Document:

Exhibit 10.2

Exhibit 10.2

 

TERM LOAN AGREEMENT

AMONG

CRAFTMADE INTERNATIONAL, INC.,

WOODARD—CM, LLC

AND

THE FROST NATIONAL BANK

July 8, 2009

 

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	Section	 	Page	 
	 
	 	 	 	 
	ARTICLE I DEFINITIONS
	 	 	1	 
	1.1 Definitions
	 	 	1	 
	1.2 Additional Definitions
	 	 	12	 
	1.3 Construction
	 	 	12	 
	 
	 	 	 	 
	ARTICLE II LOAN
	 	 	13	 
	2.1 Term Loan
	 	 	13	 
	2.2 Funding
	 	 	13	 
	2.3 Term Loan Note
	 	 	13	 
	2.4 Voluntary Prepayments
	 	 	13	 
	2.5 Mandatory Prepayments
	 	 	13	 
	2.6 Payments Generally
	 	 	14	 
	2.7 Collateral
	 	 	14	 
	 
	 	 	 	 
	ARTICLE III TAXES AND YIELD PROTECTION
	 	 	15	 
	3.1 Taxes
	 	 	15	 
	3.2 Matters Applicable to all Requests for Compensation
	 	 	16	 
	3.3 Survival
	 	 	16	 
	 
	 	 	 	 
	ARTICLE IV CONDITIONS PRECEDENT
	 	 	16	 
	4.1 Conditions Precedent to Term Loan
	 	 	16	 
	 
	 	 	 	 
	ARTICLE V AFFIRMATIVE COVENANTS
	 	 	18	 
	5.1 General Covenants
	 	 	18	 
	5.2 Accounts, Reports and Other Information
	 	 	19	 
	5.3 Inspection
	 	 	21	 
	5.4 Compliance with ERISA
	 	 	21	 
	5.5 Maintenance of Priority of Bank Liens
	 	 	21	 
	5.6 Indemnity
	 	 	22	 
	5.7 Use of Proceeds
	 	 	22	 
	5.8 Parent Credit Agreement
	 	 	22	 
	5.9 Mortgaged Property
	 	 	23	 
	5.10 Access to Mortgaged Property
	 	 	23	 
	 
	 	 	 	 
	ARTICLE VI NEGATIVE COVENANTS
	 	 	23	 
	6.1 Nature of Business
	 	 	23	 
	6.2 Liquidations, Mergers, Consolidations
	 	 	23	 
	6.3 Disposition of Assets
	 	 	23	 
	6.4 Liens
	 	 	23	 
	6.5 Debt
	 	 	23	 
	6.6 [intentionally omitted]
	 	 	23	 
	6.7 Loans
	 	 	23	 
	6.8 Transactions with Affiliates
	 	 	23	 
	6.9 Burdensome Agreements
	 	 	24	 
	6.10 Acquisition of Assets
	 	 	24	 

 

 

 

	 	 	 	 	 
	Section	 	Page	 
	 
	 
	6.11 Loans and Investments
	 	 	25	 
	6.12 ERISA
	 	 	25	 
	6.13 Assignment
	 	 	25	 
	6.14 Business
	 	 	25	 
	6.15 Stock Repurchases
	 	 	25	 
	 
	 	 	 	 
	ARTICLE VII REPRESENTATIONS AND WARRANTIES
	 	 	25	 
	7.1 Organization and Qualification
	 	 	25	 
	7.2 Financial Statements
	 	 	26	 
	7.3 Compliance With Laws and Other Matters
	 	 	26	 
	7.4 Litigation
	 	 	26	 
	7.5 Title to Properties
	 	 	26	 
	7.6 Authorization; Validity
	 	 	26	 
	7.7 Taxes
	 	 	26	 
	7.8 Use of Proceeds
	 	 	27	 
	7.9 Possession of Franchises, Licenses, Etc.
	 	 	27	 
	7.10 Leases
	 	 	27	 
	7.11 Disclosure
	 	 	27	 
	7.12 ERISA
	 	 	27	 
	7.13 Regulatory Acts
	 	 	28	 
	7.14 Solvency
	 	 	28	 
	7.15 Environmental Matters
	 	 	28	 
	7.16 Survival of Representations and Warranties, Etc.
	 	 	28	 
	 
	 	 	 	 
	ARTICLE VIII EVENTS OF DEFAULT
	 	 	29	 
	8.1 Default
	 	 	29	 
	8.2 Remedies
	 	 	30	 
	8.3 Application of Funds
	 	 	31	 
	 
	 	 	 	 
	ARTICLE IX MISCELLANEOUS
	 	 	31	 
	9.1 Notices
	 	 	31	 
	9.2 Expenses
	 	 	32	 
	9.3 Waivers
	 	 	32	 
	9.4 Determinations by Lender
	 	 	32	 
	9.5 Set-Off
	 	 	32	 
	9.6 Assignment
	 	 	33	 
	9.7 Amendment and Waiver
	 	 	33	 
	9.8 Confidentiality
	 	 	34	 
	9.9 Counterparts
	 	 	34	 
	9.10 Severability
	 	 	34	 
	9.11 Interest and Charges
	 	 	34	 
	9.12 Exception to Covenants
	 	 	35	 
	9.13 USA Patriot Act Notice
	 	 	35	 
	9.14 GOVERNING LAW
	 	 	35	 
	9.15 WAIVER OF JURY TRIAL
	 	 	35	 
	9.16 ENTIRE AGREEMENT
	 	 	35	 
	 
	 	 	 	 
	SIGNATURES
	 	 	S-1	 

 

ii

 

EXHIBITS

	 	 	 
	Exhibit A

	 	Term Loan Note
	Exhibit B

	 	Mortgage
	Exhibit C

	 	[Intentionally Omitted]
	Exhibit D

	 	Notice of Final Agreement
	Exhibit E

	 	Guaranty Agreement
	 
	 	 
	Schedule 6.4

	 	Existing Liens
	Schedule 6.5

	 	Existing Debt
	Schedule 6.11

	 	Existing Investments
	Schedule 7.1

	 	Subsidiaries
	Schedule 7.4

	 	Existing Litigation
	Schedule 9.1

	 	Notice Addresses

 

iii

 

TERM LOAN AGREEMENT

THIS TERM LOAN AGREEMENT is dated as of July 8, 2009 (this agreement, together with all
amendments and restatements, this “Agreement”), among WOODARD—CM, LLC, a Delaware limited
liability company (“Borrower”), CRAFTMADE INTERNATIONAL, INC., a Delaware corporation (“Parent”),
and THE FROST NATIONAL BANK (“Lender”).

BACKGROUND

Borrower has requested Lender to make a term credit facility available to Borrower. Lender
has agreed to do so, subject to the terms and conditions of this Agreement.

AGREEMENT

In consideration of the mutual covenants and agreements contained herein, and other good and
valuable consideration, receipt of which is acknowledged by the parties hereto, the parties hereto
agree as follows:

ARTICLE I

DEFINITIONS

1.1 Definitions. For purposes of this Agreement:

“Affiliate” means any Person that directly, or indirectly, through one or more intermediaries,
Controls or is Controlled By or is Under Common Control with any other Person.

“Agreement Date” means the date of this Agreement.

“Applicable Law” means (a) in respect of any Person, all provisions of Laws and orders of
Governmental Authorities applicable to such Person and its properties, including, without limiting
the foregoing, all orders and decrees of all Governmental Authorities and arbitrators in
proceedings or actions to which the Person in question is a party, and (b) in respect of contracts
relating to interest or finance charges that are made or performed in the State of Texas,
“Applicable Law” means the Laws of the United States of America, including without limitation
12 U.S.C. §§85 and 86, and any other statute of the United States of America now or at any time
hereafter prescribing the maximum rates of interest on loans and extensions of credit, and the Laws
of the State of Texas, and any other Laws of the State of Texas now or at any time hereafter
prescribing maximum rates of interest on loans and extensions of credit.

“Attorney Costs” means and includes all fees, expenses and disbursements of any law firm or
other external counsel and, without duplication, the allocated cost of internal legal services and
all expenses and disbursements of internal counsel.

“Auditors” means independent certified public accountants selected by Parent and reasonably
acceptable to Lender.

 

 

 

“Authorized Signatory” means such senior personnel of Borrower, any Subsidiary of Borrower or
an Obligor as may be duly authorized and designated in writing by Borrower, such Subsidiary or such
Obligor to execute documents, agreements and instruments on behalf of Borrower, such Subsidiary or
such Obligor.

“Bank Liens” means Liens in favor of Lender securing all or any of the Obligations, arising
pursuant to the Mortgage, as amended, modified, restated, and/or replaced from time to time.

“Business Day” means any day other than a Saturday, Sunday, or other day on which commercial
banks are authorized to close under the Laws of, or are in fact closed in, the state where Lender’s
office is located.

“Capital Leases” means capital leases and subleases, as defined in the Financial Accounting
Standards Board Statement of Financial Accounting Standards No. 13, dated November 1976, as
amended.

“CM Real Estate” means CM Real Estate, LLC, a Texas limited liability company, and
wholly-owned direct Subsidiary of Borrower.

“Code” means the Uniform Commercial Code as in effect in Texas or such other state where any
Collateral is located, as the case may be.

“Collateral” means any assets of any Person in which at any time Lender shall be granted a
Bank Lien to secure the Obligations.

“Compliance Certificate” means a compliance certificate pursuant to Section 5.2(c) of
this Agreement.

“Contingent Debt” means, for any Person:

(a) guarantees, endorsements (other than endorsements of negotiable instruments for
collection in the ordinary course of business) and other contingent liabilities (whether
direct or indirect) in connection with the obligations of any other Person;

(b) obligations under any contract providing for the making of loans, advances or
capital contributions to any other Person, or for the purchase of any property from any
other Person, in each case in order to enable such other Person primarily to maintain
working capital, net worth or any other balance sheet condition or to pay Debts, Dividends
or expenses;

(c) obligations under any contract to rent or lease (as lessee) any real or personal
property (other than operating leases) if such contract (or any related document) provides
that the obligation to make payments thereunder is absolute and unconditional under
conditions not customarily found in commercial leases then in general use or requires that
the lessee purchase or otherwise acquire securities or obligations of the lessor;

 

2

 

(d) obligations in respect of letters of credit; and

(e) obligations under any other contract which, in economic effect, is substantially
equivalent to a guaranty, including but not limited to “keep well” or “capital maintenance”
agreements.

“Control” or “Controlled By” or “Under Common Control” means possession, directly or
indirectly, of power to direct or cause the direction of management or policies (whether through
ownership of voting securities, by contract or otherwise); provided that, in any event any Person
which beneficially owns, directly or indirectly, 10% or more (in number of votes) of the securities
having ordinary voting power for the election of directors of a corporation or managers of a
limited liability company or other governance board of an entity shall be conclusively presumed to
control such corporation or limited liability company.

“Debt” means, at any time, for any Person, (a) Capital Leases, (b) Contingent Debt, (c) debt
created, issued, incurred or assumed for money borrowed or for the deferred purchase price of
property purchased, (d) all debt, obligations and liabilities secured by any Lien upon any property
owned by such Person, even though it has not assumed or become liable for the payment of same, and
(e) liabilities in respect of unfunded vested benefits under any Plans.

“Debtor Relief Laws” means any applicable liquidation, conservatorship, bankruptcy,
moratorium, rearrangement, insolvency, fraudulent conveyance, reorganization or similar debtor
relief Laws affecting the rights of creditors generally from time to time in effect.

“Default” means any of the events specified in Section 8.1 that would, with the giving
of notice or the passage of time, become an Event of Default.

“Disposition” and “Dispose” mean any sale, lease, abandonment, transfer, disposal, exchange or
other transfer of any ownership or leasehold interest in or control of any asset.

“Dividends” means, with respect to any Person, any dividend on any class of its capital stock
or other equity interest now or hereafter outstanding, any distribution of cash or property to
owners of any shares of such stock or other equity interest.

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

“Eligible Replacement Lender” means any bank or financial institution with assets in excess of
$50,000,000,000 and which is regulated by the Federal Deposit Insurance Corporation, the Office of
the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, or the
Office of Thrift Supervision.

“Elitex” means the Elitex Development, Ltd., a Hong Kong company, and wholly-owned direct
Subsidiary of Trade Source International, Inc.

“Environment” means ambient air, surface water and groundwater (including potable water,
navigable water and wetlands), the land surface or subsurface strata, real property improvements or
as otherwise defined in any Environmental Law.

 

3

 

“Environmental Claim” means any written accusation, allegation, notice of violation, claim,
demand, order, directive, consent decree, cost recovery action or other cause of action by, or on
behalf of, any Governmental Authority or any Person for damages, injunctive or equitable relief,
personal injury (including sickness, disease or death), Remedial Action costs, property damage,
natural resource damages, nuisance, pollution, any adverse effect on the Environment caused by any
Hazardous Material, or for fines, penalties or restrictions, resulting from or based upon: (a) the
existence, or the continuation of the existence, of a Release; (b) exposure to any Hazardous
Material; (c) the presence, use, handling, transportation, storage, treatment or disposal of any
Hazardous Material; or (d) the violation or alleged violation of any Environmental Law or
Environmental Permit.

