
appropriate matters, and (C) at least five (5) Business Days’ prior to the
consummation of such Acquisition, the Borrowers shall have provided to the Lender a
certificate of a Responsible Officer of the Borrowers attaching pro forma
computations acceptable to the Lender to demonstrate compliance with all financial
covenants hereunder giving effect to the Acquisition and for the four fiscal
quarters following such Acquisition, each stating that such Acquisition complies
with this Section 7.05(vi), all laws and regulations and that any other conditions
under this Agreement relating to such transaction have been satisfied, and such
certificate shall contain such other information and certifications as requested by
the Lender and be in form and substance satisfactory to the Lender, and (d) the
board of directors (or similar governing body) and the management of the target of
such Acquisition has approved such Acquisition;

          (vii) Guarantees existing or contemplated as of the Closing Date and listed in
Schedule 7.05 attached hereto; and

          (viii) Guarantees constituting Indebtedness permitted by Section 7.04;

          (ix) investments consisting of non-cash consideration with respect to any sale
of assets by the Loan Party;

          (x) investments by any Loan Party in any other Loan Party;

          (xi) Investments not otherwise permitted by this Section 7.05 in an amount not
to exceed $7,500,000 at anytime outstanding; and

          (xii) investments consisting of non-cash consideration with respect to any sale
of assets by any Borrower or any Loan Party; and

          (xiii) investments consisting of extensions of credit, including without
limitation, in the nature of accounts receivable arising from the grant of trade
credit or prepayments or similar transactions entered into in the ordinary course of
business and investments by any Loan Party in satisfaction or partial satisfaction
thereof from financially troubled account debtors to prevent or limit financial
loss.

     Section 7.06 Liens. The Borrowers will not, and will not permit any other Loan Party
to, directly or indirectly, make, create, incur, assume or suffer to exist any Lien upon or with
respect to the Collateral or any of their other assets or properties, whether now owned or
hereafter acquired, other than the following Liens (each a “Permitted Lien” and
collectively, “Permitted Liens”):

          (i) Liens existing on the Closing Date and described on Schedule 7.06
provided the principal amount secured thereby is not hereafter increased and no
additional assets or properties of the Loan Parties become subject to such Liens;

36

 

          (ii) Liens in favor of the Lender, including those created under the Collateral
Documents;

          (iii) purchase money security interests in property acquired or held by the
Loan Party or leased subject to a Capital Lease Obligation, in the ordinary course
of
business, securing Indebtedness incurred or assumed for the purpose of financing all
or any part of the cost of acquiring such property; provided that (A) any such Lien
attaches to such property concurrently with or within 20 days after the acquisition
thereof, (B) such Lien attaches solely to the property so acquired in such
transaction, (C) the principal amount of the debt secured thereby does not exceed
100% of the cost of such property, and (D) the principal amount of the Indebtedness
secured by any and all such purchase money security interests shall not at any time
exceed the amount permitted under Section 7.04(vi);

          (iv) Liens (other than any Lien imposed by ERISA) consisting of pledges or
deposits made to secure payment of workers’ compensation insurance (or to
participate in any fund in connection with workers’ compensation insurance),
unemployment insurance or social security programs;

          (v) Liens in favor of mechanics, warehousemen, landlords, carriers,
materialmen, repairmen and other similar Liens arising in the ordinary course of
business which are not delinquent or remain payable without penalty or which are
being contested in good faith and by appropriate proceedings, which proceedings have
the effect of preventing the forfeiture or sale of the property subject thereto;

          (vi) Liens for taxes, assessments and other governmental charges or levies
which are not delinquent or remain payable without penalty or are being contested in
good faith and as to which adequate reserves have been established, provided that no
notice of lien has been filed or recorded under the Code;

          (vii) Liens on the property of the Loan Parties securing (A) the non-delinquent
performance of bids, trade contracts (other than for borrowed money), leases,
statutory obligations, (B) contingent obligations on surety and appeal bonds, and
(C) other non-delinquent obligations of a like nature; in each case, incurred in the
ordinary course of business, provided all such Liens in the aggregate could not
(even if enforced) reasonably be expected to have a Material Adverse Effect;

          (viii) encumbrances consisting of zoning restrictions, easements, rights-of-way
or other similar restrictions on the use of real property incurred in the ordinary
course of business, provided that such items, in the aggregate, are not substantial
in amount, do not materially impair the use of such property for the purposes
intended or interfere with the ordinary conduct of the business of a Loan Party and
none of which is violated by existing or proposed restrictions on land use; and

          (ix) Liens arising solely by virtue of any statutory or common law provision
relating to Lender’s liens, rights of set-off or similar rights and remedies as to
deposit accounts or other funds maintained with a creditor depository institution;
provided that (A) such deposit account is not a dedicated cash collateral account
and is not subject to restrictions against access by the Loan Parties in excess of
those set forth by regulations promulgated by the FRB, and (B) such deposit account
is not intended by the Loan Parties to provide collateral to the depository
institution.

37

 

     Section 7.07 Affiliate Transactions. The Borrowers will not, and will not permit any
other Loan Party to, enter into or carry out any transaction with an Affiliate (including, without
limitation, purchasing property or services from or selling property or services to any Affiliate),
except:

          (i) those transactions set forth on Schedule 7.07;

          (ii) the entry into and carrying out of sales and purchases of goods and
services or leases of real property by the Loan Parties with Affiliates if done in
the ordinary course of business, pursuant to the reasonable requirements of its
business upon terms no less favorable than would be obtainable in a comparable
arm’s-length transaction and at least as favorable as comparable sales to or
purchases from non-affiliated Persons or entities, if any; and

          (iii) transactions between or among the Loan Parties not involving an Affiliate
that is not a Loan Party.

     Section 7.08 Business and Accounting Changes. No Borrower will (i) change its
jurisdiction of incorporation or formation, change its corporate, partnership or trade name, or
change its chief executive office, principal place of business, warehouses or locations at which
Collateral is held or stored, or the location of its records concerning the Collateral, in each
case without at least thirty (30) days prior written notice to the Lender and after the Lender’s
written acknowledgment that any reasonable action requested by Lender in connection therewith,
including to continue the perfection of any Liens in favor of the Lender in any Collateral, has
been completed or taken, and provided that any such new location shall be in the continental United
States or Canada, (ii) directly or indirectly engage in any business other than those described in
Section 5.22 and other business activities reasonably related thereto provided the principal
business conducted by each Borrower shall continue to be the business described in Section 5.22,
(iii) discontinue any material part of the business presently being conducted by it, or (iv) make,
or permit any other Loan Party to make, any change to its Fiscal Year or significant change in
accounting treatment or reporting practices except as required by GAAP.

