Document:

Exhibit 10.4

AMENDED AND RESTATED REVOLVING CREDIT, TERM
LOAN

AND

SECURITY AGREEMENT

PNC BANK, NATIONAL ASSOCIATION

(AS A LENDER AND AS AGENT)

AND

THE OTHER LENDERS PARTY HERETO

WITH

INSIGHT EQUITY A.P. X, LP

(AS BORROWER)

AND

INSIGHT EQUITY A.P. X ASIA, LLC,

PT. VISION-EASE ASIA,

INSIGHT EQUITY A.P. X CANADA, LLC,

INSIGHT EQUITY A.P. X CANADA PARTNERS, LP,

VISION-EASE CANADA CO.,

VISION EASE LENS EUROPE LIMITED

AND

VISION-EASE LENS LIMITED

(AS SUBSIDIARIES)

AND

INSIGHT EQUITY A.P. X COMPANY, LLC

(AS GENERAL PARTNER)

December 1, 2005

 

TABLE
OF CONTENTS

	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 1            DEFINITIONS

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 1.1

  	
   

  	
  Accounting Terms

  	
   

  	
  2

  
	
  Section 1.2

  	
   

  	
  General Terms

  	
   

  	
  2

  
	
  Section 1.3

  	
   

  	
  UCC Terms

  	
   

  	
  28

  
	
  Section 1.4

  	
   

  	
  Certain Matters of Construction

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 2            ADVANCES, PAYMENTS

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 2.1

  	
   

  	
  Advances.

  	
   

  	
  28

  
	
  Section 2.2

  	
   

  	
  Procedure for Borrowing Advances.

  	
   

  	
  29

  
	
  Section 2.3

  	
   

  	
  Disbursement of Advance Proceeds

  	
   

  	
  31

  
	
  Section 2.4

  	
   

  	
  Term Loans

  	
   

  	
  31

  
	
  Section 2.5

  	
   

  	
  Maximum Advances

  	
   

  	
  32

  
	
  Section 2.6

  	
   

  	
  Repayment of Advances.

  	
   

  	
  32

  
	
  Section 2.7

  	
   

  	
  Repayment of Excess Advances

  	
   

  	
  32

  
	
  Section 2.8

  	
   

  	
  Statement of Account

  	
   

  	
  33

  
	
  Section 2.9

  	
   

  	
  Letters of Credit

  	
   

  	
  33

  
	
  Section 2.10

  	
   

  	
  Issuance and Requirements of Letters of Credit, etc.

  	
   

  	
  33

  
	
  Section 2.11

  	
   

  	
  Requirements for Issuance of Letters of Credit, etc.

  	
   

  	
  34

  
	
  Section 2.12

  	
   

  	
  Additional Payments

  	
   

  	
  39

  
	
  Section 2.13

  	
   

  	
  Manner of Borrowing and Payment.

  	
   

  	
  39

  
	
  Section 2.14

  	
   

  	
  Prepayments.

  	
   

  	
  41

  
	
  Section 2.15

  	
   

  	
  Use of Proceeds

  	
   

  	
  42

  
	
  Section 2.16

  	
   

  	
  Defaulting Lender.

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 3            INTEREST AND FEES

  	
   

  	
  43

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 3.1

  	
   

  	
  Interest

  	
   

  	
  43

  
	
  Section 3.2

  	
   

  	
  Letter of Credit Fees.

  	
   

  	
  43

  
	
  Section 3.3

  	
   

  	
  Certain Fees.

  	
   

  	
  44

  
	
  Section 3.4

  	
   

  	
  Collateral Fees.

  	
   

  	
  45

  
	
  Section 3.5

  	
   

  	
  Computation of Interest and Fees

  	
   

  	
  45

  
	
  Section 3.6

  	
   

  	
  Maximum Charges.

  	
   

  	
  45

  
	
  Section 3.7

  	
   

  	
  Increased Costs

  	
   

  	
  46

  
	
  Section 3.8

  	
   

  	
  Basis For Determining Interest Rate Inadequate or Unfair

  	
   

  	
  47

  
	
  Section 3.9

  	
   

  	
  Capital Adequacy.