“Environmental Law” means any and all applicable domestic Laws, judgments, injunctions,
notices or binding agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the Environment, preservation or reclamation of natural resources, the
management, Release or threatened Release of any Hazardous Material or to health and safety
matters, including the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. §§ 9601 et
seq. (collectively “CERCLA”), the Solid Waste Disposal Act, as amended by the Resource Conservation
and Recovery Act of 1976 and Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. §§ 6901 et
seq., the Federal Water Pollution Control Act, as amended by the Clean Water Act of 1977, 33 U.S.C.
§§ 1251 et seq., the Clean Air Act of 1970, 42 U.S.C. §§ 7401 et seq., as amended, the Toxic
Substances Control Act of 1976, 15 U.S.C. §§ 2601 et seq., the Occupational Safety and Health Act
of 1970, as amended by 29 U.S.C. §§ 651 et seq., the Emergency Planning and Community Right-to-Know
Act of 1986, 42 U.S.C. §§ 11001 et seq., the Safe Drinking Water Act of 1974, as amended by
42 U.S.C. §§ 300(f) et seq., the Hazardous Materials Transportation Act, 49 U.S.C. §§ 5101 et seq.,
and any similar or implementing Law.

“Environmental Permit” means any permit, approval, authorization, certificate, license,
variance, filing or permission required by or from any Governmental Authority pursuant to any
Environmental Law.

“ERISA” means the Employee Retirement Income Security Act of 1974.

“Event of Default” means any of the events specified in Section 8.1, provided there
has been satisfied any requirement in connection with such event for the giving of notice, or the
lapse of time, or the happening of any further specified condition, event or act.

“Existing Credit Agreement” means that certain Third Amended and Restated Loan Agreement,
dated as of December 31, 2007, among the Parent, the lenders party thereto and Frost, as
administrative agent, as amended, modified or supplemented from time to time.

“Existing Debt” means the Debt of Parent and its Subsidiaries existing on the Agreement Date,
which is described on Schedule 6.5, including renewals (but not increases) thereof.

“Existing Investments” means the Investments of Parent and its Subsidiaries existing on the
Agreement Date, which are described on Schedule 6.11.

 

4

 

“Existing Liens” means Liens against assets of Parent and its Subsidiaries existing on the
Agreement Date, which are described on Schedule 6.4.

“Existing Litigation” means the Litigation involving or otherwise affecting Parent and its
Subsidiaries existing on the Agreement Date, which is described on Schedule 7.4.

“Financial Statements” includes, but is not limited to, balance sheets, profit and loss
statements, reconciliations of capital and surplus and/or partnership capital accounts, as
appropriate, and statements of changes in financial position or cash flow, prepared in comparative
form with respect to the corresponding period of the preceding fiscal year and prepared in
accordance with GAAP.

“Foreign Subsidiary” means Elitex, TSI Prime Asia and any other direct or indirect Subsidiary
of Parent that is not organized under the laws of any political subdivision of the United States.

“Frost” means The Frost National Bank and its successors.

“GAAP” means generally accepted accounting principles applied on a consistent basis, set forth
in the Opinions of the Accounting Principles Board of the American Institute of Certified Public
Accountants and/or in statements of the Financial Accounting Standards Board, which are applicable
in the circumstances as of the date in question, and the requisite that such principles be applied
on a consistent basis shall mean that the accounting principles observed in a current period are
comparable in all material respects to those applied in a preceding period.

“Governmental Authority” means any nation or government, any state or other political
subdivision thereof, any agency, authority, instrumentality, regulatory body, court, administrative
Governmental Authority, central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to government.

“Guarantor” means (a) Parent, (b) each Subsidiary (whether now or hereafter existing) of
Parent other than Borrower, any Foreign Subsidiary, and CM Real Estate (so long as (i) CM Real
Estate engages in no business or activity other than the ownership, operation, leasing and
maintenance of the real property located at 650 South Royal Lane, Coppell, Texas and activities
related thereto and (ii) Parent remains its sole member).

“Guaranty” means a Guaranty Agreement, substantially in the form of Exhibit E, duly
executed by each Guarantor.

“Hazardous Materials” means all explosive or radioactive substances or wastes, hazardous or
toxic substances or wastes, pollutants, solid, liquid or gaseous wastes, including petroleum or
petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls
(“PCBs”) or PCB-containing materials or equipment, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any Environmental Law.

 

5

 

“Highest Lawful Rate” means at the particular time in question the maximum rate of interest
which, under Applicable Law, any Lender is then permitted to charge on the Obligations. If the
maximum rate of interest which, under Applicable Law, any Lender is permitted to charge on the
Obligations shall change after the date hereof, the Highest Lawful Rate shall be automatically
increased or decreased, as the case may be, from time to time as of the effective time of each
change in the Highest Lawful Rate without notice to Borrower. For purposes of determining the
Highest Lawful Rate under Applicable Law, the indicated rate ceiling shall be the lesser of
(a)(i) the “weekly ceiling”, as that expression is defined in Section 303.003 of the Texas Finance
Code, as amended, or (ii) if available in accordance with the terms thereof and at Lender’s option
after notice to Borrower and otherwise in accordance with the terms of Section 303.103 of the Texas
Finance Code, as amended, the “annualized ceiling” and (b)(i) if the amount outstanding under this
Agreement is less than $250,000, 24% per annum, or (ii) if the amount under this Agreement is equal
to or greater than $250,000, 28% per annum.

“Investment” means, as to any Person, any direct or indirect acquisition or investment by such
Person, whether by means of (a) the purchase or acquisition of all or substantially all of the
assets of any Person, (b) any direct or indirect purchase or other acquisition of, or a beneficial
interest in, any equity interest or other securities of any other Person, or (c) any direct or
indirect loan, advance, or capital contribution to or investment in any other Person, including
without limitation the incurrence or sufferance of Debt or accounts receivable of any other Person
that are not current assets or do not arise from Dispositions to that other Person in the ordinary
course of business.

“Investment Grade Securities” means and includes (a) securities that are direct obligations of
the United States of America, the payment of which is backed by the full faith and credit of the
United States of America, (b) debt securities or debt instruments with a rating of A or higher by
S&P, A2 or higher by Moody’s, Class (1) or higher by NAIC or the equivalent of such rating by S&P,
Moody’s or NAIC, or if none of S&P, Moody’s and NAIC shall then exist, the equivalent of such
rating by any other nationally recognized securities rating agency, but excluding any debt
securities or instruments constituting loans or advances among Parent and its wholly-owned
Subsidiaries, and (c) any fund investing exclusively in investments of the type described in
clauses (a) and (b), which funds may also hold immaterial amounts of cash pending
investment and/or distribution.

“Laws” means, collectively, all international, foreign, Federal, state and local
constitutions, statutes, treaties, rules, guidelines, regulations, ordinances, codes and
administrative or judicial precedents or authorities, including the interpretation or
administration thereof by any Governmental Authority charged with the enforcement, interpretation
or administration thereof, and all applicable administrative orders, directed duties, requests,
licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each
case whether or not having the force of law.

“Lender’s Office” means Lender’s address and, as appropriate, account as set forth on
Schedule 9.1, or such other address or account as Lender may from time to time notify
Borrower.

 

6

 

“Lien” means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind
(including any agreement to give or not to give any of the foregoing), any conditional sale or
other title retention agreement, any financing or other lease in the nature thereof, and the filing
of or agreement to give any financing statement or other similar form of public notice under the
Laws of any jurisdiction.

“Litigation” means any proceeding, claim, lawsuit and/or investigation conducted or threatened
by or before any Governmental Authority, including, but not limited to, proceedings, claims,
lawsuits, and/or investigations under or pursuant to any environmental, occupational, safety and
health, antitrust, unfair competition, securities, Tax, or other Law, or under or pursuant to any
contract, agreement or other instrument.

“Loan Documents” means this Agreement, the Term Loan Notes, the Security Documents, the
Guaranties, and all other documents and instruments executed and delivered to Lender by any Obligor
or any other Person in connection with this Agreement.

“Material Adverse Change or Effect” means (a) a material adverse change in, or a material
adverse effect upon, the operations, business, properties, liabilities (actual or contingent), or
financial condition of Parent and its Subsidiaries taken as a whole; (b) a material impairment of
the ability of the Obligors, taken as a whole to perform any obligations under any Loan Documents,
including repayment of the Obligations, or (c) an adverse effect on any Lien granted pursuant to a
Security Document.

“Maximum Amount” means the maximum amount of interest which, under Applicable Law, any Lender
is permitted to charge on the Obligations.

“Moody’s” means Moody’s Investors Service, Inc.

“Mortgage” means the Mortgage executed by Borrower, substantially in the form of
Exhibit B.

“Mortgaged Property” means the Property as that term is defined in the Mortgage.

“Net Proceeds” means, with respect to any event (a) the cash proceeds received in respect of
such event including (i) any cash received in respect of any non-cash proceeds, but only as and
when received, (ii) in the case of an insured loss, casualty insurance proceeds, and (iii) in the
case of a condemnation or similar event, condemnation awards and similar payments, net of (b) the
sum of (i) all reasonable fees, commissions and out-of-pocket expenses paid by any Obligor to third
parties (other than Affiliates) in connection with such event (including reasonable attorneys fees
and expenses), (ii) in the case of a sale, transfer or other disposition of an asset (including
pursuant to a sale and leaseback transaction or a casualty or a condemnation or similar
proceeding), the amount of all payments required to be made by any Obligor as a result of such
event to repay Debt (other than the Term Loan) secured by such asset or otherwise subject to
mandatory prepayment as a result of such event, and (iii) the amount of all taxes paid (or
reasonably estimated to be payable) by any Obligor (as determined reasonably and in good faith by
the chief financial officer of Borrower).

 

7

 

“Notice of Final Agreement” means the Arbitration and Notice of Final Agreement, substantially
in the form of Exhibit D.

“Obligations” means all obligations, indebtedness and liabilities under the Loan Documents now
or hereafter owing by Borrower or any other Person to or for the benefit of Lender, whether joint
or several, fixed or contingent, including principal, interest, expenses of collection and
foreclosure and attorneys’ fees that Borrower is responsible for pursuant to Section 9.2.
Without limiting the generality of the foregoing, “Obligations” includes interest, fees and other
amounts that would accrue after the commencement by or against Borrower, any Affiliate thereof or
any other Person (other than Lender or any Participant) of any proceeding under any Debtor Relief
Laws naming such Person as the debtor in such proceeding, regardless of whether such interest, fees
and other amounts are allowed claims in such proceeding.

“Obligor” means Borrower, each Guarantor and each other Person liable for performance of any
of the Obligations or the property of which secures the performance of any of the Obligations.

“Off-Balance Sheet Liabilities” means, with respect to any Person as of any date of
determination thereof, without duplication and to the extent not included as a liability on the
consolidated balance sheet of such Person and its Subsidiaries in accordance with GAAP: (a) with
respect to any asset securitization transaction (including any accounts receivable purchase
facility) (i) the unrecovered investment of purchasers or transferees of assets so transferred and
(ii) any other payment, recourse, repurchase, hold harmless, indemnity or similar obligation of
such Person or any of its Subsidiaries in respect of assets transferred or payments made in respect
thereof, other than limited recourse provisions that are customary for transactions of such type
and that neither (x) have the effect of limiting the loss or credit risk of such purchasers or
transferees with respect to payment or performance by the obligors of the assets so transferred nor
(y) impair the characterization of the transaction as a true sale under applicable Laws (including
Debtor Relief Laws); (b) the monetary obligations under any financing lease or so-called
“synthetic,” tax retention or off-balance sheet lease transaction which, upon the application of
any Debtor Relief Law to such Person or any of its Subsidiaries, would be characterized as
indebtedness; (c) the monetary obligations under any sale and leaseback transaction which does not
create a liability on the consolidated balance sheet of such Person and its Subsidiaries; or
(d) any other monetary obligation arising with respect to any other transaction which (i) upon the
application of any Debtor Relief Law to such Person or any of its Subsidiaries, would be
characterized as indebtedness or (ii) is the functional equivalent of or takes the place of
borrowing but which does not constitute a liability on the consolidated balance sheet of such
Person and its Subsidiaries (for purposes of this clause (d), any transaction structured to
provide tax deductibility as interest expense of any Dividend, coupon or other periodic payment
will be deemed to be the functional equivalent of a borrowing).

“Parent Credit Agreement” means that certain Credit Agreement, dated as of July 8, 2009,
between the Parent and Bank of America, N.A., as amended, modified or supplemented from time to
time, and including any renewals, refinancings, replacements and extensions of the Debt evidenced
thereby, so long as the lender is Parent Lender.

“Parent Lender” means Bank of America, N.A. or any Eligible Replacement Lender.

 

8

 

“Parent Credit Agreement Satisfaction Conditions” means the satisfaction of all of the
following conditions: (a) the obligations under the Parent Credit Agreement have been paid in full,
provided, however, with respect to any contingent or unliquidated obligations owing
to Parent Lender, adequate provision (satisfactory to the Parent Lender or as a court of competent
jurisdiction may otherwise determine in a final non-appealable judgment) has been made, (b) all
commitments to extend credit under the Parent Credit Agreement have been terminated, and (c) there
are no outstanding letters of credit or other instruments issued under or in connection with the
Parent Credit Agreement.

“Parent Credit Agreement Satisfaction Date” means the earlier of (i) the first date on which
(a) all of the Parent Credit Agreement Satisfaction Conditions have been satisfied, and (b) Parent
Lender shall have given the Parent Credit Agreement Satisfaction Notice; and (ii) such time as
Parent Lender is no longer the lead lender under the Parent Credit Agreement.