     Section 7.09 Insurance. The Borrowers will not, and will not permit any other Loan
Party to, insure itself or any of its properties through captive insurance companies or through
self-insurance, except worker’s compensation self-insurance.

     Section 7.10 Intentionally Left Blank.

     Section 7.11 Hazardous Materials. The Borrowers will not, and will not permit any
other Loan Party to, allow any Hazardous Materials to be stored, contained, incorporated or used in
or on any of its business locations, other than in compliance with all applicable Environmental
Laws and other applicable Laws, or allow to occur any Release on or from any such properties at any
time where such Release could reasonably be expected to have a Material Adverse Effect.

     Section 7.12 Disposition of Assets. The Borrowers will not, and will not permit any
other Loan Party to, directly or indirectly, make a Disposition of (whether in one or a series of
transactions) any of its property (including accounts and notes receivable, with or without
recourse) or enter into any agreement or commitment to do any of the foregoing, except:

          (i) Dispositions of Inventory, or used, obsolete, worn-out or surplus
equipment, all in the ordinary course of business;

          (ii) the sale of equipment to the extent that such equipment is exchanged for
credit against the purchase price of equipment used in the selling Loan Party’s

38

 

business, or the proceeds of such sale are promptly applied to the purchase price of
equipment used in the selling Loan Party’s business;

          (iii) Dispositions resulting from the bona fide exercise by an Authority of its
actual power of eminent domain or other disposition required by applicable law; and

          (vi) Dispositions of property subject to a Permitted Lien that are transferred
to a lienholder or its designee in satisfaction or settlement of the lienholder’s
claim or a realization upon a security interest permitted under this Agreement.

     Section 7.13 Intentionally Left Blank..

     Section 7.14 Anti-Terrorism Laws. The Borrowers will not, and will not permit any
other Loan Party to, (i) conduct any business or engage in any transaction or dealing with any
Blocked Person, including the making or receiving of any contribution of funds, goods or services
to or for the benefit of any Blocked Person, (ii) deal in, or otherwise engage in any transaction
relating to, any property or interests in property blocked pursuant to the Executive Order No.
13224; or (iii) engage in or conspire to engage in any transaction that evades or avoids, or has
the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in
the Executive Order No. 13224, the USA Patriot Act or any other Anti-Terrorism Law. The Borrowers
shall deliver to the Lender any certification or other evidence requested from time to time by the
Lender in its sole discretion, confirming compliance with this Section 7.14.

     Section 7.15 ERISA Compliance. No Borrower will, and will not suffer or permit any of
its ERISA Affiliates to, (i) engage in a prohibited transaction or violation of the fiduciary
responsibility rules with respect to any Plan which has resulted or could reasonably be expected to
result in liability of the Borrowers in an aggregate amount in excess of $50,000; (ii) cause any
“accumulated funding deficiency” as defined in ERISA and/or the Code; (iii) terminate any Plan in a
manner which could result in the imposition of a Lien on the property of the Borrowers pursuant to
ERISA; (iv) terminate or consent to the termination of any Multiemployer Plan; or (v) incur a
complete or partial withdrawal with respect to any Multiemployer Plan.

     Section 7.16 Changes in Organization Documents. The Borrowers will not, and will not
permit any other Loan Party to, amend in any respect its articles of incorporation (including any
provisions or resolutions relating to capital stock), by-laws, partnership agreement or other
Organization Documents in a manner that would materially and adversely affect the Lender without
obtaining the prior written consent of the Lender.

     Section 7.17 SWS. SWS will not engage in any trade or business other than incident to
its ownership of the limited partnership interests of Superior and Bradford and the membership
interest of the general partner of Superior and Bradford.

ARTICLE VIII. EVENTS OF DEFAULT

The occurrence or existence of any one or more of the following events or conditions (whatever the
reason for such occurrence or existence and whether voluntary, involuntary or effected by operation
of Law) shall constitute an Event of Default:

     Section 8.01 Failure to Make Payments. (a) The failure of the Borrowers to pay when
due any principal of the Revolving Credit Loans or any L/C Obligation.

39

 

          (b) The failure of the Borrowers to pay within five (5) days of when due any interest or fee
on the Revolving Credit Loans or any L/C Obligation, or any indemnity, expense or other amount due
under this Agreement or any of the other Loan Documents.

     Section 8.02 Representations and Warranties. Any representation or warranty made or
deemed to have been made by the Borrowers under this Agreement or any of the other Loan Documents
or any statement made by the Borrowers in any financial statement, certificate, report, exhibit or
document furnished by the Borrowers to the Lender pursuant to this Agreement or any of the other
Loan Documents shall prove to have been false or misleading in any material respect as of the time
when made or when reaffirmed (including by omission of material information necessary to make such
representation, warranty or statement, in light of the circumstances under which it was made, not
misleading).

     Section 8.03 Covenants and Agreements. (a) The failure of the Borrowers to observe,
perform or abide by any covenant, agreement or provision applicable to it contained in Sections
6.02 and 6.06 of this Agreement, Article VII of this Agreement or any Hedging Contracts which give
rise to Hedging Obligations.

          (b) The failure of the Borrowers to observe, perform or abide by any other covenant, agreement
or provision of this Agreement (other than any provision embodied in or covered by any other
Section of this Article VIII), or any covenant, agreement or provision of any other Loan Document,
if such failure shall continue for a period of thirty (30) days after the earlier to occur of (i)
the date upon which a Responsible Officer of the Borrowers knew or reasonably should have known of
such failure, or (ii) written notice from the Lender to the Borrowers of such failure.

     Section 8.04 Defaults on Other Obligations. Any Loan Party (i) fails to make any
payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or
otherwise) in respect of any Indebtedness or Guarantee having an aggregate principal amount
(including undrawn committed or available amounts and including amounts owing to all creditors
under any combined or syndicated credit arrangement) greater than $2,500,000 and such failure
continues after the applicable grace or notice period, if any, specified in the relevant document
on the date of such failure except to the extent the validity or amount thereof is being contested
in good faith by such Borrower with reserves maintained in amounts satisfactory to the Lender; or
(ii) fails to perform or observe any other condition or covenant, or any other event shall occur or
condition exist, under any agreement or instrument relating to any such Indebtedness or Guarantee
and such failure continues after the applicable grace or notice period, if any, specified in the
relevant document on the date of such failure, if the effect of such failure, event or condition is
to cause, or to permit the holder or holders of such Indebtedness or beneficiary or beneficiaries
of such Indebtedness (or a trustee or agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause such Indebtedness to be declared to be due and payable prior to its stated
maturity, or such Guarantee to become payable.