  	
   

  	
  47

  
	
  Section 3.10

  	
   

  	
  Gross Up for Taxes.

  	
   

  	
  48

  
	
  Section 3.11

  	
   

  	
  Tax Withholding Clause

  	
   

  	
  48

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 4            COLLATERAL AND GUARANTIES: GENERAL
  TERMS

  	
   

  	
  49

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 4.1

  	
   

  	
  Security Interests and Liens in and to the Collateral.

  	
   

  	
  49

  
	
  Section 4.2

  	
   

  	
  Perfection of Security Interest

  	
   

  	
  50

  
	
  Section 4.3

  	
   

  	
  Disposition of Collateral

  	
   

  	
  51

  
	
  Section 4.4

  	
   

  	
  Preservation of Collateral

  	
   

  	
  51

  

 

 i
 

 

 

	
  Section 4.5

  	
   

  	
  Ownership of Collateral

  	
   

  	
  52

  
	
  Section 4.6

  	
   

  	
  Defense of Agent’s and
  Lenders’ Interests

  	
   

  	
  52

  
	
  Section 4.7

  	
   

  	
  Books and Records

  	
   

  	
  52

  
	
  Section 4.8

  	
   

  	
  Financial Disclosure

  	
   

  	
  53

  
	
  Section 4.9

  	
   

  	
  Compliance with Laws

  	
   

  	
  53

  
	
  Section 4.10

  	
   

  	
  Examinations, Inspection of
  Premises and Appraisals

  	
   

  	
  53

  
	
  Section 4.11

  	
   

  	
  Insurance

  	
   

  	
  53

  
	
  Section 4.12

  	
   

  	
  Failure to Pay Insurance

  	
   

  	
  54

  
	
  Section 4.13

  	
   

  	
  Payment of Taxes

  	
   

  	
  54

  
	
  Section 4.14

  	
   

  	
  Payment of Leasehold
  Obligations

  	
   

  	
  54

  
	
  Section 4.15

  	
   

  	
  Receivables.

  	
   

  	
  55

  
	
  Section 4.16

  	
   

  	
  Inventory

  	
   

  	
  57

  
	
  Section 4.17

  	
   

  	
  Maintenance of Equipment

  	
   

  	
  57

  
	
  Section 4.18

  	
   

  	
  Exculpation of Liability

  	
   

  	
  57

  
	
  Section 4.19

  	
   

  	
  Environmental Matters.

  	
   

  	
  57

  
	
  Section 4.20

  	
   

  	
  Financing Statements

  	
   

  	
  59

  
	
  Section 4.21

  	
   

  	
  Guaranties and Security
  Agreements of Subsidiaries.

  	
   

  	
  59

  
	
  Section 4.22

  	
   

  	
  Pledge Agreements of
  Limited Partners and General Partner

  	
   

  	
  60

  
	
  Section 4.23

  	
   

  	
  “Opt In” to Article 8

  	
   

  	
  60

  
	
  Section 4.24

  	
   

  	
  Investment Property

  	
   

  	
  60

  
	
  Section 4.25

  	
   

  	
  Real Property

  	
   

  	
  61

  
	
  Section 4.26

  	
   

  	
  Ratification, Confirmation
  and Reaffirmation of Guaranties, Security Agreements and Pledge Agreements.

  	
   

  	
  61

  
	
  Section 4.27

  	
   

  	
  No Unlawful Financial
  Assistance

  	
   

  	
  62

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 5            REPRESENTATIONS AND WARRANTIES

  	
   

  	
  62

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 5.1

  	
   

  	
  Authority

  	
   

  	
  62

  
	
  Section 5.2

  	
   

  	
  Formation and
  Qualification.

  	
   

  	
  62

  
	
  Section 5.3

  	
   

  	
  Survival of Representations
  and Warranties

  	
   

  	
  63

  
	
  Section 5.4

  	
   

  	
  Tax Returns

  	
   

  	
  63

  
	
  Section 5.5

  	
   

  	
  Financial Statements.