“Parent Credit Agreement Satisfaction Notice” means a written notice from Parent Lender which
states that the Parent Credit Agreement Satisfaction Conditions have occurred. Following the
satisfaction of the Parent Credit Agreement Satisfaction Conditions, Parent shall request that
Parent Lender deliver to Lender the Parent Credit Agreement Satisfaction Notice within 15 days
after request therefor from either Lender or Parent, provided, however, that if the Parent Credit
Agreement Satisfaction Conditions have not been satisfied, Parent shall request that Parent Lender
deliver to Lender a statement setting forth which Parent Credit Agreement Satisfaction Conditions
have not been satisfied and what obligations remain outstanding under the Parent Credit Agreement.

“PBGC” means the Pension Benefit Guaranty Corporation established under ERISA.

“Permitted Acquisition” means the acquisition of the assets or equity of another Person, so
long as in each case (a) the acquisition is permitted by the terms of the Parent Credit Agreement
or any consent of the Parent Lender and (b) each acquired entity executes and delivers, or causes
to be executed and delivered, each of the documents described in Section 6.10.

“Permitted Debt” means (a) Existing Debt, (b) the Obligations, (c) trade accounts payable and
other similar obligations incurred in the ordinary course of business, (d) purchase money Debt not
to exceed $1,500,000 in aggregate amount outstanding at any time, and (e) Debt in respect of the
Parent Credit Agreement.

“Permitted Investments” means (a) Investment Grade Securities, (b) Existing Investments,
(c) travel advances to employees in the ordinary course of business, (d) equity contributions made
by Parent or Subsidiaries of Parent in existing Subsidiaries of Parent that are either Guarantors,
if such equity contribution results in an increase in shareholders’ or members’ equity of such
Subsidiary receiving such equity contribution, and (e) other Investments of Parent and its
Subsidiaries that do not, as at any date of determination, exceed in the aggregate $500,000 (the
value of each such Investment to be the greater of (1) the then current market value of such
Investment, and (2) the purchase price of such Investment).

 

9

 

“Permitted Liens” means (a) Bank Liens, (b) pledges or deposits made to secure payment of
workmen’s compensation, or to participate in any fund in connection with workmen’s compensation,
unemployment insurance, pensions, or other social security programs (excluding any Liens in respect
of ERISA), (c) good-faith pledges or deposits made to secure performance of bids, tenders,
contracts (other than for the repayment of borrowed money), or leases, or to secure statutory
obligations, surety or appeal bonds, or indemnity, performance, or other similar bonds in the
ordinary course of business, (d) encumbrances consisting of zoning restrictions, easements, or
other restrictions on the use of real property, none of which impair the use of such property by
any Obligor or any of its Subsidiaries in the operation of its business in any manner which would
have a Material Adverse Effect, (e) the following, if the validity or amount thereof is being
contested in good faith and by appropriate and lawful proceedings for which Borrower has
established adequate reserves and so long as levy and execution thereon have been stayed and
continue to be stayed: claims and Liens for Taxes due and payable; claims and Liens upon, and
defects of title to, real or personal property or other legal process prior to adjudication of a
dispute on the merits, including mechanic’s and materialmen’s Liens; and adverse judgments on
appeal, (f) set-off, charge-back and other rights of depository and collection banks and other
financial institutions with respect to money or instruments of Borrower or its Subsidiaries on
depository with or in possession of such institutions, (g) Liens arising under Capital Leases and
purchase money Debt permitted under this Agreement, (h) Existing Liens and (i) and other Liens
permitted by the Parent Credit Agreement or by the prior written consent of Parent Lender.

“Person” means and includes an individual, a partnership, a joint venture, a limited liability
company, a corporation, a trust, an unincorporated organization, and a government or any
department, Governmental Authority, agency or political subdivision thereof.

“Plan” means any plan subject to Title IV of ERISA and maintained for employees of any Obligor
or any of its Subsidiaries, or of any member of a controlled group of corporations, as the term
“controlled group of corporations” is defined in Section 1563 of the Internal Revenue Code of 1986,
as amended, of which any Obligor or any of its Subsidiaries is a part.

“Prepayment Event” means (a) any sale, transfer, condemnation or other disposition (including
pursuant to a sale and leaseback transaction) of Collateral, and (b) the receipt by Borrower or any
other Obligor of any insurance or other cash proceeds by reason of theft, loss, physical
destruction or damage or any other similar event with respect to any Collateral.

“Prime Rate” means for any day a per annum rate of interest equal to the “prime rate,” as
published in the “Money Rates” column of The Wall Street Journal, from time to time, or if
for any reason such rate is no longer available, the rate established by Frost as its prime rate.
The Prime Rate shall change effective as of the date of any change as published in The Wall
Street Journal, or as established by Frost, as appropriate. The Prime Rate is a reference rate
and does not necessarily represent the lowest or best rate actually charged to any customer of any
Lender.

“Principal Office” means the principal office of a Lender specified on Schedule 9.1.

“Release” means any spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping, disposing, depositing, dispersing, emanating or migrating
of any Hazardous Material in, into, onto or through the Environment.

 

10

 

“Remedial Action” means (a) “remedial action” as such term is defined in CERCLA, 42 U.S.C.
Section 9601(24), and (b) all other actions required by any Governmental Authority or voluntarily
undertaken to: (i) cleanup, remove, treat, abate or in any other way address any Hazardous Material
in the Environment; (ii) prevent the Release or threat of Release, or minimize the further Release
of any Hazardous Material so it does not migrate or endanger or threaten to endanger public health,
welfare or the Environment; or (iii) perform studies and investigations in connection with, or as a
precondition to, (i) or (ii) above.

“Reportable Event” means a reportable event as defined in Section 4043(b) of Title IV of ERISA
or PBGC regulations issued thereunder, other than a reportable event not subject to Section 4043’s
notification requirements pursuant to PGBC’s regulations.

“S&P” means Standard & Poor’s Ratings Group, a division of McGraw-Hill, Inc., a New York
corporation.

“Security Documents” means, collectively, the Mortgage and any and all other documents,
instruments, financing statements, public notices and the like executed and delivered in connection
with any of the Bank Liens or the Collateral.

“Senior Management” means each of James Ridings, Brad Heimann, and Marcus Scrudder.

“Solvent” means, with respect to any Person, that the fair value of the assets of such Person
(both at fair valuation and at present fair saleable value) is, on the date of determination,
greater than the total amount of liabilities (including contingent and unliquidated liabilities) of
such Person as of such date and that, as of such date, such Person is able to pay all liabilities
of such Person as such liabilities mature and such Person does not have unreasonably small capital
with which to carry on its business. In computing the amount of contingent or unliquidated
liabilities at any time, such liabilities will be computed at the amount which, in light of all the
facts and circumstances existing at such time, represents the amount that can reasonably be
expected to become an actual or matured liability discounted to present value at rates believed to
be reasonable by such Person.

“Special Counsel” means the law firm of Winstead PC, or such other legal counsel as Lender may
select.

“Stock Repurchases” means, with respect to any Person, any retirement, redemption, purchase,
repurchase or other acquisition, directly or indirectly, of any shares of any class of its capital
stock or other equity interest now or hereafter outstanding.

“Subordinated Debt” means any indebtedness of Parent or its Subsidiaries which shall have been
and continues to be validly and effectively subordinated to the Obligations pursuant to a written
agreement in form and substance acceptable to Lender.

“Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability
company or other business entity of which a majority of the shares of securities or other interests
having ordinary voting power for the election of directors or other governing body (other than
securities or interests having such power only by reason of the happening of a contingency) are at
the time beneficially owned, or the management of which is otherwise Controlled, directly or
indirectly through one or more intermediaries, or both, by such Person.

 

11

 

“Taxes” means all taxes, assessments, fees or other charges from time to time or at any time
imposed by any Laws or by any Governmental Authority.

“Term Loan” has the meaning specified in Section 2.1.

“Term Loan Commitment” means $3,500,000.

“Term Loan Maturity Date” means the first to occur of (a) the Termination Date, or (b) the
date the Obligations are accelerated.

“Term Loan Note” means the promissory note made by Borrower in favor of Lender evidencing the
Term Loan made by Lender, substantially in the form of Exhibit A.

“Termination Date” means July
 _____, 2012.

“TSI Prime Asia” means TSI Prime Asia Limited, a wholly-owned direct Subsidiary of Elitex.

1.2 Additional Definitions. The following additional terms have the meaning specified in the
indicated Section or other provision of this Agreement:

	 	 	 
	Term	 	Section/Provision
	 
	 	 
	Agreement

	 	Introductory Paragraph
	Borrower

	 	Introductory Paragraph
	Indemnified Matters

	 	Section 5.6
	Indemnified Taxes

	 	Section 3.1(a)
	Indemnitees

	 	Section 5.6
	Lender

	 	Introductory Paragraph
	Parent

	 	Introductory Paragraph
	Participant

	 	Section 9.6(b)
	Participation

	 	Section 9.6(b)
	Properties

	 	Section 7.15(a)
	Term Loan

	 	Section 2.1

1.3 Construction. Unless otherwise expressly provided in this Agreement or the context
requires otherwise, (a) the singular shall include the plural, and vice versa, (b) words of a
gender include the other gender, (c) all accounting and financial terms shall be construed in
accordance with GAAP, (d) all references to time are San Antonio time,(e) monetary references are
to Dollars, (f) all references to “Articles,” “Sections,” “Exhibits,” and “Schedules” are to the
Articles, Sections, Exhibits, and Schedules of and to this Agreement, (g) headings used in this
Agreement and each other Loan Document are for convenience only and shall not be used in connection
with the interpretation of any provision hereof or thereof, (h) references to any
Person include that Person’s heirs, personal representatives, successors, and permitted
assigns, that Person as a debtor-in possession, and any receiver, trustee, liquidator, conservator,
custodian, or similar party appointed for such Person or all or substantially all of its assets,
(i) references to any Law include every amendment or restatement to it, rule and regulation adopted
under it, and successor or replacement for it, and (j) references to a particular Loan Document
include each amendment, modification, or supplement to or restatement of it made in accordance with
this Agreement and such Loan Document.

 

12

 

ARTICLE II

LOAN

2.1 Term Loan. Subject to the terms and conditions of this Agreement, Lender agrees to make a
term loan in the amount of the Term Loan Commitment (the “Term Loan”), to Borrower on the Agreement
Date.

2.2 Funding. Upon satisfaction of the applicable conditions set forth in Article V,
Lender shall make the proceeds of the Term Loan available to Borrower by crediting the account of
Borrower on the books of Lender with the amount of such funds.

2.3 Term Loan Note. The Term Loan will be evidenced by the Term Loan Note. Interest on the
Term Loan will accrue at the rates set forth in the Term Loan Note. The principal of and interest
on the Term Loan will be due and payable in accordance with the terms and conditions set forth in
the Term Loan Note and in this Agreement.

2.4 Voluntary Prepayments. Borrower may at any time or from time to time voluntarily prepay
the Term Loan in whole or in part without premium or penalty. Each partial prepayment of the Term
Loan shall be in an aggregate amount of $100,000 or an integral multiple thereof. Prepayments
shall be accompanied by accrued interest on the principal amount prepaid. Such amount prepaid
shall be applied to the Term Loan in the inverse order of maturity.

2.5 Mandatory Prepayments. In the event and on each occasion that any Net Proceeds are
received by or on behalf of Borrower in respect of any Prepayment Event, Borrower shall, within
five days after such Net Proceeds are received, prepay the Term Loan in an aggregate amount equal
to:

(a) Asset Dispositions. In the case of Net Proceeds received in any event described
in clause (a) of the definition of Prepayment Event, the total amount of such Net Proceeds;
and

(b) Recovery Events. Subject to Section 2.5(e), in the case of Net Proceeds
received in any event described in clause (b) of the definition of Prepayment Event, the
total amount of such Net Proceeds; provided that if (A) no Default or Event of Default
exists, (B) Borrower delivers to Lender a written plan describing the proposed use of such Net
Proceeds to repair, restore or replace the stolen, lost, destroyed or damaged property or asset,
and certifying that no Default or Event of Default exists, and (C) such repair, restoration or
replacement has commenced within 60 days after the loss event, then no prepayment shall be required
pursuant to this Section 2.5(b).

(c) Application. All amounts prepaid pursuant to this Section 2.5 shall be
applied to the unpaid principal of the Term Loan in the inverse order of maturity and shall be
accompanied by accrued interest on the principal amount prepaid.

 

13

 

(d) Exception. Notwithstanding Section 2.5(b), in the event that Borrower has
received Net Proceeds (i) in an aggregate amount less than $50,000 from a single event described in
Section 2.5(b), (ii) or in an aggregate amount less than $100,000 from all events and
circumstances described in Section 2.5(b), Borrower shall not be required to comply with
the mandatory prepayment requirements of Section 2.5(b) with respect to such amounts
received after the Agreement Date.

2.6 Payments Generally. (a) Each payment (including prepayments) by Borrower of the principal
of or interest on the Term Loan and any other amount owed under this Agreement or any other Loan
Document shall be made not later than 2:00 p.m. on the date specified for payment under this
Agreement to Lender at Lender’s Office, in Dollars constituting immediately available funds. All
payments received by Lender after 2:00 p.m. shall be deemed received on the next succeeding
Business Day and any applicable interest or fee shall continue to accrue.

(b) If any payment under this Agreement or any other Loan Document shall be specified to be
made upon a day which is not a Business Day, it shall be made on the next succeeding day which is a
Business Day. Any extension of time shall in such case be included in computing interest and fees,
if any, in connection with such payment.

(c) Borrower agrees to pay principal, interest, fees and all other amounts due under the Loan
Documents without deduction for set-off or counterclaim or any deduction whatsoever.