     Section 8.05 Insolvency and Other Events. (a) An Insolvency Proceeding shall be
instituted by a Loan Party with respect to itself and its properties, or a Loan Party shall take
any action in furtherance of any such Insolvency Proceeding.

          (b) Any Loan Party (i) has an involuntary Insolvency Proceeding commenced or filed against it
and any such proceeding or petition shall not be dismissed within ninety (90) days after
commencement; (ii) admits the material allegations of a petition against it in any Insolvency
Proceeding, or an order for relief (or similar order under non-U.S. law) is ordered in any
Insolvency Proceeding; or (iii) acquiesces in the appointment of a receiver, trustee, custodian,
conservator, liquidator, mortgagee in
possession (or agent therefor), or other similar Person for itself or a substantial portion of
its property or business.

40

 

          (c) Any Loan Party shall (x) become insolvent, or generally fail to pay, become unable to pay,
or state that it is or will be unable to pay, its debts as they become due, (y) voluntarily cease
to conduct its business in the ordinary course, or (z) make a general assignment for the benefit of
creditors.

     Section 8.06 Final Judgments. A Final Judgment or Final Judgments are rendered
against any Loan Party or against all of the Loan Parties (not adequately covered by insurance with
respect to which the relevant insurance company has acknowledged coverage or for which adequate
reserves are not maintained on the consolidated balance sheet of the Borrowers) which, individually
or in the aggregate, exceeds $2,500,000 and such Final Judgments remain in force, undischarged,
unsatisfied and unstayed, for more than thirty (30) days, whether or not consecutive.

     Section 8.07 Execution on Properties. A writ or warrant of attachment, garnishment,
execution, distraint or similar process shall have been issued against a Borrower or any of its
properties seeking to recover in excess of $2,500,000 which, within thirty (30) days after such
issuance, shall not have been discharged.

     Section 8.08 ERISA Events. Any of the following events shall occur: (i) An ERISA
Event shall occur with respect to a Pension Plan or Multiemployer Plan which has resulted or could
reasonably be expected to result in liability of the Borrowers under Title IV of ERISA to the
Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of $2,500,000; or
(ii) the aggregate amount of Unfunded Pension Liability among all Pension Plans of the Borrowers at
any time exceeds $2,500,000; or (iii) any Borrower or any ERISA Affiliate shall fail to pay when
due, after the expiration of any applicable grace period, any installment payment with respect to
its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate
amount in excess of $2,500,000.

     Section 8.09 The Collateral. There shall occur any uninsured material damage to, or
loss, theft or destruction of, any Collateral consisting of personal property having a value in
excess of $2,500,000, or a Person (other than the Lender) shall obtain possession of the Collateral
by levy, distraint, replevin, self-help or other means of exercising rights as a creditor, or the
Lender’s Liens in the Collateral are or become unperfected or no longer constitute first priority
liens or security interests therein (subject only to Permitted Liens).

     Section 8.10 Termination of Loan Documents. This Agreement or any other Loan Document
or any material term or provision hereof or thereof shall cease to be in full force and effect
(except in accordance with the express terms of this Agreement or such other Loan Document), or the
Borrowers or any other Person shall, or shall purport to, terminate (except in accordance with the
terms of this Agreement or such other Loan Document), repudiate, declare voidable or void or
otherwise contest, this Agreement or such other Loan Document or term or provision hereof or
thereof or any obligation or liability of the Borrowers or such other Person hereunder or
thereunder, as the case may be.

     Section 8.11 Change of Control. A Change of Control occurs unless consented to in
writing by the Lender.

ARTICLE IX. REMEDIES

     Section 9.01 Rights of the Lender Upon Default. Upon the occurrence and during the
continuance of an Event of Default:

          (i) If the Event of Default that has occurred is an Event of Default other than
those specified in Section 8.05, then the Lender may do all or any of the following:
(A) declare the Revolving Credit Commitment to be terminated, whereupon the Lender
shall have no further obligation to make Revolving Credit Loans, (B) terminate the
L/C

41

 

Commitment, whereupon the Lender shall have no further obligation to Issue or
reissue Letters of Credit, (C) cause the Borrowers to provide Cash Collateral for
all outstanding Letters of Credit in an amount equal to the aggregate Stated Amount
thereof, and (D) declare the unpaid principal amount of the Revolving Credit Loans,
interest accrued thereon and all other Obligations to be immediately due and payable
without presentment, demand, protest or further notice or act of any kind, all of
which are hereby expressly waived, and an action therefor shall immediately accrue;

          (ii) If the Event of Default that has occurred is an Event of Default specified
in Section 8.05, then (A) the Revolving Credit Commitment shall automatically
terminate and the Lender shall have no further obligation to make any Revolving
Credit Loan, (B) the L/C Commitment shall automatically terminate, whereupon the
Lender shall have no further obligation to Issue or reissue Letters of Credit, and
(C) the unpaid principal amount of all Revolving Credit Loans, interest accrued
thereon and all other Obligations shall automatically become due and payable without
presentment, demand, protest or further act or notice of the Lender of any kind, all
of which are hereby expressly waived by the Borrowers, and an action therefor shall
immediately accrue;

          (iii) With respect to the Collateral, the Lender shall have all of the rights
and remedies of a secured party or otherwise afforded to it by Law and such
additional rights and remedies as are contained in the Loan Documents;

          (iv) In addition to any rights and remedies of the Lender provided by Law, the
Lender is authorized at any time and from time to time, without prior notice to the
Borrowers, any such notice being waived by the Borrowers to the fullest extent
permitted by law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held by, and other Indebtedness at
any time owing by, the Lender to or for the credit or the account of the Borrowers
against any and all Obligations owing to the Lender, now or hereafter existing,
irrespective of whether or not the Lender shall have made demand under this
Agreement or any Loan Document and although such Obligations may be contingent or
unmatured. The Lender agrees promptly to notify the Borrowers after any such set-off
and application made by the Lender; provided, however, that the failure to give such
notice shall not affect the validity of such set-off and application;

          (v) The Lender may decrease the percentage of Eligible Accounts or Eligible
Inventory, or both, comprising part of the Borrowing Base; and

          (vi) At any time after ten (10) days’ prior written notice from the Lender to
the Borrowers of its intention to apply for a receiver, the Lender shall be entitled
to apply for and have a receiver appointed under state or federal law by a court of
competent jurisdiction in any action taken by the Lender to enforce the Lender’s
rights and remedies under this Agreement, the Collateral Documents and the other
Loan Documents in order to protect, preserve, manage, sell and otherwise dispose of
all or any portion of the
Collateral and continue the operation of the business of the Borrowers and to
collect all revenues and profits thereof and apply the same to the payment of all
expenses and other charges of such receivership, including the compensation of the
receiver, and to the payment of the Loans and other Reimbursable Costs and Expenses
due hereunder and under the Loan Documents until a sale or other disposition of such
Collateral.