  	
   

  	
  63

  
	
  Section 5.6

  	
   

  	
  Entity Name

  	
   

  	
  63

  
	
  Section 5.7

  	
   

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

  	
   

  	
  63

  
	
  Section 5.8

  	
   

  	
  Solvency; No Litigation,
  Violation, Indebtedness or Default.

  	
   

  	
  64

  
	
  Section 5.9

  	
   

  	
  Patents, Trademarks,
  Copyrights and Licenses

  	
   

  	
  66

  
	
  Section 5.10

  	
   

  	
  Licenses and Permits

  	
   

  	
  66

  
	
  Section 5.11

  	
   

  	
  Default of Indebtedness

  	
   

  	
  66

  
	
  Section 5.12

  	
   

  	
  No Default

  	
   

  	
  67

  
	
  Section 5.13

  	
   

  	
  No Burdensome Restrictions

  	
   

  	
  67

  
	
  Section 5.14

  	
   

  	
  No Labor Disputes

  	
   

  	
  67

  
	
  Section 5.15

  	
   

  	
  Margin Regulations

  	
   

  	
  67

  
	
  Section 5.16

  	
   

  	
  Investment Company Act

  	
   

  	
  67

  
	
  Section 5.17

  	
   

  	
  Disclosure

  	
   

  	
  67

  
	
  Section 5.18

  	
   

  	
  Swaps

  	
   

  	
  67

  
	
  Section 5.19

  	
   

  	
  Conflicting Agreements

  	
   

  	
  67

  
	
  Section 5.20

  	
   

  	
  Application of Certain Laws
  and Regulations

  	
   

  	
  67

  
	
  Section 5.21

  	
   

  	
  Business and Property of
  Loan Parties.

  	
   

  	
  68

  
	
  Section 5.22

  	
   

  	
  Delivery of Certain
  Documents

  	
   

  	
  68

  
	
  Section 5.23

  	
   

  	
  Material Contracts

  	
   

  	
  68

  
	
  Section 5.24

  	
   

  	
  Anti-Terrorism Laws.

  	
   

  	
  69

  

 

 ii
 

 

 

	
  ARTICLE 6            AFFIRMATIVE
  COVENANTS

  	
   

  	
  69

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 6.1

  	
   

  	
  Payment of Fees

  	
   

  	
  69

  
	
  Section 6.2

  	
   

  	
  Conduct of Business and
  Maintenance of Existence and Assets

  	
   

  	
  70

  
	
  Section 6.3

  	
   

  	
  Violations

  	
   

  	
  70

  
	
  Section 6.4

  	
   

  	
  Government Receivables

  	
   

  	
  70

  
	
  Section 6.5

  	
   

  	
  Fixed Charge Coverage Ratio

  	
   

  	
  70

  
	
  Section 6.6

  	
   

  	
  Tangible Net Worth

  	
   

  	
  70

  
	
  Section 6.7

  	
   

  	
  Execution of Supplemental
  Instruments

  	
   

  	
  70

  
	
  Section 6.8

  	
   

  	
  Payment of Indebtedness,
  etc

  	
   

  	
  70

  
	
  Section 6.9

  	
   

  	
  Standards of Financial
  Statements

  	
   

  	
  71

  
	
  Section 6.10

  	
   

  	
  Exercise of Rights

  	
   

  	
  71

  
	
  Section 6.11

  	
   

  	
  Subsidiaries

  	
   

  	
  71

  
	
  Section 6.12

  	
   

  	
  Total Leverage Ratio

  	
   

  	
  71

  
	
  Section 6.13

  	
   

  	
  Unadjusted EBITDA

  	
   

  	
  71

  
	
  Section 6.14

  	
   

  	
  Post Closing IP Covenant

  	
   

  	
  72

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 7            NEGATIVE COVENANTS

  	
   

  	
  72

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 7.1

  	
   

  	
  Merger, Consolidation,
  Acquisition and Sale of Assets.