(d) If some but less than all amounts due from Borrower are received by Lender, Lender shall
apply such amounts in the following order of priority: (i) to the payment of Lender’s expenses
incurred under the Loan Documents then due and payable, if any; (ii) to the payment of all other
fees under the Loan Documents then due and payable; (iii) to the payment of interest then due and
payable on the Term Loan (applied as provided in Section 8.3); (iv) to the payment of all
other amounts not otherwise referred to in this Section 2.6(d) then due and payable under
the Loan Documents; and (v) to the payment of principal then due and payable on the Term Loan
(applied as provided in Section 8.3).

2.7 Collateral. Payment of the Obligations is secured on the Agreement Date by (a) a
perfected first priority Lien in the Collateral, and (b) Guaranties of the Obligations by each
Guarantor. Parent shall cause each Subsidiary (other than any Foreign Subsidiary) created or
acquired after the Agreement Date to execute and deliver to Lender a Guaranty, and such related
certificates and opinions as Lender may reasonably require.

 

14

 

ARTICLE III

TAXES AND YIELD PROTECTION

3.1 Taxes.

(a) Except as provided in this Section 3.1, any and all payments by Borrower to or for
the account of Lender under any Loan Document shall be made free and clear of and without deduction
for any and all present or future income, stamp or other Taxes, duties, levies, imposts,
deductions, assessments, fees, withholdings or similar charges, now or hereafter imposed, and all
liabilities with respect thereto, excluding, in the case of Lender, its applicable lending office,
or any branch or Affiliate thereof, Taxes imposed on or measured by its net income (including net
income Taxes imposed by means of a backup withholding tax) franchise Taxes, branch Taxes, Taxes on
doing business or Taxes measured by or imposed upon the overall capital or net worth of Lender or
its applicable lending office, or any branch or Affiliate thereof, in each case imposed: (i) by
the jurisdiction under the Laws of which Lender or its applicable lending office, branch or
Affiliate is organized or is located, or in which the principal executive office of Lender is
located, or any nation within which such jurisdiction is located or any political subdivision
thereof, or (ii) by reason of any present or former connection between the jurisdiction imposing
such Tax and Lender or its applicable lending office, branch or Affiliate other than a connection
arising solely from Lender having executed, delivered or performed its obligation under, or
received payment under or enforced this Agreement the Laws of such jurisdiction (all such Taxes,
duties, levies, imposts, deductions, assessments, fees, withholdings or similar charges, and
liabilities being hereinafter referred to as “Indemnified Taxes”). If Borrower shall be required
by any Laws to deduct any Indemnified Taxes from or in respect of any sum payable under any Loan
Document to Lender, (i) the sum payable shall be increased as necessary to yield to Lender an
amount equal to the sum it would have received had no such deductions been made, (ii) Borrower
shall make such deductions, (iii) Borrower shall pay the full amount deducted to the relevant
taxation authority or other Governmental Authority in accordance with Applicable Laws, and
(iv) promptly (but in no event later than thirty days) after the date of such payment, Borrower
shall furnish to Lender the original or a certified copy of a receipt evidencing payment thereof.

(b) In addition, Borrower shall pay any and all present or future stamp, court or documentary
taxes and any other excise or property taxes or charges or similar levies which arise from any
payment made under any Loan Document or from the execution, delivery, performance, enforcement or
registration of, or otherwise with respect to, any Loan Document (hereinafter referred to as “Other
Taxes”).

(c) If Borrower shall be required to deduct or pay any Indemnified Taxes or Other Taxes from
or in respect of any sum payable under any Loan Document to Lender, Borrower shall also pay to
Lender, at the time interest on the Obligations is paid, such additional amount that Lender
specifies as necessary to preserve the after-tax yield (after factoring in all Taxes, including
Taxes imposed on or measured by net income) Lender would have received if such Indemnified Taxes or
Other Taxes had not been imposed.

(d) BORROWER SHALL INDEMNIFY LENDER FOR (i) THE FULL AMOUNT OF INDEMNIFIED TAXES AND OTHER
TAXES (INCLUDING ANY INDEMNIFIED TAXES OR OTHER TAXES IMPOSED OR ASSERTED BY ANY JURISDICTION ON
AMOUNTS PAYABLE UNDER THIS SECTION) PAID BY LENDER, (ii) AMOUNTS PAYABLE UNDER
SECTION 3.1(c) AND (iii) ANY LIABILITY (INCLUDING PENALTIES, INTEREST AND EXPENSES)
ARISING THEREFROM OR WITH RESPECT THERETO, IN EACH CASE WHETHER OR NOT SUCH INDEMNIFIED TAXES OR
OTHER TAXES WERE CORRECTLY OR LEGALLY IMPOSED OR ASSERTED BY THE RELEVANT GOVERNMENTAL AUTHORITY.
PAYMENT UNDER THIS SECTION 3.1(d) SHALL BE MADE WITHIN THIRTY DAYS AFTER THE DATE LENDER
MAKES A DEMAND THEREFOR.

 

15

 

(e) If Lender determines, in its reasonable discretion, that it has received a refund of any
Indemnified Taxes or Other Taxes as to which it has been indemnified by Borrower or with respect to
which Borrower has paid additional amounts pursuant to this Section, it shall pay to
Borrower an amount equal to such refund (but only to the extent of indemnity payments made, or
additional amounts paid, by Borrower under this Section with respect to the Indemnified
Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of Lender and
without interest (other than any interest paid by the relevant Governmental Authority with respect
to such refund), provided that Borrower, upon the request of Lender, agrees to repay the
amount paid over to Borrower (plus any penalties, interest or other charges imposed by the relevant
Governmental Authority) to Lender in the event Lender is required to repay such refund to such
Governmental Authority. This Section shall not be construed to require Lender to make
available its tax returns (or any other information relating to its taxes that it deems
confidential) to Borrower or any other Person.

3.2 Matters Applicable to all Requests for Compensation. Any demand or notice delivered by
Lender to Borrower claiming compensation under this Article III shall be in writing and
shall certify (a) that one of the events described in this Article III has occurred,
describing in reasonable detail the nature of such event and (b) as to the amount or amounts for
which Lender seeks compensation hereunder, setting forth in reasonable detail the basis for and
calculations of such compensation. Such certification shall be conclusive in the absence of
manifest error. In determining such amount, Lender may use any reasonable averaging and
attribution methods.

3.3 Survival. All of Borrower’s obligations under this Article III shall survive
payment in full of all Obligations.

ARTICLE IV

CONDITIONS PRECEDENT

4.1 Conditions Precedent to Term Loan. The obligation of Lender to make the Term Loan is
subject to (i) receipt by Lender of the following items which are to be delivered, in form and
substance reasonably satisfactory to Lender and (ii) the date (“Closing Date”) of satisfaction of
the following conditions, in form and substance reasonably satisfactory to Lender:

(a) Borrower Certificate. A certificate of officers acceptable to Lender of Borrower
certifying as to (i) the incumbency of the officers signing such certificate and the Loan Documents
to which it is a party, (ii) an original certified copy of its Articles of Organization (or similar
organization and governance document), certified as true, complete and correct as of a date not
more than ten days prior to the Agreement Date by the appropriate authority of the State of
Delaware, (iii) a copy of its operating agreement (or similar organization or governance document),
as in effect on the Agreement Date, (iv) a copy of the resolutions of the appropriate governance
body authorizing it to execute, deliver and perform the Loan Documents to which it is a party,
(v) an original certificate of good standing and existence issued by the appropriate authority of
the State of Delaware (certified as of a date not more than ten days prior to the Agreement Date),
(vi) the accuracy of the representations and warranties in the Loan Documents, (vii) no Default or
Event of Default exists, and (viii) no Material Adverse Change having occurred.

 

16

 

(b) Obligor Certificate. A certificate of officers acceptable to Lender of each
Obligor (other than Borrower) certifying as to (i) the incumbency of the officers signing such
certificate and the Loan Documents to which it is a party, (ii) if a corporation, an original
certified copy of its Articles of Incorporation or Certificate of Incorporation, as applicable,
certified as true, complete and correct as of a date not more than ten days prior to the Agreement
Date by the appropriate authority of its state of incorporation, (iii) if a limited liability
company, an original certified copy of its Articles of Organizations (or similar organization and
governance document), certified as true, complete and correct as of a date not more than ten days
prior to the Agreement Date by the appropriate authority of its state of organization, (iv) if a
limited partnership, an original certified copy of its Certificate of Limited Partnership (or
similar organization or governance document), certified as true, complete and correct as of a date
not more than ten days prior to the Agreement Date by the appropriate authority of its jurisdiction
of organization, (v) if a corporation, a copy of its By-Laws, as in effect on the Agreement Date,
(vi) if a limited liability company, a copy of its operating agreement (or similar organization
and governance document), as in effect on the Agreement Date, (vii) if a limited partnership, a
copy of its partnership agreement (or similar organization or governance document), as in effect on
the Agreement Date, (viii) a copy of the resolutions of the appropriate governance board
authorizing it to execute, deliver and perform the Loan Documents to which it is a party, and (ix)
an original certificate of good standing and existence issued by the appropriate authority of its
state of organization (certified as of a date not more than ten days prior to the Agreement Date).

(c) Term Loan Note. Duly executed the Term Loan Note, payable to the order of Lender
and in an amount equal to the Term Loan Commitment.

(d) Mortgage. The duly executed and completed Mortgage, executed by Borrower, dated
as of the Agreement Date, granting to Lender, a first priority Lien in the Collateral set forth
therein, together with insurance certificates (including flood insurance, if applicable), current
survey, environmental reports, and title insurance policy, all in form and substance satisfactory
to Lender.

(e) Guaranties. A duly executed Guaranty for each Guarantor.

(f) Expenses. Reimbursement for Special Counsel’s reasonable fees and expenses
rendered through the date hereof and payment of all title policy fees, bank appraisal fees and
environmental review fees.

(g) UCC and Lien Searches. Searches of the Uniform Commercial Code, Tax lien and
other records as Lender may require.

(h) Opinions of Borrower’s and Obligors’ Counsel. Opinions of counsel to Borrower and
each other Obligor addressed to Lender and Lenders dated the Agreement Date and covering such
matters incident to the transactions contemplated hereby as Lender or Special Counsel may
reasonably request.

(i) Final Agreement Notice. The Final Agreement Notice executed by all parties
thereto.

 

17

 

(j) Other Documents. In form and substance satisfactory to Lender and Special
Counsel, such other documents, instruments and certificates as Lender and any Lender may reasonably
require in connection with the transactions contemplated hereby.

(k) Parent Credit Agreement. A copy of the fully-executed copy of the Parent Credit
Agreement, and all conditions precedent to funding thereunder shall have been satisfied.

(l) Payment of Fees. Payment by Borrower to Lender of an origination fee equal to 1%
of the Term Loan Commitment.

(m) Representations and Warranties. All of the representations and warranties of
Borrower, each of its Subsidiaries and each other Obligor under this Agreement and each other Loan
Document shall be true and correct when made, except to the extent applicable to a specific date,
both before and after giving effect to the application of the proceeds of the Term Loan.

(n) No Default or Event of Default. There shall not exist a Default or Event of
Default.

(o) Material Adverse Change. There shall have occurred no change in the business,
assets, operations, prospects or conditions (financial or otherwise) of Parent, any other Obligor,
or any Subsidiary of Parent since June 30, 2008, which caused or could reasonably be expected to
cause a Material Adverse Effect.

ARTICLE V

AFFIRMATIVE COVENANTS

From the date hereof and so long as this Agreement is in effect and until payment in full of
the Obligations, and the performance of all other obligations of each Obligor under this Agreement
and each other Loan Document, Parent will, and will cause each Guarantor to:

5.1 General Covenants.

(a) Payment of Taxes and Claims. Pay and discharge all lawful Taxes imposed upon its
income or profits or upon any of its property before the same shall be in default, and all lawful
claims for labor, rentals, materials and supplies which, if unpaid, might become a Lien upon its
property or any part thereof; provided, however, that it shall not be required to
pay or discharge any such Tax, assessment or claim so long as the validity thereof shall be
contested in good faith by appropriate proceedings, and adequate book reserves shall be established
with respect thereto, and it shall pay such Tax, charge or claim before any Collateral subject
thereto shall be sold to satisfy a Lien.

(b) Maintenance of Existence. As to Parent and Borrower only, do all things necessary
to preserve and keep in full force and effect it as a corporation, limited liability company or
partnership, as appropriate.

 

18

 

(c) Preservation of Property. Keep its properties which are necessary to continue
business, whether owned in fee or otherwise, or leased, in good operating condition, ordinary wear
and tear excepted, and comply with all material leases to which it is a party or under which it
occupies or uses property so as to prevent any material loss or forfeiture thereunder.

(d) Insurance. Maintain in force with financially sound and reputable insurers,
policies with respect to its property and business against such casualties and contingencies
(including public liability, larceny, embezzlement or other criminal misappropriation insurance)
and in such amounts as is customary in the case of entities engaged in the same or similar lines of
business of comparable size and financial strength and as deemed necessary or required by Lender.

(e) Compliance with Applicable Laws. Comply in all material respects with the
requirements of all applicable Laws and orders of any Governmental Authority, except where
contested in good faith and by proper proceedings or where the failure to so comply could not
reasonably be expected to have a Material Adverse Effect, and obtain and maintain all material
licenses, permits, franchises or other governmental authorizations necessary to the ownership of
its properties or to the conduct of its business.