     Section 9.02 Warrant of Authority. THE FOLLOWING PARAGRAPH SETS FORTH A WARRANT OF
AUTHORITY FOR AN ATTORNEY TO CONFESS JUDGMENT AGAINST THE BORROWERS, JOINTLY AND SEVERALLY. IN
GRANTING THIS WARRANT TO CONFESS

42

 

JUDGMENT, THE BORROWERS KNOWINGLY, INTENTIONALLY, VOLUNTARILY AND,
ON THE ADVICE OF COUNSEL, UNCONDITIONALLY WAIVE ANY AND ALL RIGHTS THE BORROWERS HAVE OR MAY HAVE
TO PRIOR NOTICE AND AN OPPORTUNITY FOR HEARING BEFORE A JUDGMENT CAN BE ENTERED HEREUNDER:

     THE BORROWERS UNCONDITIONALLY AND IRREVOCABLY AUTHORIZE AND EMPOWER ANY ATTORNEY OR ANY
PROTHONOTARY, CLERK OF COURT OR COURT OF RECORD, AS ATTORNEY FOR THE BORROWERS, TO APPEAR FOR THE
BORROWERS IN SUCH COURT AT ANY TIME AFTER THE OCCURRENCE OF AN EVENT OF DEFAULT AND CONFESS
JUDGMENT AGAINST THE BORROWERS, JOINTLY AND SEVERALLY, IN FAVOR OF THE LENDER FOR (i) POSSESSION OF
ANY OF THE COLLATERAL IN ANY ACTION FOR REPLEVIN INSTITUTED BY THE LENDER, AND (ii) FOR ALL OR ANY
PORTION OF THE OUTSTANDING BALANCE OF THE OBLIGATIONS (INCLUDING WITHOUT LIMITATION, THE
OUTSTANDING PRINCIPAL BALANCE OF THE REVOLVING CREDIT LOANS), TOGETHER WITH UNPAID INTEREST, COSTS
OF SUIT AND ATTORNEYS’ FEES ADDED FOR COLLECTION IN AN AMOUNT EQUAL TO FIVE PERCENT (5.0%) OF THE
SUM DUE. THE BORROWERS ALSO RELEASE ALL ERRORS, AND TO THE EXTENT PERMITTED BY LAW, WAIVE AND
RELEASE ALL RELIEF FROM ANY AND ALL APPRAISEMENT, STAY OR EXEMPTION LAW OF ANY STATE NOW IN FORCE
OR HEREAFTER ENACTED. IF A COPY OF THIS AGREEMENT, VERIFIED BY AFFIDAVIT OF THE LENDER OR SOMEONE
ON BEHALF OF THE LENDER, SHALL HAVE BEEN FILED IN SUCH ACTION, IT SHALL NOT BE NECESSARY TO FILE AN
ORIGINAL OF THIS AGREEMENT AS A WARRANT OF ATTORNEY. THE AUTHORITY AND POWER TO APPEAR FOR AND
ENTER JUDGMENT AGAINST THE BORROWERS SHALL NOT BE EXHAUSTED BY THE INITIAL EXERCISE THEREOF OR BY
ANY IMPERFECT EXERCISE THEREOF AND SHALL NOT BE EXTINGUISHED BY ANY JUDGMENT ENTERED PURSUANT
THERETO; THE AUTHORITY AND POWER MAY BE EXERCISED ON ONE OR MORE OCCASIONS, FROM TIME TO TIME, IN
THE SAME OR DIFFERENT JURISDICTIONS, AS OFTEN AS THE LENDER SHALL DEEM NECESSARY OR DESIRABLE, FOR
ALL OF WHICH THIS AGREEMENT OR A VERIFIED COPY HEREOF SHALL BE A SUFFICIENT WARRANT. TO THE EXTENT
PERMITTED BY LAW, INTEREST SHALL ACCRUE ON ANY JUDGMENT AT THE DEFAULT RATE APPLICABLE TO THE
REVOLVING CREDIT LOANS.

     Section 9.03 Cumulative Remedies. The rights, remedies and powers of the Lender under
this Agreement and the other Loan Documents are cumulative, irrevocable and non-exclusive of any
rights, remedies or powers which the Lender would otherwise have, including, without limitation,
the right of specific performance.

     Section 9.04 Waiver of Right to Marshal. Each Borrower for itself and all who may
claim through or under it, hereby expressly waives and releases all rights to have the Collateral,
or any part thereof, or any other of its properties, marshaled on any foreclosure, sale or other
enforcement thereof, and the Lender, or any court
in which the foreclosure of the liens or security interests in the Collateral are sought,
shall have the right as aforesaid to sell the Collateral as an entirety in a single parcel. Each
Borrower, upon the request of the Lender, shall provide the Lender with a specific written waiver
to evidence the intent of this Section 9.04.

43

 

ARTICLE X. MISCELLANEOUS

     Section 10.01 Automatic Debits of Fees. With respect to any commitment or other fee,
or any other cost or expense (including attorneys’ fees) due and payable to the Lender under the
Loan Documents, each Borrower irrevocably authorizes the Lender to debit any deposit account of
such Borrower with the Lender in an amount such that the aggregate amount debited from all such
deposit accounts does not exceed such fee or other cost or expense. If there are insufficient
funds in such deposit accounts to cover the amount of the fee or other cost or expense then due,
such debits will be reversed (in whole or in part, in the Lender’s sole discretion) and such amount
not debited shall be deemed to be unpaid. No such debit under this Section shall be deemed a
set-off.

     Section 10.02 Rights in Property held by the Lender. As security for the prompt and
full satisfaction of the Obligations, each Borrower assigns, transfers and sets over to each Lender
all of its right, title and interest in and to, and grants the Lender a lien on and security
interest in, all amounts that may be owing from time to time by the Lender to such Borrower in any
capacity, including, without limitation, any balance or share belonging to such Borrower of any
deposit or other account with the Lender (general or special, time or demand, provisional or
final), which lien and security interest shall be independent of any right of set-off which the
Lender may have otherwise.

     Section 10.03 Collateral. All Collateral of any kind held by the Lender shall stand
as one general, continuing collateral security for the Obligations, and may be retained by the
Lender until all of such Obligations have been paid in full.

     Section 10.04 No Third Party Rights. Nothing in this Agreement, whether expressed or
implied, shall be construed to give to any Person other than the parties hereto any legal or
equitable right, remedy or claim under or in respect of this Agreement, it being expressly
understood that this Agreement is intended for the sole protection and legal benefit of the
Borrowers, the Lender and their permitted successors and assigns, and no other Person shall be a
direct or indirect legal beneficiary of, or have any direct or indirect cause of action or claim in
connection with, this Agreement or any of the other Loan Documents.

     Section 10.05 Construction. The provisions of this Agreement shall be in addition to
those of the other Loan Documents, all of which shall be construed as complementing each other and
as augmenting and not restricting the rights of the Lender. Nothing herein contained shall prevent
the Lender from enforcing, in accordance with their respective terms, any of the Loan Documents on
a several basis. In no event shall the rights of the Lender hereunder and under the other Loan
Documents be construed to grant the Lender the right to, or be deemed to indicate that, the Lender
is in control of the business, management or properties of the Borrowers or have power over the
daily management functions and operating decisions made by the Borrowers. To the extent any
provision of this Agreement or the other Loan Documents shall be held to be in violation of any
applicable Law, then the Lender shall not be required, to the extent of such violation, to perform
its obligations in connection with such provision.

     Section 10.06 Amendment and Waiver. This Agreement and the other Loan
Documents may not be amended, modified, or changed in any respect except by an agreement in writing
signed by the parties thereto. No course of dealing and no failure or delay on the part of the
Lender to exercise any right, power or privilege under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or
privilege preclude any other or further exercise of any other right, power or privilege.

     Section 10.07 Indemnification by the Borrowers. (a) Whether or not the transactions
contemplated hereby are consummated, the Borrowers shall indemnify, defend and hold the Lender and
its officers, directors, employees, counsel, agents and attorneys-in-fact (each, an
“Indemnified Person”) harmless from and against any and all liabilities, obligations,
losses, damages, penalties, actions,

44

 

judgments, suits, costs, charges, expenses and disbursements
(including reasonable attorneys’ fees) of any kind or nature whatsoever which may at any time
(including at any time following repayment of the Loans) be imposed on, incurred by or asserted
against any such Person in any way relating to or arising out of this Agreement, any other Loan
Document or any document contemplated by or referred to herein or therein, or the transactions
contemplated hereby or thereby, or any action taken or omitted by any such Person under or in
connection with any of the foregoing, including with respect to any investigation, litigation or
proceeding (including any Insolvency Proceeding or appellate proceeding) related to or arising out
of this Agreement, any other Loan Document or the Loans or the use of the proceeds thereof, whether
or not any Indemnified Person is a party thereto (all the foregoing, collectively, the
“Indemnified Liabilities”); provided, that the Borrowers shall have no obligation hereunder
to any Indemnified Person with respect to Indemnified Liabilities resulting solely from the gross
negligence or willful misconduct of such Indemnified Person. The agreements in this Section shall
survive payment of all other obligations.

          (b) The Borrowers shall indemnify, defend and hold harmless each Indemnified Person, from and
against any and all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, charges, expenses or disbursements (including reasonable attorneys’ fees and the
allocated cost of internal environmental audit or review services), which may be incurred by or
asserted against such Indemnified Person in connection with or arising out of any pending or
threatened investigation, litigation or proceeding, or any action taken by any Person, with respect
to any Environmental Claim arising out of or related to any property subject to a mortgage or deed
of trust in favor of the Lender except to the extent resulting solely from the gross negligence or
willful misconduct of such Indemnified Person. In no event shall any site visit, observation, or
testing by the Lender (or any contractee of the Lender) be deemed a representation or warranty that
Hazardous Materials are or are not present in, on, or under, the site, or that there has been or
shall be compliance with any Environmental Law. Neither the Borrowers nor any other Person is
entitled to rely on any site visit, observation, or testing by the Lender. The Lender owes no duty
of care to protect the Borrowers or any other Person against, or to inform the Borrowers or any
other party of, any Hazardous Materials or any other adverse condition affecting any site or
property.

          (c) The obligations in this Section shall survive payment of all other Obligations. At the
election of any Indemnified Person, the Borrowers shall defend such Indemnified Person using legal
counsel satisfactory to such Indemnified Person in such Person’s sole discretion, at the sole cost
and expense of the Borrowers. All amounts owing under this Section shall be paid within thirty
(30) days after demand.

     Section 10.08 Marshaling; Payments Set Aside. The Lender shall be under no obligation
to marshal any assets in favor of the Borrowers or any other Person or against or in payment of any
or all of the Obligations. To the extent that the Borrowers makes a payment to the Lender, or the
Lender exercises its right of set-off, and such payment or the proceeds of such set-off or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or
required (including pursuant to any settlement entered into by the Lender in its discretion) to be
repaid to a trustee, receiver or any other party, in connection with any Insolvency Proceeding or
otherwise, then to the extent of such recovery the obligation or part thereof originally intended
to be satisfied shall be revived and continued in full force and effect as if such payment had not
been made or such set-off had not occurred.

     Section 10.09 Waiver of Jury Trial. THE BORROWERS AND THE LENDER HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY EXPRESSLY WAIVE ANY RIGHT TO DEMAND A TRIAL BY JURY IN RESPECT OF ANY
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS AGREEMENT, ANY OTHER LOAN DOCUMENT
OR ANY OTHER DOCUMENT OR INSTRUMENT ATTACHED HERETO, REFERRED TO HEREIN OR DELIVERED IN CONNECTION
HEREWITH, OR (ii) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE
BORROWERS WITH RESPECT TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT

45

 

OR INSTRUMENT ATTACHED HERETO,
REFERRED TO HEREIN OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR
THERETO, IN EACH CASE WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND THE BORROWERS AND THE
LENDER HEREBY AGREE AND CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
BORROWERS AND THE LENDER TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. FURTHER, EACH BORROWER
HEREBY CERTIFIES THAT NO REPRESENTATIVE OF THE LENDER OR THE LENDER’S COUNSEL HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT, IN THE EVENT OF SUCH LITIGATION, THE LENDER WOULD NOT SEEK TO ENFORCE
THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION. THE BORROWERS FURTHER ACKNOWLEDGE THAT THE LENDER HAS
BEEN OR WILL BE INDUCED TO ENTER INTO THIS AGREEMENT BY, INTER ALIA, THE PROVISIONS
OF THIS SECTION 10.09.

     Section 10.10 Consent to Jurisdiction. The Borrowers and the Lender hereby
irrevocably consent and agree that any action or proceeding against it may be commenced and
maintained in any state court sitting in Allegheny County, Pennsylvania or in the United States
District Court for the Western District of Pennsylvania, and each waive personal service of any
summons, complaint or other process, which may be made by any other means permitted by
Pennsylvania. The Borrowers irrevocably consent and agree that the state courts sitting in
Allegheny County, Pennsylvania and the United States District Court for the Western District of
Pennsylvania shall have exclusive jurisdiction for any action or proceeding commenced by or through
it with respect to the subject matter hereof. THE BORROWERS AND THE LENDER EACH IRREVOCABLY WAIVE
ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO.