5.2 Accounts, Reports and Other Information. Maintain a system of accounting in accordance
with GAAP, consistently applied, and furnish, or cause to be furnished, to Lender the following:

(a) Interim Financial Statements. As soon as available, and in any event within
forty-five (45) days after the end of each quarter of each fiscal year of Parent, a balance sheet
and income statement of Parent as of the end of such fiscal quarter, all in form and substance and
in reasonable detail satisfactory to Lender and duly certified (subject to year-end review
adjustments) by the President and/or Chief Financial Officer of Parent (i) as being true and
correct in all material respects to the best of his or her knowledge and (ii) as having been
prepared in accordance with GAAP, consistently applied.

(b) Annual Financial Statements. As soon as available and in any event within one
hundred twenty (120) days after the end of each fiscal year of Parent, a balance sheet and income
statement of Parent as of the end of such fiscal year, in each case audited and unqualified by
Auditors.

(c) Compliance Certificate. A certificate signed by the Chief Financial Officer of
Parent within forty-five (45) days after the end of each quarter of each fiscal year of Borrower
stating that Parent and Borrower are in full compliance with all of its obligations under this Loan
Agreement and all other Loan Documents and is not in default of any term or provisions hereof or
thereof.

(d) 10K Filings. Parent’s annual 10K filing with the Securities and Exchange
Commission within fifteen (15) days after such filing.

(e) 10Q Filings. Parent’s quarterly 10Q filing with the Securities and Exchange
Commission within fifteen (15) days after such filing.

 

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(f) Other Reports. Promptly upon request by Lender, a copy of (i) such financial
statements, reports, notices or proxy statements sent by it to stockholders requested by Lender,
(ii) such regular or periodic reports and any registration statements, prospectuses and written
communications in respect thereof filed by it with any state insurance department, any securities
exchange, or with the Securities Exchange Commission or any successor agency requested by Lender,
and (iii) all press releases concerning it.

(g) Notice of Default. Promptly upon the happening of any condition or event which
constitutes an Event of Default or Default, a written notice specifying the nature and period of
existence thereof and what action it is taking and propose to take with respect thereto.

(h) Notice of Judgment. Promptly (but no later than 30 days after such date) upon the
entry by any court of competent jurisdiction of any judgment requiring the payment by any Obligor
of monies in excess of $1,000,000 or the effectiveness of any other order or settlement requiring
the payment by any Obligor of monies in excess of $1,000,000, a written notice detailing such
judgment, order and/or settlement.

(i) Notice of Claimed Default. Promptly (but no later than 30 days after such date)
upon becoming aware that the holder of any note or any evidence of indebtedness or other security
or payee of any obligation in an amount of $1,000,000 or more (including, without limitation, the
Parent Credit Agreement) has given notice or taken any action with respect to a claimed event of
default thereunder, a written notice specifying the notice given or action taken by such holder and
the nature of the claimed event of default thereunder and what action it is taking or proposes to
take with respect thereto.

(j) Notice from Governmental Authority. Promptly upon receipt thereof, information
with respect to and copies of any notices received from any Governmental Authority relating to an
order, ruling, statute or other Law or information which could reasonably be expected to have a
Material Adverse Effect.

(k) Auditors’ Reports. Promptly upon receipt thereof, a copy of (i) each other report
or “management letter” submitted to Parent or any of its Subsidiaries by Auditors in connection
with any annual, interim or special audit made by them of the books of Borrower or such Subsidiary
and (ii) each report submitted to Parent or any of its Subsidiaries by any Auditors to the extent
that such report, in the good faith opinion of Parent or such Subsidiary, identifies a condition,
situation or event that has or is reasonably likely to have a Material Adverse Effect.

(l) Additional Information. Such other additional financial information which Lender
may require to rate and/or otherwise administer the Loan, as may be reasonably requested from time
to time by Lender, including but not limited to operating statements on any assets listed on
Parent’s financial statements.

 

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Documents required to be delivered pursuant to this Section 5.2 shall be deemed to have been
delivered if and to the extent any such documents are filed, or are included in materials otherwise
filed, with the United States Securities and Exchange Commission on the date of such filing.
Notwithstanding anything to the contrary, the deadline for delivery of any notice under Section 5.2
(other than information required under Sections 5.2(a), (b) and (c)) shall not be shorter than the
required deadline for making such public filings under Applicable Law.

5.3 Inspection. (a) If no Event of Default exists, upon three Business Day’s prior notice,
and as often as may be reasonably requested, and (b) if an Event of Default exists, upon request by
Lender, permit Lender or any representatives of Lender to visit and inspect any of its properties,
to examine all books of account, records, reports and other papers, to make copies and extracts
therefrom, and to discuss the affairs, finances and accounts with its officers, employees and
auditors (and by this provision Parent authorizes Auditors to discuss with Lender and its
representatives the finances and affairs of Parent and its Subsidiaries, provided Parent receives
advance notice of any such discussions with the Auditors and has an opportunity to participate in
such discussions). All costs and expenses of Lender related to (a) the first such inspection
during each fiscal year conducted when no Event of Default exists, and (b) each such inspection
conducted when an Event of Default exists, shall be a part of the Obligations and paid by Borrower
to Lender within ten days after written demand by Lender.

5.4 Compliance with ERISA. Comply with ERISA in all material respects, and (a) at all times
make contributions within the time limits imposed by Law to meet the minimum funding standards set
forth in ERISA with respect to any Plan; (b) notify Lender as soon as reasonably practicable of any
fact which it knows or should know, including but not limited to any Reportable Event, arising in
connection with any Plan which could reasonably be expected to result in termination thereof by the
PBGC or for the appointment by a Governmental Authority of a trustee to administer the Plan; and
(c) furnish to Lender upon such request such additional information concerning any Plan as Lender
may reasonably request.

5.5 Maintenance of Priority of Bank Liens. Upon the request of Lender from time to time, it
shall perform such acts and duly authorize, execute, acknowledge, deliver, file, and record such
additional agreements, documents, instruments, and certificates as Lender may deem necessary or
appropriate in order to perfect and maintain the Bank Liens in favor of Lender and preserve and
protect the rights of Lender in respect of the Collateral.

 

21

 

5.6 Indemnity. BORROWER SHALL DEFEND, PROTECT, INDEMNIFY AND HOLD HARMLESS LENDER, ITS
AFFILIATES, AND EACH OF ITS (INCLUDING SUCH AFFILIATES’) OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
ATTORNEYS, SHAREHOLDERS AND CONSULTANTS (INCLUDING, WITHOUT LIMITATION, THOSE RETAINED IN
CONNECTION WITH THE SATISFACTION OR ATTEMPTED SATISFACTION OF ANY OF THE CONDITIONS SET FORTH
HEREIN) OF EACH OF THE FOREGOING (COLLECTIVELY, “INDEMNITEES”) FROM AND AGAINST ANY AND ALL
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, CLAIMS, COSTS,
EXPENSES AND DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER (INCLUDING, WITHOUT LIMITATION, THE
ATTORNEY COSTS OF COUNSEL FOR SUCH INDEMNITEES IN CONNECTION WITH ANY INVESTIGATIVE, ADMINISTRATIVE
OR JUDICIAL PROCEEDING, WHETHER OR NOT SUCH INDEMNITEES SHALL BE DESIGNATED A PARTY THERETO),
IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST SUCH INDEMNITEES (WHETHER DIRECT, INDIRECT OR
CONSEQUENTIAL AND WHETHER BASED ON ANY FEDERAL, STATE, OR LOCAL LAWS AND REGULATIONS, UNDER COMMON
LAW OR AT EQUITABLE CAUSE, OR ON CONTRACT, TORT OR OTHERWISE, ARISING FROM OR CONNECTED WITH THE
PAST, PRESENT OR FUTURE OPERATIONS OF PARENT OR ANY OF ITS SUBSIDIARIES OR THEIR RESPECTIVE
PREDECESSORS IN INTEREST, OR THE PAST, PRESENT OR FUTURE ENVIRONMENTAL CONDITION OF PROPERTY OF
PARENT OR ANY OF ITS SUBSIDIARIES), IN ANY MANNER RELATING TO OR ARISING OUT OF THIS AGREEMENT, THE
OTHER LOAN DOCUMENTS, OR ANY ACT, EVENT OR TRANSACTION OR ALLEGED ACT, EVENT OR TRANSACTION
RELATING OR ATTENDANT THERETO, THE MAKING OR ANY PARTICIPATION IN THE TERM LOAN, INCLUDING IN
CONNECTION WITH, OR AS A RESULT, IN WHOLE OR IN PART, OF ANY NEGLIGENCE OF LENDER (OTHER THAN THOSE
MATTERS RAISED EXCLUSIVELY BY A PARTICIPANT AGAINST THE LENDER AND NOT BORROWER), OR THE USE OR
INTENDED USE OF THE PROCEEDS OF THE TERM LOAN HEREUNDER, OR IN CONNECTION WITH ANY INVESTIGATION OF
ANY POTENTIAL MATTER COVERED HEREBY, BUT EXCLUDING ANY CLAIM OR LIABILITY THAT ARISES AS THE RESULT
OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY INDEMNITEE, AS DETERMINED IN A FINAL,
NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION (COLLECTIVELY, “INDEMNIFIED MATTERS”).
IN ADDITION, BORROWER SHALL PERIODICALLY, UPON REQUEST, REIMBURSE EACH INDEMNITEE FOR ITS
REASONABLE LEGAL AND OTHER ACTUAL EXPENSES (INCLUDING THE COST OF ANY INVESTIGATION AND
PREPARATION) INCURRED IN CONNECTION WITH ANY INDEMNIFIED MATTER. THE REIMBURSEMENT, INDEMNITY AND
CONTRIBUTION OBLIGATIONS UNDER THIS SECTION SHALL BE IN ADDITION TO ANY LIABILITY WHICH
BORROWER MAY OTHERWISE HAVE, SHALL EXTEND UPON THE SAME TERMS AND CONDITIONS TO EACH INDEMNITEE,
AND SHALL BE BINDING UPON AND INURE TO THE BENEFIT OF ANY SUCCESSORS, ASSIGNS, HEIRS AND PERSONAL
REPRESENTATIVES OF BORROWER, LENDER, AND ALL OTHER INDEMNITEES. THIS SECTION SHALL
SURVIVE ANY TERMINATION OF THIS AGREEMENT AND PAYMENT OF THE OBLIGATIONS.

5.7 Use of Proceeds. Borrower shall use the proceeds of the Term Loan to repay debt under the
Existing Credit Agreement.

5.8 Parent Credit Agreement. Borrower and Parent shall promptly provide to Lender, but in no
event later than ten (10) business days after Borrower’s and/or Parent’s receipt of same, a true,
complete and correct copy of: (i) any and all amendments, modifications and/or restatements of the
Parent Credit Agreement and the Loan Documents (as defined in the Parent Credit Agreement), and
(ii) any and all notices from Parent Lender with respect to either (A) the intent of Parent Lender
to accelerate all or any portion of the indebtedness owing under the Parent Credit Agreement,
and/or (B) the acceleration of all or any portion of the indebtedness owing under the Parent Credit
Agreement.

 

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5.9 Mortgaged Property. Parent and Borrower shall at all times (i) pay and discharges all
Taxes owing with respect to the Mortgaged Property as required by the Mortgage, (ii) preserve the
Mortgaged Property as required by the Mortgage, (iii) maintain insurance with respect to the
Mortgaged Property as required by the Mortgage, (iv) comply with all Laws applicable to the
Mortgaged Property as required by the Mortgage, and (v) otherwise perform all of the covenants and
conditions set forth in the Mortgage.

5.10 Access to Mortgaged Property. Borrower shall its use best efforts to obtain, within 120
days after the date of this Agreement, legal access from the Mortgaged Property to Delaney Road,
which access shall be in the form of a recorded access easement or publicly dedicated right-of-way
or in form otherwise be reasonably acceptable to Lender.

ARTICLE VI

NEGATIVE COVENANTS

From and after the Parent Credit Agreement Satisfaction Date and thereafter so long as this
Agreement is in effect and until payment in full of the Obligations, and the performance of all
other obligations of each Obligor under this Agreement and each other Loan Document, Parent shall
not, and shall not permit any Guarantor to:

6.1 Nature of Business. Make any material change in the nature of its business as carried on
as of the Agreement Date.

6.2 Liquidations, Mergers, Consolidations. Liquidate, merge or consolidate with or into any
other entity.

6.3 Disposition of Assets. Dispose of any of its assets or properties, other than in the
ordinary course of business or sales of worn, damaged or obsolete equipment.

6.4 Liens. Create or incur any lien or encumbrance on any of its assets, other than Permitted
Liens.

6.5 Debt. Create, incur or assume any Debt, other than Permitted Debt.

6.6 [intentionally omitted].

6.7 Loans. Make any loans or advances to any Person except for (i) loans to Obligors, and
(ii) loans to officers and directors of Parent not to exceed $100,000.00 in the aggregate at any
one time.

6.8 Transactions with Affiliates. Except for transactions among Obligors, enter into any
transaction, including, without limitation, the purchase, sale or exchange of property or the
rendering of any service, with any Affiliate of Parent, except: (a) transactions contemplated by
the Loan Documents; (b) payment of reasonable compensation to officers and employees for services
actually rendered, and loans and advances permitted by Section 6.7; (c) payment of customary
directors’ fees and indemnities; (d) transactions with Affiliates that were consummated prior to
the Closing Date, as shown on Schedule 6.8; (e) transactions with Affiliates in the ordinary course
of upon fair and reasonable terms fully disclosed to Lender and no less favorable than would be
obtained in a comparable arm’s-length transaction with a Person not an Affiliate of Parent.