     Section 10.11 Survival. All representations and warranties of the Borrowers contained
herein or made in connection herewith are continuing and shall survive the making of and shall not
be waived by the execution and delivery of the Loan Documents, the making of the Loans and the
issuance, extension or renewal of any Letters of Credit. Notwithstanding termination of this
Agreement or the occurrence of an Event of Default, all covenants and agreements of the Borrowers
shall continue in full force and effect from and after the date of this Agreement until payment in
full of the Loans, all interest accrued thereon and all other sums due under the Loan Documents.

     Section 10.12 Entire Agreement. This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding
among the Borrowers and the Lender, and supersedes all prior or contemporaneous agreements and
understandings of such Persons, verbal or written, relating to the subject matter hereof and
thereof.

     Section 10.13 Notices. (a) All notices, requests, consents, approvals, waivers and
other communications shall be in writing and mailed, faxed or delivered, to the address or
facsimile number specified for notices on Schedule 10.13; or, as directed to the Borrowers
or the Lender, to such other address as shall be designated by such party in a written notice to
the other parties, and as directed to any other party, at such other address as shall be designated
by such party in a written notice to the Borrowers and the Lender.

          (b) All such notices, requests and communications shall, when transmitted by overnight
delivery, or faxed, be effective when delivered for overnight (next-day) delivery, or transmitted
in legible form by facsimile machine (subject to confirmation immediately by telephone call to the

46

 

recipient and followed promptly by delivery of a hard copy original thereof), respectively, or if
mailed, upon the second Business Day after the date deposited into the U.S. mail, or if delivered,
upon delivery; except that notices to the Lender shall not be effective until actually received by
the Lender.

          (c) Any agreement of the Lender herein to receive certain notices by telephone or facsimile is
solely for the convenience and at the request of the Borrowers. The Lender shall be entitled to
rely on the authority of any Person purporting to be a Person authorized by the Borrowers to give
such notice and the Lender shall not have any liability to the Borrowers or other Person on account
of any action taken or not taken by the Lender in reliance upon such telephonic or facsimile
notice. The obligation of the Borrowers to repay the Loans shall not be affected in any way or to
any extent by any failure by the Lender to receive written confirmation of any telephonic or
facsimile notice or the receipt by the Lender of a confirmation which is at variance with the terms
understood by the Lender to be contained in the telephonic or facsimile notice.

     Section 10.14 Limitation of Liability. NEITHER THE LENDER NOR ITS AFFILIATES,
OFFICERS, DIRECTORS, AGENTS, CONTRACTORS, SERVANTS, EMPLOYEES, LICENSEES, SUCCESSORS AND ASSIGNS
SHALL HAVE ANY LIABILITY WITH RESPECT TO, AND THE BORROWERS HEREBY WAIVE, RELEASE AND AGREE NOT TO
SUE ANY OF THEM UPON, ANY CLAIM FOR ANY SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES
SUFFERED OR INCURRED BY THE BORROWERS IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO,
THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS EXCEPT TO THE EXTENT ARISING FROM THE GROSS
NEGLIGENCE, BAD FAITH, FRAUD, CRIMINAL OR WILLFUL MISCONDUCT OF THE LENDER. THE BORROWERS HEREBY
WAIVE, RELEASE AND AGREE NOT TO SUE THE LENDER, OR ANY OF ITS AFFILIATES, OFFICERS, DIRECTORS,
EMPLOYEES, ATTORNEYS OR AGENTS FOR PUNITIVE DAMAGES IN RESPECT OF ANY CLAIM IN CONNECTION WITH,
ARISING OUT OF, OR IN ANY WAY RELATED TO, THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, OR ANY
TRANSACTION CONTEMPLATED BY THIS AGREEMENT OR ANY OF THE LOAN DOCUMENTS, EXCEPT TO THE EXTENT
ARISING FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE LENDER.

     Section 10.15 Sale and Participation. The Lender may participate, or sell, assign or
otherwise transfer the Loans, the Notes and the other Loan Documents, or any part thereof,
provided, so long as no Potential Default or Event of Default has occurred and is continuing, the
Lender shall not sell, assign or otherwise transfer more that fifty-one percent (51.0%) of the
Loans without the prior written consent of the Borrowers, such consent not to be unreasonably
withheld or delayed. To the extent of any such participation, sale, assignment or transfer,
the Lender shall be released of its obligations and liabilities arising hereunder or relating
hereto from and after the effective date of, and to the extent of, such participation, sale,
assignment or transfer.

     Section 10.16 Applicable Law. This Agreement, all other Loan Documents, any claim
arising from or relating to this Agreement or any other Loan Document, or any statement, course of
conduct, act, omission, or event occurring in connection herewith or therewith (whether for breach
of contract, tort or any other theory of liability) shall be governed by and construed and enforced
in accordance with the laws of the Commonwealth of Pennsylvania, without giving effect to its
choice of law principles except to the extent the procedural laws of another jurisdiction shall
apply to any action commenced by the Lender with respect to the remedies of the Lender under this
Agreement or otherwise. The Borrowers acknowledge that part of the consideration to the Lender for
making the Loans is the agreement of the Borrowers that all issues relating to the maximum interest
rate and usury shall be governed by the laws of the Commonwealth of Pennsylvania, and the Borrowers
further acknowledge that the agreement to be

47

 

governed by the laws of the Commonwealth of
Pennsylvania is not for the purpose of avoiding the law or public policy of any other jurisdiction,
but rather is a negotiated term in this commercial transaction and is based upon a reasonable
relation to the Commonwealth of Pennsylvania.

     Section 10.17 Binding Effect and Assignment. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their respective successors and
assigns, except that the Borrowers may not assign or transfer any of its rights or obligations
under this Agreement, voluntarily or involuntarily, whether by merger, consolidation, dissolution,
operation of law or otherwise, without the prior written consent of the Lender.

     Section 10.18 Counterparts. This Agreement and the other Loan Documents may be
executed in any number of counterparts and by different parties on separate counterparts, each of
which counterparts, when so executed and delivered, shall be deemed to be an original and all of
which counterparts, taken together, shall constitute but one and the same Agreement. This
Agreement shall become effective upon the execution and delivery of a counterpart hereof by each of
the parties hereto. Delivery by telecopier of an executed counterpart of a signature page to this
Agreement, the other Loan Documents or any notice, communication, agreement, certificate, document
or other instrument in connection herewith shall be effective as delivery of an executed original
counterpart thereof.

     Section 10.19 Headings. The title, headings and table of contents of this Agreement
and the other Loan Documents are included for the convenience of reference only and shall not
constitute a part of the applicable Loan Documents for any other purpose.

     Section 10.20 Severability. The provisions of this Agreement are intended to be
severable. If any provision of this Agreement shall be held invalid or unenforceable in whole or
in part in any jurisdiction, such provision shall, as to such jurisdiction, be ineffective to the
extent of such invalidity or unenforceability without in any manner affecting the validity or
enforceability hereof in any other jurisdiction or the remaining provisions hereof in any
jurisdiction.

     Section 10.21 Sealed Document. This Agreement is intended as a document under seal.

     Section 10.22 USA Patriot Act Notification. The following notification is provided to
the Borrowers pursuant to Section 326 of the USA Patriot Act:

          (a) IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT. To help the government
fight the funding of terrorism and money laundering activities, federal law requires all financial
institutions to obtain, verify, and record information that identifies each person or entity that
opens an account, including any deposit account, treasury management account, loan, other extension
of credit, or other financial services product. What this means for borrowers: When a borrower
opens an account, if the borrower is an individual, the Lender will ask for the borrower’s name,
taxpayer identification number, residential address, date of birth and other information that will
allow the Lender to identify the borrower, and, if the borrower is not an individual, the Lender
will ask for the borrower’s name, taxpayer identification number, business address, and other
information that will allow such bank to identify the borrower. The Lender may also ask, if the
borrower is an individual, to see the borrower’s driver’s license or other identifying documents,
and, if the borrower is not an individual, to see the borrower’s legal organizational documents or
other identifying documents.

          (b) Government Regulation. The Borrowers shall not (i) be or become subject at any time to
any law, regulation, or list of any government agency (including, without limitation, the U.S.
Office of Foreign Asset Control list) that prohibits or limits the Lender from making any advance
or extension of credit to any Borrower or from otherwise conducting business with the Borrowers, or
(ii) fail to provide documentary and other evidence of the identity of any Borrower as may be
requested by the Lender at any time to enable the Lender to verify the identity of any Borrower or
to comply with any

48

 

applicable law or regulation, including, without limitation, Section 326 of the
USA Patriot Act of 2001, 31 U.S.C. Section 5318.

ARTICLE XI. JOINT AND SEVERAL LIABILITY; AUTHORITY TO ACT

     Section 11.01 Joint and Several Liability. (a) It is the intention of the Borrowers
and the Lender that all of the Obligations shall be the joint and several obligations of all of the
Borrowers without preferences or distinction among them. Each of the Borrowers, jointly and
severally, hereby irrevocably and unconditionally accepts, not merely as a surety but also as a
co-debtor, joint and several liability with each other Borrower, with respect to the payment and
performance of all of the Obligations. If and to the extent that any of the Borrowers shall fail
to make any payment with respect to any of the Obligations as and when due or to perform any of
such Obligations in accordance with the terms thereof, then in each such event each other Borrower
will make such payment with respect to, or perform, such Obligation.

          (b) The obligations and liabilities of each Borrower under this Section 11.01 shall be
absolute and unconditional and joint and several, irrespective of the genuineness, validity,
priority, regularity or enforceability of this Agreement, the Notes or any of the other Loan
Documents or any other circumstance which might otherwise constitute a legal or equitable discharge
of such obligations and liabilities. Each Borrower expressly agrees that the Lender may, in its
sole and absolute discretion, without notice to or further assent of such Borrower and without in
any way releasing, affecting or in any way impairing the joint and several obligations and
liabilities of such Borrower under this Section 11.01: (i) waive compliance with, or any defaults
under, or grant any other indulgences under or with respect to any of the Loan Documents; (ii)
modify, amend, change or terminate any provisions of any of the Loan Documents in accordance with
the provisions of this Agreement including, without limitation, the agreements of necessary
parties; (iii) grant extensions or renewals of or with respect to the Revolving Credit Loans, the
Notes or any of the other Loan Documents; (iv) effect any release, subordination, compromise or
settlement in connection with this Agreement, any of the Notes or any of the other Loan Documents;
(v) agree to the substitution, exchange, release or other disposition of the Collateral or any part
thereof, or any other collateral for the Loans or to the subordination of any lien or security
interest therein; (vi) make advances for the purpose of performing any term, provision or covenant
contained in this Agreement, the Notes or any of the other Loan Documents with respect to which the
Borrowers shall then be in default; (vii) make future advances pursuant to this Agreement or any of
the other Loan
Documents; (viii) assign, pledge, hypothecate or otherwise transfer the Obligations, the
Notes, any of the other Loan Documents or any interest therein, all as and to the extent permitted
by the provisions of this Agreement; (ix) deal in all respects with the other Borrowers; (x) effect
any release, compromise or settlement with any of the other Borrowers; and (xi) provide
debtor-in-possession financing or allow use of cash collateral in proceedings under the Bankruptcy
Code, it being expressly agreed by all Borrowers that any such financing and/or use would be part
of the Obligations.

          (c) The obligations and liabilities of each Borrower under this Section 11.01 shall be
primary, direct and immediate, shall not be subject to any counterclaim, recoupment, set off,
reduction or defense based upon any claim that a Borrower may have against any one or more of the
other Borrowers, the Lender and/or any Guarantor and shall not be conditional or contingent upon
pursuit or enforcement by the Lender of any remedies it may have against the Borrowers with respect
to this Agreement, the Notes or any of the other Loan Documents, whether pursuant to the terms
thereof or by operation of law. Without limiting the generality of the foregoing, the Lender shall
not be required to make any demand upon any of the Borrowers or any Guarantor, or to sell the
Collateral or otherwise pursue, enforce or exhaust its or their remedies against the Borrowers, the
Collateral either before, concurrently with or after pursuing or enforcing its rights and remedies
against any Borrower. Any one or more successive or concurrent actions or proceedings may be
brought against each Borrower, either in the same action, if any, brought against any one or more
of the Borrowers or in separate actions or proceedings, as often as the Lender may deem expedient
or advisable. Without limiting the foregoing, it is specifically understood that any modification,
limitation or discharge of any of the liabilities or obligations of any one or more of

49

 

the
Borrowers, or any obligor under any of the Loan Documents, arising out of, or by virtue of, any
bankruptcy, arrangement, reorganization or similar proceeding for relief of debtors under federal
or state Law initiated by or against any one or more of the Borrowers shall not modify, limit,
lessen, reduce, impair, discharge, or otherwise affect the liability of each of the other Borrowers
under this Section 11.01 in any manner whatsoever, and this Section 11.01 shall remain and continue
in full force and effect. It is the intent and purpose of this Section 11.01 that each Borrower
shall and does hereby waive all rights and benefits which might accrue by reason of any such
proceeding, and the Borrowers agree that they shall be liable for the full amount of the
obligations and liabilities under this Section 11.01, regardless of, and irrespective to, any
modification, limitation or discharge of the liability of any one or more of the Borrowers, any
guarantor or any obligor under any of the Loan Documents, that may result from any such
proceedings. Except as otherwise expressly provided for herein, the joint and several liability of
the Borrowers hereunder shall continue in full force and effect notwithstanding any absorption,
merger, amalgamation or any other change whatsoever in the name, membership, constitution or place
of formation of any Borrower or the Lender. If at any time, any payment, or any part thereof, made
in respect of any of the Obligations, is rescinded or must otherwise be restored or returned by the
Lender upon the insolvency, bankruptcy or reorganization of any of the Borrowers or any guarantors,
or otherwise, the provisions of this Section 11.01 will forthwith be reinstated in effect, as
though such payment had not been made.