 

23

 

6.9 Burdensome Agreements. Enter into any agreement (other than this Agreement or any other
Loan Document) that limits the ability (a) of any Obligor to pay Dividends to Borrower or to
otherwise transfer property to Parent, (b) of any Obligor to guarantee the Obligations or (c) of
Parent or any Obligor to create, incur, assume or suffer to exist Liens on property of such Person.

6.10 Acquisition of Assets. Acquire any assets, property or business of any Person, except in
the ordinary course of business, or participate in any joint venture, or create or acquire any
Subsidiary, except Permitted Acquisitions, provided and if such Permitted Acquisition results in a
new Subsidiary (other than a Foreign Subsidiary), such new Subsidiary delivers to Lender (in such
number of counterparts as Lender may reasonably require) the following:

(a) A certificate of officers acceptable to Lender of such Subsidiary certifying as to (i) the
incumbency of the officers signing such certificate and the Loan Documents to which it is a party,
(ii) if a corporation, an original certified copy of its Articles of Incorporation or Certificate
of Incorporation, as applicable, certified as true, complete and correct by the appropriate
authority of its state of incorporation as of a date not more than ten days prior to the date such
certificate is delivered to Lender, (iii) if a limited liability company, an original certified
copy of its Articles of Organizations (or similar organization and governance document), certified
as true, complete and correct by the appropriate authority of its state of organization as of a
date not more than ten days prior to the date such certificate is delivered to Lender, (iv) if a
corporation, a copy of its By-Laws, as in effect on the date such certificate is delivered to
Lender, (v) if a limited liability company, a copy of its operating agreement (or similar
organization and governance document), as in effect on the date such certificate is delivered to
Lender, (vi) a copy of the resolutions of the appropriate governance board authorizing it to
execute, deliver and perform the Loan Documents to which it is a party, and (vii) an original
certificate of good standing and existence issued by the appropriate authority of
its state of organization (certified as of a date not more than ten days prior to the date
such certificate is delivered to Lender).

(b) The duly executed Guaranty of such Subsidiary.

(c) Reimbursement of Lender’s reasonable expenses related to the formation of such new
Subsidiary, including Special Counsel’s reasonable fees and expenses.

(d) Searches of the Uniform Commercial Code, Tax lien and other records as Lender may require.

(e) Opinions of counsel to Parent and such Subsidiary addressed to Lender and covering such
matters incident to such new Subsidiary and the Loan Documents as Lender or Special Counsel may
reasonably request.

(f) A Notice of Final Agreement executed by such Subsidiary.

 

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(g) In form and substance reasonably satisfactory to Lender and Special Counsel, such other
documents, instruments and certificates as Lender may reasonably require in connection with the
formation of such new Subsidiary.

6.11 Loans and Investments. Make any Investment except (a) Permitted Investments, and
(b) acquisitions permitted by Section 6.10.

6.12 ERISA. Make funding contributions with respect to any Plan that are less than the
minimum required by ERISA or the regulations thereunder, or permit any Plan ever to be subject to
involuntary termination proceeding by the PBGC pursuant to ERISA § 4042(a).

6.13 Assignment. Directly or indirectly, assign or transfer, or attempt to do so, any rights,
duties or obligations under the Loan Documents.

6.14 Business. Engage in any business, other than its business as conducted on the Closing
Date and any activities incidental thereto.

6.15 Stock Repurchases. Make any Stock Repurchases, except that if no Default or Event of
Default exists or would result after giving effect thereto, Parent may repurchase up to 200,000
shares of its capital stock authorized by its Board of Directors as of the Agreement Date.

ARTICLE VII

REPRESENTATIONS AND WARRANTIES

Parent represents, warrants, and covenants, to Lender, as follows:

7.1 Organization and Qualification. Parent and each Obligor (a) is a corporation, limited
liability company or limited partnership duly organized, validly existing, and in good standing
under the Laws of its jurisdiction of organization; (b) is duly licensed and in good standing as a
foreign corporation, limited liability company or limited partnership in each
jurisdiction in which the nature of the business transacted or the property owned is such as
to require licensing as such; and (c) possesses all requisite corporate, limited liability company
or limited partnership, respectively, power, authority and legal right, to execute, deliver and
comply with the terms of the Loan Documents to be executed by it, all of which have been duly
authorized and approved by all necessary corporate, limited liability company or limited
partnership action and for which no approval or consent of any Governmental Authority which has not
been obtained is required. No proceeding is pending for the forfeiture of Parent’s or any such
Obligor’s organization documents or its dissolution. The issued and outstanding capital stock,
limited liability company interest and partnership interest of Parent and each of Obligor is duly
authorized validly issued, fully paid and nonassessable, and free of the preemptive rights of
shareholders as of the Agreement Date. Schedule 7.1 sets forth the respective jurisdiction
of organization and percentage ownership as of the Agreement Date of each of Parent’s direct and
indirect Subsidiaries as of the Agreement Date. Parent has no direct or indirect Subsidiary other
than those set forth on Schedule 7.1.

 

25

 

7.2 Financial Statements. The Financial Statements heretofore furnished to Lender prior to
the Agreement Date are complete and correct in all material respects and prepared in accordance
with GAAP, and fairly present the financial condition of the Persons described therein as of the
dates indicated and for the periods involved. There are no Contingent Debts, liabilities for
Taxes, unusual forward or long-term commitments or unrealized or anticipated losses from any
unfavorable commitments, any of which are material in amount in relation to the financial condition
of Parent or any of its Subsidiaries, except for Existing Debt. Neither Parent nor any of its
Subsidiaries has any Off-Balance Sheet liabilities. Since the date of the most recent financial
statements delivered pursuant to Section 5.2(a) or (b), as applicable, there has
been no Material Adverse Change.

7.3 Compliance With Laws and Other Matters. The execution, delivery and performance and
compliance with the terms of the Loan Documents will not cause Parent or any of its Subsidiaries to
be, (a) in violation of its corporate charter or bylaws, certificate of organization, operating
agreement, certificate of limited partnership, partnership agreement or other organization and
governance document, (b) in violation of any Law in any respect which could have any Material
Adverse Effect, or (c) in default (nor has any event occurred which, with notice or lapse of time
or both, could constitute a default) under any material agreement (including any agreement related
to any Debt or such Person).

7.4 Litigation. As of the Agreement Date, there is no Litigation pending against or, to the
knowledge of Parent, threatened against or affecting any Parent or any of its Subsidiaries or their
respective assets or properties which involves the probability of any final judgment or liability
which may result in a Material Adverse Change. Schedule 7.4 is a complete and correct
description of all Existing Litigation. There are no outstanding or unpaid final judgments against
Parent or any of its Subsidiaries.

7.5 Title to Properties. Parent and each other Obligor has (a) full corporate, limited
liability or partnership, respectively, power, authority and legal right to own and operate the
properties which it now owns, and to carry on the lines of business in which it is now engaged, and
(b) good and marketable title to the Collateral, subject to no Lien of any kind, except
Permitted Liens. Except for the Mortgage, Borrower and/or Parent has not granted to any
party, including Parent Lender, a Lien of any kind on the Mortgaged Property.

7.6 Authorization; Validity. The Board of Directors, managers, partners or other appropriate
governance board of each Obligor has duly authorized the execution and delivery of the Loan
Documents to which such Obligor is a party and the performance of their respective terms. No
consent of the stockholders, members, partners or other equityholders of any Obligor is required as
a prerequisite to the validity and enforceability of any Loan Document. Each Obligor has full
corporate, limited liability or partnership, respectively, power, authority and legal right to
execute and deliver and to perform and observe the provisions of all Loan Documents to which such
Obligor is a party. Each of the Loan Documents is the legal, valid and binding obligation of each
Obligor which is a party thereto, enforceable in accordance with its respective terms, subject as
to enforcement of remedies to any Debtor Relief Laws.

7.7 Taxes. Parent and each other Obligor have filed all federal and state and all other
material income Tax returns which are required to be filed by such Person and has paid all Taxes as
shown on said returns, and all Taxes due and payable without returns and all assessments received
to the extent that such Taxes or assessments have become due and payable. All Tax liabilities of
Parent and each of its Subsidiaries are adequately provided for on the books of such Person,
including interest and penalties. No income Tax liability of a material nature has been asserted
by taxing authorities for Taxes in excess of those already paid, except such Taxes being contested
in good faith by appropriate proceedings.

 

26

 

7.8 Use of Proceeds. No Obligor is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System)
and no part of the proceeds of any Loan will be used to purchase or carry any margin stock or to
extend credit to others for the purpose of purchasing or carrying any margin stock. None of the
assets of any Obligor are margin stock. No Obligor nor any agent acting on its behalf has taken or
will take any action which might cause this Agreement or any of the Loan Documents to violate any
regulation of the Board of Governors of the Federal Reserve System or to violate the Securities
Exchange Act of 1934, in each case as in effect now or as the same may hereafter be in effect.

7.9 Possession of Franchises, Licenses, Etc. Parent and each other Obligor possesses all
franchises, certificates, licenses, permits and other authorizations from all Governmental
Authorities, free from burdensome restrictions, that (a) are necessary for the ownership,
maintenance and operation of its properties and assets, and (b) the loss of possession of which
could reasonably be expected to have a Material Adverse Effect, and such Person is not in violation
of any thereof.

7.10 Leases. Except as to properties which are owned by Parent or any of its Subsidiaries,
Parent and each Obligor enjoys peaceful and undisturbed possession of all leases necessary for the
operation of its properties and assets the loss of possession of which could reasonably be expected
to have a Material Adverse Effect. All such leases are valid and subsisting and are in full force
and effect.

7.11 Disclosure. Neither this Agreement nor any other document, certificate or statement
furnished to Lender by or on behalf of Parent or any other Obligor in connection herewith contains
any untrue statement of a material fact or omits to state a material fact necessary in order to
make the statements contained herein and therein not misleading. There is no fact known to Parent
or any other Obligor and not known to the public generally which reasonably may be expected to
materially adversely affect its assets or in the future may reasonably be expected (so far as such
Parent or each Obligor can now foresee) to result in a Material Adverse Effect, which has not been
set forth in this Agreement or in the documents, certificates and statements furnished to Lender by
or on behalf of Parent or any other Obligor prior to the date hereof in connection with the
transactions contemplated hereby.

7.12 ERISA. As of the Agreement Date, neither Parent nor any of its Subsidiaries has
(a) incurred any material accumulated funding deficiency within the meaning of ERISA, or
(b) incurred any material liability to the PBGC in connection with any Plan established or
maintained by it. No Reportable Event has occurred with respect to any Plan which could reasonably
be expected to result in a Material Adverse Change.

 

27

 

7.13 Regulatory Acts. Neither Parent nor any of its Subsidiaries is an “investment company”
within the meaning of the Investment Company Act of 1940, as amended, or is subject to regulation
under any other Law (other than Regulation X of the Board of Governors of the Federal Reserve
System) which regulates the incurring by Parent or any of its Subsidiaries of debt, including, but
not limited to, Laws regulating common or contract carriers or the sale of electricity, gas, steam,
water, or other public utility services.

7.14 Solvency. Parent and each of its Subsidiaries is, and Parent and its Subsidiaries on a
consolidated basis are, Solvent.

7.15 Environmental Matters. Except as could not reasonably be expected to result in a
Material Adverse Change or Effect:

(a) The Mortgaged Property does not contain any Hazardous Materials in amounts or
concentrations which (i) constitute a violation of, or (ii) could reasonably be expected to give
rise to liability under, Environmental Laws;

(b) All Environmental Permits have been obtained and are in effect with respect to the
Mortgaged Property and operations of Parent and each of its Subsidiaries, and the Mortgaged
Property and all operations of each Obligor are in material compliance therewith;

(c) Neither Parent nor any of its Subsidiaries has received any written notice of an
Environmental Claim in connection with the Mortgaged Property or the operations of Parent or any of
its Subsidiaries, nor does Borrower or any of its Subsidiaries have knowledge that any such written
notice will be received or is being threatened;

(d) Neither Parent nor any of its Subsidiaries has actual knowledge of any liabilities related
to Hazardous Materials Parent or any of its Subsidiaries has retained or assumed, in whole or in
part, contractually;

(e) To Parent’s knowledge, Hazardous Materials have not been transported from the Mortgaged
Property, nor have Hazardous Materials been generated, treated, stored or disposed of at, on or
under the Mortgaged Property in a manner that could reasonably be expected to give rise to
liability under any Environmental Law; and

(f) Neither Parent nor any of its Subsidiaries has actual knowledge that Parent or any of its
Subsidiaries has retained or assumed any liability contractually, with respect to the generation,
treatment, storage or disposal of Hazardous Materials.

7.16 Survival of Representations and Warranties, Etc. All representations and warranties made
under this Agreement and the other Loan Documents shall be deemed to be made at and as of the
Agreement Date, and each shall be true and correct in all material respects when made, except to
the extent applicable to a specific date. All such representations and warranties shall survive,
and not be waived by, the execution hereof by Lender, any investigation or inquiry by Lender, or by
the making of the Term Loan under this Agreement.

 

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ARTICLE VIII

EVENTS OF DEFAULT

8.1 Default. The term “Event of Default” as used herein, means the occurrence and continuance
of any one or more of the following events (including the passage of time, if any, specified
therefor):

(a) Term Loan. The failure or refusal of Borrower to pay any part of the principal of
or interest on the Term Loan or of Borrower on or before the date such payment is due; or

(b) Other Obligations. The failure or refusal of Borrower to pay any part of the
Obligations (other than as referenced in Section 8.1(a)) on or before the date such payment
is due and such failure shall continue for three days after such payment was due; or

(c) Covenants. (i) The failure or refusal of any Obligor to perform, observe and
comply with any covenant, agreement or condition contained in Article VI or
Sections 5.1(b), 5.2(a),(b),(c),(g),(h),(i),(l), 5.3, 5.5, 5.6, 5.7, 5.8, 5.9 (subject to
any applicable cure or grace periods contained in the Mortgage) or 5.10 of this Agreement,
or (ii) the failure or refusal of any Obligor to perform, observe and comply with any other
covenant, agreement or condition in this Agreement or any other Loan Document (other than covenants
to pay the Obligations and those referenced in clause (i) immediately preceding) and the
continuation of such failure or refusal for thirty days after the earlier of actual knowledge
thereof by Senior Management or notice thereof from Lender, provided, however,
clause (ii) shall have no effect prior to the occurrence of the Parent Credit Agreement
Satisfaction Date; or

(d) Voluntary Debtor Relief. Any Obligor or any of its Subsidiaries shall (i) execute
an assignment for the benefit of creditors, or (ii) admit in writing its inability, or be generally
unable, to pay its debts generally as they become due, or (iii) voluntarily seek the benefit or
benefits of any Debtor Relief Law, or (iv) voluntarily become a party to any
proceeding provided for by any Debtor Relief Law that would suspend or otherwise affect any of
the rights of Lender granted in the Loan Documents; or

(e) Involuntary Proceedings. Any Obligor or any of its Subsidiaries shall
involuntarily (i) have an order, judgment or decree entered against it or a material portion of its
property by any Governmental Authority pursuant to any Debtor Relief Law that would suspend or
otherwise affect any of the rights granted to Lender in any of the Loan Documents, or (ii) have a
petition filed against it or a material portion of its property seeking the benefit or benefits
provided for by any Debtor Relief Law that would suspend or otherwise affect any of the rights
granted to Lender in any of the Loan Documents, and the failure to have such order, judgment,
decree or petition dismissed within sixty days after the filing or entry thereof; or

(f) Judgments. Any Obligor or any of its Subsidiaries shall have rendered against it
a money judgment in an aggregate uninsured amount in excess of $1,000,000 for which such Person has
not set aside appropriate reserves, and the same shall remain in effect and unstayed for a period
of thirty consecutive days, provided, however, this Section 8.1(f) shall
have no effect prior to the occurrence of the Parent Credit Agreement Satisfaction Date; or

 

29

 

(g) Parent Credit Agreement. Parent Lender shall have declared all or any portion of
the indebtedness owing under and/or in connection with the Parent Credit Agreement to be
immediately due and payable; or

(h) Misrepresentation. Any statement, representation or warranty in the Loan
Documents or in any writing ever delivered to Lender pursuant to the Loan Documents proves to be
incorrect in any material respect where made, provided, however, prior to the
occurrence of the Parent Credit Agreement Satisfaction Date, this Section 8.1(h) shall have
no effect with respect to statements, representations and/or warranties which either (i) do not
relate to the enforceability of the Loan Documents, and/or (ii) are not set forth in the Mortgage.

(i) ERISA. Any Reportable Event under any Plan, or the appointment by an appropriate
Governmental Authority of a trustee to administer any Plan, or the termination of any Plan within
the meaning of Title IV of ERISA, or any material accumulated funding deficiency within the meaning
of ERISA under any Plan, or the institution of proceedings by the PBGC to terminate any Plan or to
appoint a trustee to administer any Plan, and any of such events could reasonably be expected to
result in a Material Adverse Change, provided, however, this Section 8.1(i)
shall have no effect prior to the occurrence of the Parent Credit Agreement Satisfaction Date; or

(j) Loan Documents. This Agreement, any Note, any Guaranty, any Security Document, or
any other material agreement related to this Agreement shall, at any time after its execution and
delivery and for any reason, cease to be in full force and effect in or be declared to be null and
void (other than in accordance with the terms hereof or thereof) or the validity or enforceability
thereof be contested by any Person party thereto (other than Lender) or any Person (other than
Lender) shall deny in writing that it has any liability or any further liability or obligations
under any Loan Document to which it is a party; or any Security Document shall for any reason
(other than pursuant to the terms thereof) cease to create a valid and perfected first priority
Lien in any Collateral.

8.2 Remedies. If an Event of Default exists:

(a) With the exception of an Event of Default specified in Section 8.1(d) or
(e), Lender may declare the principal of and interest on the Term Loan and Obligations and
other amounts owed under the Loan Documents to be forthwith due and payable without presentment,
demand, protest or notice of any kind, all of which are hereby expressly waived, anything in the
Loan Documents to the contrary notwithstanding.

(b) Upon the occurrence of an Event of Default specified in Section 8.1(d) or
(e), the principal of and interest on the Term Loan and Obligations and other amounts and
under the Loan Documents shall thereupon and concurrently therewith become due and payable, all
without any action by Lender or any holders of the Term Loan Note and without presentment, demand,
protest or other notice of any kind, all of which are expressly waived, anything in the Loan
Documents to the contrary notwithstanding.

 

30

 

(c) Lender may exercise all of the post-default rights granted to them under the Loan
Documents or under Law.

(d) The rights and remedies of Lender hereunder shall be cumulative, and not exclusive.

8.3 Application of Funds. After the exercise of remedies provided for in Section 8.2
(or after the Term Loan and other Obligations have automatically become immediately due and
payable), any amounts received on account of the Obligations shall be applied by Lender in the
following order:

(a) First, to payment of that portion of the Obligations constituting fees,
indemnities, expenses and other amounts (including Attorney Costs payable under Section 9.2
and amounts payable under Article III) payable under the Loan Documents to Lender;

(b) Second, to payment of that portion of the Obligations constituting fees,
indemnities and other amounts (other than principal and interest) payable to Lender (including
Attorney Costs payable under Section 9.2 and amounts payable under Article III);

(c) Third, to payment of that portion of the Obligations constituting accrued and
unpaid interest on the Term Loan;

(d) Fourth, to payment of that portion of the Obligations constituting unpaid
principal of the Term Loan;

(e) Fifth, to all other Obligations; and

(f) Last, to the balance, if any, after all of the Obligations have been indefeasibly
paid in full, to Borrower or as otherwise required by Law;

ARTICLE IX

MISCELLANEOUS

9.1 Notices.

(a) All notices and other communications under this Agreement (except in those cases where
giving notice by telephone is expressly permitted) shall be in writing and shall be deemed to have
been given on the date personally delivered or sent by telecopy (answerback received), or three
days after deposit in the mail, designated as certified mail, return receipt requested,
postage-prepaid, or one day after being entrusted to a reputable commercial overnight delivery
service, addressed to the party to which such notice is directed at its address determined as
provided in this Section. All notices and other communications under this Agreement shall
be given if to Borrower and Parent, at the address specified on Schedule 9.1, and if to
Lender, at the address specified on Schedule 9.1.

(b) Any party hereto may change the address to which notices shall be directed by giving ten
days’ written notice of such change to the other parties.

 

31

 

9.2 Expenses. Borrower shall promptly pay:

(a) all reasonable out-of-pocket expenses and reasonable Attorney Costs of Lender in
connection with the preparation, negotiation, execution and delivery of this Agreement and the
other Loan Documents, the transactions contemplated hereunder and thereunder, and the making of the
Term Loan hereunder;

(b) all reasonable out-of-pocket expenses and reasonable Attorney Costs of Lender in
connection with the preparation, negotiation, execution and delivery of any waiver, amendment or
consent, as appropriate, relating to this Agreement or the other Loan Documents; and

(c) all costs, out-of-pocket expenses and Attorney Costs of Lender incurred for enforcement,
collection, restructuring, refinancing and “work-out”, or otherwise incurred in obtaining
performance under the Loan Documents, and all costs and out-of-pocket expenses of collection if
default is made in the payment of the Term Loan Note or other Obligations which in each case shall
include without limitation fees and expenses of consultants and counsel for Lender.

9.3 Waivers. The rights and remedies of Lender under this Agreement and the other Loan
Documents shall be cumulative and not exclusive of any rights or remedies which it would otherwise
have. No failure or delay by Lender in exercising any right shall operate as a waiver of such
right. Any waiver or indulgence granted by Lender shall not constitute a modification of any Loan
Document, except to the extent expressly provided in such written waiver or indulgence, or
constitute a course of dealing by Lender at variance with the terms of any Loan Document such as to
require further notice by Lender of Lender’s intent to require strict adherence to the terms of
such Loan Document in the future. Any such actions shall not in any way affect the ability of
Lender, in its discretion, to exercise any rights available to them under
this Agreement, any other Loan Document or under any other agreement, whether or not Lender is
a party thereto, relating to Borrower, its Subsidiaries or other Obligors.

9.4 Determinations by Lender. Any material determination required or expressly permitted to
be made by Lender under this Agreement shall be made in its reasonable judgment and in good faith,
and shall when made, absent manifest error, constitute prima facie evidence as to the accuracy
thereof.

9.5 Set-Off. In addition to any rights now or hereafter granted under Law and not by way of
limitation of any such rights, during the existence of an Event of Default, Lender and any
subsequent holder of the Term Loan Note or other Obligations, is hereby authorized by Borrower at
any time or from time to time, solely after the occurrence of the Parent Credit Agreement
Satisfaction Date, without notice to Borrower or any other Person, any such notice being hereby
expressly waived, to set-off, appropriate and apply any deposits (general or special (except trust
and escrow accounts), time or demand, including without limitation Debt evidenced by certificates
of deposit, in each case whether matured or unmatured) and any other Debt at any time held or owing
by Lender, or such holder to or for the credit or the account of Borrower, against and on account
of the Obligations and other liabilities of Borrower to Lender, or such holder, irrespective of
whether or not (a) Lender, or such holder shall have made any demand hereunder, or (b) Lender, or
such holder shall have declared the principal of and interest on any Loan and other amounts due
hereunder to be due and payable as permitted by Section 8.2 and although such obligations
and liabilities, or any of them, shall be contingent or unmatured. Any sums obtained by Lender, or
any assignee, participant or subsequent holder of any other Obligation shall be subject to pro rata
treatment of the Obligations and other liabilities hereunder. Notwithstanding any provision of any
Loan Document to the contrary, no Lender may set-off against funds in any account containing only
funds held in trust by Borrower for the benefit of a third party and which account Borrower has
disclosed to Lender as being a trust account.

 

32

 

9.6 Assignment.

(a) Neither Borrower nor any other Obligor may assign or transfer any of its rights or
obligations hereunder or under the other Loan Documents without the prior written consent of
Lender.

(b) Lender may at any time sell participations in all or any part of the Term Loan
(collectively, “Participations”) to any banks or other financial institutions (“Participants”)
provided that such Participation shall not confer on any Person (other than the parties hereto) any
right to vote on, approve or sign amendments or waivers, or any other independent benefit or any
legal or equitable right, remedy or other claim under this Agreement or any other Loan Documents,
other than the right to vote on, approve, or sign amendments or waivers or consents with respect to
items that would result in (i) (A) the extension of the date of maturity of, or (B) the extension
of the due date for any payment of principal, interest or fees respecting, or (C) the reduction of
the amount of any installment of principal or interest on or the change or reduction of any
mandatory reduction required hereunder, or (D) a reduction of the rate of interest on, the Term
Loan; or (ii) the release of security for the Obligations (except pursuant to this Agreement).
Notwithstanding the foregoing, Borrower agrees that Participants shall be
entitled to the benefits of Article VIII and Section 9.5 as though they were
the Lender. To the fullest extent it may effectively do so under Law, Borrower agrees that any
Participant may exercise any and all rights of banker’s lien, set-off and counterclaim with respect
to its Participation as fully as if such Participant were the holder of the Term Loan in the amount
of its Participation.

9.7 Amendment and Waiver. The provisions of this Agreement may not be amended, modified or
waived except by the written agreement of Borrower and Lender. Neither this Agreement nor any term
hereof may be amended orally, nor may any provision hereof be waived orally but only by an
instrument in writing the parties required by this Section 9.7.

 

33

 

9.8 Confidentiality. Lender agrees to maintain the confidentiality of the Information, except
that Information may be disclosed (a) to its and its Affiliates’ directors, officers, employees and
agents, including accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the extent requested by
any Governmental Authority, (c) to the extent required by Laws or by any subpoena or similar legal
process, (d) to any other Lender, (e) in connection with the exercise of any remedies hereunder or
under any other Loan Document or any action or proceeding relating to this Agreement or any other
Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section, to any assignee of
or Participant in, or any prospective assignee of or Participant in, any of its rights or
obligations under this Agreement, (g) with the written consent of Borrower or (h) to the extent
such Information (i) becomes publicly available other than as a result of a breach of this
Section or (ii) becomes available to Lender on a nonconfidential basis from a source other
than Borrower, any of its Subsidiaries or any other Obligor. For purposes of this Section,
“Information” means all information received from Borrower, any other Obligor or any Subsidiary of
Parent relating to Parent, any other Obligor or any Subsidiary of Parent or any of their respective
businesses, other than any such information that is available to Lender on a nonconfidential basis
prior to disclosure by Borrower, any other Obligor or any Subsidiary of Parent, provided
that, in the case of information received from Borrower, any other Obligor or any Subsidiary of
Parent after the date hereof, such information is clearly identified at the time of delivery as
confidential. Any Person required to maintain the confidentiality of Information as provided in
this Section shall be considered to have complied with its obligation to do so if such
Person has exercised the same degree of care to maintain the confidentiality of such Information as
such Person would accord to its own confidential information.