          (d) Each Borrower as a guarantor under this Article XI hereby unconditionally, jointly and
severally, irrevocably and expressly waives (i) presentment and demand for payment of the
Obligations and protest of non-payment; (ii) notice of acceptance of the joint and several
liability of the Borrowers under this Section 11.01 and of presentment, demand and protest thereof;
(iii) notice of the occurrence of any Event of Default and notice of all indulgences; (iv) notice
of any increase in the amount of any portion of or all of the Obligations; (v) demand for
observance, performance or enforcement of any of the terms or provisions of this Agreement, the
Notes or any of the other Loan Documents; (vi) all errors and omissions in connection with the
Lender’s administration of the Obligations, except errors and omissions resulting from acts of bad
faith; (vii) any right or claim of right to cause a marshaling of the assets of any one or more of
the other Borrowers; (viii) any act or omission of the Lender which changes the scope of the risk
of the Borrowers.

     Section 11.02 Authority to Act for the Borrowers. (a) For administrative
convenience, SWS is hereby irrevocably appointed by each of the Borrowers as agent for each of the
Borrowers for the purpose of taking all actions of the Borrowers under or in connection with this
Agreement, the other Loan Documents and the Loans, including, without limitation, requesting Loans,
receiving the proceeds of the Loans, disbursing the proceeds of the Loans as among the Borrowers.
By reason thereof, SWS is hereby irrevocably appointed by each of the Borrowers as the
attorney-in-fact of each of the Borrowers with power and authority through its duly authorized
officer or officers to (i) endorse any check (if any) for the proceeds of any of the Loans for and
on behalf of each of the Borrowers and in the name of each of the Borrowers, (ii) instruct the
Lender to credit the proceeds of any of the Loans directly to an account of any of the Borrowers
which shall evidence the making of such Loans and shall constitute the acknowledgment by each of
the Borrowers of the receipt of the proceeds of such Loans, and (iii) sign promissory notes,
instruments, documents, Borrowing Base Certificates, compliance and other certificates and further
assurances under or in connection with this Agreement, the other Loan Documents and the Loans.

          (b) Each of the Borrowers is accepting joint and several liability hereunder in consideration
of the financial accommodations to be provided by the Lender under this Agreement, for the mutual
benefit, directly and indirectly, of each of the Borrowers and in consideration of the undertakings
of each of the Borrowers to accept joint and several liability for the obligations of each of them.
The Borrowers represent and warrant to the Lender that each of them will derive benefits, directly
and indirectly, from the financial accommodations to be provided by the Lender under this Agreement
(both in their separate capacity and as a member of the integrated group to which each of the
Borrowers is a part, the continued successful operation of which is dependent, in part, upon
performance of the

50

 

functions of the integrated group as a whole), because, among other reasons, (i)
the terms of the consolidated financing provided under this Agreement are more favorable than would
otherwise be obtainable by the Borrowers individually, and (ii) the Borrowers’ additional
administrative and other costs and reduced flexibility associated with individual financing
arrangements which would otherwise be required if obtainable would substantially reduce the value
to the Borrowers of the financing. The Borrowers in the discretion of their respective managements
are to agree among themselves as to the allocation of the benefits of the proceeds of the
Revolving Credit Loans, and the purposes for which such benefits and proceeds will be used so long
as any such allocations or purpose is not in violation of this Agreement.

          (c) Without implying any limitation on the joint and several nature of the Obligations, the
Lender agrees that, notwithstanding any other provision of this Agreement, the Borrowers may create
reasonable intercompany Indebtedness between or among the Borrowers with respect to the allocation
of the benefits and proceeds of the Loans made under this Agreement. The Borrowers agree among
themselves, and the Lender consents to that agreement, that each Borrower shall have rights of
contribution from all of the other Borrowers to the extent such Borrower incurs Obligations in
excess of the proceeds of the Loans received by, or allocated to purposes for the direct benefit
of, such Borrower. All such indebtedness and rights shall be, and are hereby agreed by the
Borrowers to be, subordinate in priority and payment to the indefeasible repayment in full of the
Obligations, and, unless the Lender agrees in writing otherwise, shall not be exercised or repaid
in whole or in part until all of the Obligations have been satisfied. The Borrowers agree that all
of such intercompany indebtedness and rights of contribution are part of the Collateral and secure
the Obligations. Each Borrower hereby waives all rights of counterclaim, recoupment and offset
between or among themselves arising on account of that indebtedness and otherwise. Each Borrower
shall not evidence the intercompany indebtedness or rights of contribution by note or other
instrument unless the same are assigned to the Lender, and shall not secure such indebtedness or
rights of contribution with any Lien or security, even though any such Lien and security shall be
part of the Collateral, unless the same are assigned to the Lender.

******SIGNATURES APPEAR ON THE FOLLOWING PAGE******

51

 

     IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby, have caused
their duly authorized officers to execute and deliver this Credit Agreement effective as of the day
and year first above written.

	 	 	 	 	 	 	 
	 	 	SUPERIOR WELL SERVICES, INC.
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	SUPERIOR WELL SERVICES, LTD.
	 	 	By:	 	Superior GP, L.L.C., Its 
sole general partner
	 
	 	 	 	 	 	 
	 

	 	 	 	By:	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Title:	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	BRADFORD RESOURCES, LTD.
	 	 	By:	 	Superior GP, L.L.C., Its
sole general partner
	 
	 	 	 	 	 	 
	 	 	 	 	sole general partner
	 
	 	 	 	 	 	 
	 

	 	 	 	By:	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Title:	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	CITIZENS BANK OF PENNSYLVANIA
	 
	 	 	 	 	 	 
	 

	 	BY	 	 	 	 
	 	 	 	 	 
	 

	 	TITLE	 	 	 	 
	 	 	 	 	 

52

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00092-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00092-of-00352.parquet"}]]