9.9 Counterparts. This Agreement may be executed in any number of counterparts, including via
facsimile, each of which shall be deemed to be an original, but all such separate counterparts
shall together constitute but one and the same instrument.

9.10 Severability. Any provision of this Agreement which is for any reason prohibited or
found or held invalid or unenforceable by any Governmental Authority shall be ineffective to the
extent of such prohibition or invalidity or unenforceability without invalidating the remaining
provisions hereof in such jurisdiction or affecting the validity or enforceability of such
provision in any other jurisdiction.

9.11 Interest and Charges. It is not the intention of any parties to this Agreement to make
an agreement in violation of the Laws of any applicable jurisdiction relating to usury. Regardless
of any provision in any Loan Document, Lender shall never be entitled to receive, collect or apply,
as interest on the Obligations, any amount in excess of the Maximum Amount. If Lender, or any
Participant ever receives, collects or applies, as interest, any such excess, such amount which
would be excessive interest shall be deemed a partial repayment of principal by Borrower. In
determining whether or not the interest paid or payable, under any specific contingency, exceeds
the Maximum Amount, Borrower and Lender shall, to the maximum extent permitted under Applicable
Law, (a) characterize any non-principal payment as an expense, fee or premium rather than as
interest, (b) exclude voluntary prepayments and the effect thereof, and (c) amortize, prorate,
allocate and spread in equal parts, the total amount of interest throughout the entire contemplated
term of the Obligations so that the interest rate is uniform throughout the entire term of the
Obligations; provided, however, that if the Obligations are paid and performed in
full prior to the end of the full contemplated term thereof, and if the interest received for the
actual period of existence thereof exceeds the Maximum Amount, Lender shall refund to Borrower the
amount of such excess or credit the amount of such excess against the total principal amount of the
Obligations owing, and, in such event, Lender shall not be subject to any penalties provided by any
Laws for contracting for, charging or receiving interest in excess of the Maximum Amount. This
Section shall control every other provision of all agreements pertaining to the
transactions contemplated by or contained in the Loan Documents.

 

34

 

9.12 Exception to Covenants. No Obligor shall be deemed to be permitted to take any action or
fail to take any action which is permitted as an exception to any of the covenants contained herein
or which is within the permissible limits of any of the covenants contained herein if such action
or omission would result in the breach of any other covenant contained herein.

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

9.14 GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS (EXCEPT TO THE EXTENT THAT THE LAWS
OF MICHIGAN APPLY WITH RESPECT TO THE COLLATERAL). THE LOAN DOCUMENTS ARE PERFORMABLE IN SAN
ANTONIO, BEXAR COUNTY, TEXAS, AND BORROWER AND LENDER WAIVE THE RIGHT TO BE SUED ELSEWHERE.
BORROWER AND LENDER AGREE THAT THE STATE AND FEDERAL COURTS OF TEXAS LOCATED IN SAN ANTONIO, TEXAS
SHALL HAVE JURISDICTION OVER PROCEEDINGS IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS.

9.15 WAIVER OF JURY TRIAL. EACH OF BORROWER AND LENDER HEREBY KNOWINGLY VOLUNTARILY,
IRREVOCABLY AND INTENTIONALLY WAIVE, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM ARISING OUT OF OR RELATED TO ANY OF THE LOAN
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY. THIS PROVISION IS A MATERIAL INDUCEMENT TO
LENDER ENTERING INTO THIS AGREEMENT AND MAKING ANY LOANS.

9.16 ENTIRE AGREEMENT. THIS WRITTEN AGREEMENT, TOGETHER WITH THE OTHER LOAN DOCUMENTS,
REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN
ORAL AGREEMENTS BETWEEN THE PARTIES.

The Remainder of This Page Is Intentionally Left Blank.

 

35

 

IN WITNESS WHEREOF, this Agreement is executed as of the date first set forth above.

	 	 	 	 	 
	BORROWER: 	WOODARD—CM, LLC, a Delaware limited liability company

 	 
	 	By:  	/s/ C. Brett Burford
 	 
	 	 	Name:  	C. Brett Burford 	 
	 	 	Title:  	Secretary and Chief Financial Officer 	 

 

 

 

	 	 	 	 	 

	 	 	 	 	 
	PARENT: 	 CRAFTMADE INTERNATIONAL, INC., a Delaware corporation

 	 
	 	By:  	/s/ C. Brett Burford
 	 
	 	 	Name:  	C. Brett Burford 	 
	 	 	Title:  	Secretary and Chief Financial Officer 	 

 

 

 

	 	 	 	 	 

	 	 	 	 	 
	LENDER: 	THE FROST NATIONAL BANK

 	 
	 	By:  	/s/ Julie Glass
 	 
	 	 	Name:  	Julie Glass 	 
	 	 	Title:  	Senior Vice PresidentExhibit 10.3

Exhibit 10.3

TERM LOAN NOTE

(Floating Rate)

	 	 	 
	$3,500,000.00
	 	 July 8, 2009

For value received, WOODARD—CM, LLC, a Delaware limited liability company, as principal
(“Borrower”), promises to pay to the order of THE FROST NATIONAL BANK, a national banking
association (“Lender”) at P.O. Box 34746, San Antonio, Texas 78265, or at such other
address as Lender shall from time to time specify in writing, the principal sum of THREE MILLION
FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($3,500,000.00), in legal and lawful money of the United
States of America, with interest on the outstanding principal from the date advanced until paid at
the rate set out below. Interest shall be computed on a per annum basis of a year of 360 days and
for the actual number of days elapsed, unless such calculation would result in a rate greater than
the highest rate permitted by applicable law, in which case interest shall be computed on a per
annum basis of a year of 365 days or 366 days in a leap year, as the case may be.

1. Payment Terms. Principal and interest shall be due and payable in monthly payments
of $37,687.03 each, payable on the first Business Day of each and every calendar month, beginning
August 1, 2009 and continuing regularly thereafter until July 10, 2012, or earlier as provided in
the Term Loan Agreement, dated as of July 8, 2009, between Borrower and Lender (such agreement,
together with all amendments, supplements, modifications and restatements, the “Loan
Agreement”; capitalized terms used herein and not otherwise defined herein shall have the
meaning given to them in the Loan Agreement), when the entire amount hereof, principal and interest
then remaining unpaid, shall be then due and payable; interest being calculated on the unpaid
principal each day principal is outstanding and all payments made credited to any collection costs
and late charges, to the discharge of the interest accrued and to the reduction of the principal,
in such order as Lender shall determine.

The monthly payments of principal and interest on this Note have been calculated on the basis
of an amortization of the principal balance hereof over a period of ten (10) years from the date
hereof (the “Amortization Period”) based upon an interest rate of 5.25% per annum. It is
intended by Lender and Borrower that the payments hereon shall always be sufficient to pay all
accrued interest and some principal on this Note. Because of possible interest rate changes from
time to time that could result in negative amortization of the principal balance hereof, and to
maintain the present amortization schedule on this Note, Lender shall have the option, in its sole
discretion, to adjust the payment amount every year during the term hereof, beginning one year from
the date hereof to an amount satisfactory, in Lender’s sole discretion, to cover (i) all accrued,
unpaid interest hereon, (ii) the principal reduction required to fully amortize the unpaid
principal balance hereof in equal monthly payments over the then remaining portion of the
Amortization Period, and (iii) all interest anticipated to accrue on this Note during the one-year
period following a payment adjustment. Lender may choose not to change the payments on this Note
in any year throughout the term hereof.

2. Late Charge. If a payment is made 10 days or more late, Borrower will be charged,
in addition to interest, a delinquency charge of (i) 5% of the unpaid portion of the
regularly scheduled payment, or (ii) $250.00, whichever is less. Additionally, upon maturity
of this Note, if the outstanding principal balance (plus all accrued but unpaid interest) is not
paid within 10 days of the maturity date, Borrower will be charged a delinquency charge of (i) 5%
of the sum of the outstanding principal balance (plus all accrued but unpaid interest), or (ii)
$250.00, whichever is less. Borrower agrees with Lender that the charges set forth herein are
reasonable compensation to Lender for the handling of such late payments.

 

 

 

3. Interest Rate. Interest on the outstanding and unpaid principal balance hereof
shall be computed at a per annum rate equal to the lesser of (a) a rate equal to the Prime Rate,
plus two percent (2%) per annum, with said rate to be adjusted to reflect any change in said Prime
Rate at the time of any such change or (b) the Highest Lawful Rate, but in no event shall interest
contracted for, charged or received hereunder plus any other charges in connection herewith which
constitute interest exceed the maximum interest permitted by applicable law, said rate to be
effective prior to maturity (however such maturity is brought about). “Prime Rate” means for any
day a per annum rate of interest equal to the “prime rate,” as published in the “Money Rates”
column of The Wall Street Journal, from time to time, or if for any reason such rate is no longer
available, the rate established by Lender as its prime rate. The Prime Rate shall change effective
as of the date of any change as published in The Wall Street Journal or as established by Lender,
as appropriate. The Prime Rate is a reference rate and does not necessarily represent the lowest
or best rate actually charged to another customer.

4. Default Rate. Matured unpaid principal and interest shall bear interest from date
of maturity until paid at the Highest Lawful Rate.

5. Prepayment. Borrower reserves the right to prepay, prior to maturity, all or any
part of the principal of this Note without penalty. Any prepayments shall be applied first to
accrued interest and then to principal. Borrower will provide written notice to the holder of this
Note of any such prepayment of all or any part of the principal at the time thereof. All payments
and prepayments of principal or interest on this Note shall be made in lawful money of the United
States of America in immediately available funds, at the address of Lender indicated above, or such
other place as the holder of this Note shall designate in writing to Borrower. All partial
prepayments of principal shall be applied to the last installments payable in their inverse order
of maturity.

6. Default. It is expressly provided that upon default in the punctual payment of
this Note or any part hereof, principal or interest, as the same shall become due and payable, or
upon the occurrence of an Event of Default specified in any of the other Loan Documents (as defined
below), the holder of this Note may, at its option, without further notice or demand, (i) declare
the outstanding principal balance of and accrued but unpaid interest on this Note at once due and
payable, (ii) refuse to advance any additional amounts under this Note, (iii) foreclose all liens
securing payment hereof, (iv) pursue any and all other rights, remedies and recourses available to
the holder hereof, including but not limited to any such rights, remedies or recourses under the
Loan Documents, at law or in equity, or (v) pursue any combination of the foregoing; and in the
event default is made in the prompt payment of this Note when due or declared due, and the same is
placed in the hands of an attorney for collection, or suit is brought on same, or the same is
collected through probate, bankruptcy or other judicial proceedings, then the Borrower agrees and
promises to pay all costs of collection, including reasonable attorney’s fees.

 

2

 

7. Joint and Several Liability; Waiver. Each maker, signer, surety and endorser
hereof, as well as all heirs, successors and legal representatives of said parties, shall be
directly and primarily, jointly and severally, liable for the payment of all indebtedness
hereunder. Lender may release or modify the obligations of any of the foregoing persons or
entities, or guarantors hereof, in connection with this loan without affecting the obligations of
the others. All such persons or entities expressly waive presentment and demand for payment,
notice of default, notice of intent to accelerate maturity, notice of acceleration of maturity,
protest, notice of protest, notice of dishonor, and all other notices and demands for which waiver
is not prohibited by law, and diligence in the collection hereof; and agree to all renewals,
extensions, indulgences, partial payments, releases or exchanges of collateral, or taking of
additional collateral, with or without notice, before or after maturity. No delay or omission of
Lender in exercising any right hereunder shall be a waiver of such right or any other right under
this Note.

8. No Usury Intended; Usury Savings Clause. In no event shall interest contracted
for, charged or received hereunder, plus any other charges in connection herewith which constitute
interest, exceed the maximum interest permitted by applicable law. The amounts of such interest or
other charges previously paid to the holder of the Note in excess of the amounts permitted by
applicable law shall be applied by the holder of the Note to reduce the principal of the
indebtedness evidenced by the Note, or, at the option of the holder of the Note, be refunded. To
the extent permitted by applicable law, determination of the legal maximum amount of interest shall
at all times be made by amortizing, prorating, allocating and spreading in equal parts during the
period of the full stated term of the loan and indebtedness, all interest at any time contracted
for, charged or received from the Borrower hereof in connection with the loan and indebtedness
evidenced hereby, so that the actual rate of interest on account of such indebtedness is uniform
throughout the term hereof.

9. Security. This Note has been executed and delivered pursuant to the Loan
Agreement, and is secured by, inter alia, certain of the other Loan Documents.

10. Governing Law, Venue. This Note is being executed and delivered, and is intended
to be performed in the State of Texas. Except to the extent that the laws of the United States may
apply to the terms hereof, the substantive laws of the State of Texas shall govern the validity,
construction, enforcement and interpretation of this Note. In the event of a dispute involving
this Note or any other instruments executed in connection herewith, the undersigned irrevocably
agrees that venue for such dispute shall lie in any court of competent jurisdiction in Bexar
County, Texas.

11. Purpose of Loan. Borrower agrees that no advances under this Note shall be used
for personal, family or household purposes, and that all advances hereunder shall be used solely
for business, commercial, investment, or other similar purposes.

 

3

 

12. Captions. The captions in this Note are inserted for convenience only and are not
to be used to limit the terms herein.

	 	 	 	 	 
	 	BORROWER:

WOODARD-CM, LLC

 	 
	 	By:  	/s/ C. Brett Burford
 	 
	 	 	Name:  	C. Brett Burford 	 
	 	 	Title:  	Secretary and Chief Financial Officer 	 

 

4

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