  	
   

  	
  72

  
	
  Section 7.2

  	
   

  	
  Creation of Liens

  	
   

  	
  72

  
	
  Section 7.3

  	
   

  	
  Guarantees

  	
   

  	
  72

  
	
  Section 7.4

  	
   

  	
  Investments

  	
   

  	
  73

  
	
  Section 7.5

  	
   

  	
  Loans

  	
   

  	
  73

  
	
  Section 7.6

  	
   

  	
  Capital Expenditures

  	
   

  	
  73

  
	
  Section 7.7

  	
   

  	
  Management Fees; Dividends;
  Distributions

  	
   

  	
  73

  
	
  Section 7.8

  	
   

  	
  Indebtedness

  	
   

  	
  75

  
	
  Section 7.9

  	
   

  	
  Nature of Business

  	
   

  	
  76

  
	
  Section 7.10

  	
   

  	
  Transactions with
  Affiliates

  	
   

  	
  76

  
	
  Section 7.11

  	
   

  	
  Leases

  	
   

  	
  76

  
	
  Section 7.12

  	
   

  	
  Subsidiaries.

  	
   

  	
  76

  
	
  Section 7.13

  	
   

  	
  Fiscal Year and Accounting
  Changes

  	
   

  	
  76

  
	
  Section 7.14

  	
   

  	
  Pledge of Credit

  	
   

  	
  76

  
	
  Section 7.15

  	
   

  	
  Amendment of Organizational
  Documents

  	
   

  	
  76

  
	
  Section 7.16

  	
   

  	
  Compliance with ERISA.

  	
   

  	
  77

  
	
  Section 7.17

  	
   

  	
  Prepayment of Indebtedness

  	
   

  	
  78

  
	
  Section 7.18

  	
   

  	
  Subordinated Loans

  	
   

  	
  78

  
	
  Section 7.19

  	
   

  	
  Other Agreements

  	
   

  	
  78

  
	
  Section 7.20

  	
   

  	
  Transfer of Funds

  	
   

  	
  78

  
	
  Section 7.21

  	
   

  	
  Compensation

  	
   

  	
  78

  
	
  Section 7.22

  	
   

  	
  Anti-Terrorism Laws

  	
   

  	
  78

  
	
  Section 7.23

  	
   

  	
  Other Senior Debt

  	
   

  	
  79

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 8            CONDITIONS PRECEDENT

  	
   

  	
  79

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 8.1

  	
   

  	
  Conditions to Initial
  Advances

  	
   

  	
  79

  
	
  Section 8.2

  	
   

  	
  Conditions to Each Advance

  	
   

  	
  83

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 9            INFORMATION AS TO LOAN PARTIES

  	
   

  	
  84

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 9.1

  	
   

  	
  Disclosure of Material
  Matters

  	
   

  	
  84

  

 

 iii
 

 

 

	
  Section 9.2

  	
   

  	
  Schedules

  	
   

  	
  84

  
	
  Section 9.3

  	
   

  	
  Environmental Reports

  	
   

  	
  84

  
	
  Section 9.4

  	
   

  	
  Litigation

  	
   

  	
  84

  
	
  Section 9.5

  	
   

  	
  Material Occurrences

  	
   

  	
  85

  
	
  Section 9.6

  	
   

  	
  Government Receivables

  	
   

  	
  85

  
	
  Section 9.7

  	
   

  	
  Annual Financial Statements

  	
   

  	
  85

  
	
  Section 9.8

  	
   

  	
  Monthly Financial
  Statements

  	
   

  	
  85

  
	
  Section 9.9

  	
   

  	
  Other Collateral Reporting

  	
   

  	
  86

  
	
  Section 9.10

  	
   

  	
  Additional Information

  	
   

  	
  86

  
	
  Section 9.11

  	
   

  	
  Projected Operating Budget

  	
   

  	
  86

  
	
  Section 9.12

  	
   

  	
  [Intentionally omitted.]

  	
   

  	
  86

  
	
  Section 9.13

  	
   

  	
  Notice of Suits, Adverse
  Events

  	
   

  	
  87

  
	
  Section 9.14

  	
   

  	
  ERISA Notices and Requests

  	
   

  	
  87

  
	
  Section 9.15

  	
   

  	
  Documentation Information
  Questionnaire

  	
   

  	
  88

  
	
  Section 9.16

  	
   

  	
  Additional Documents

  	
   

  	
  88

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 10          EVENTS OF DEFAULT

  	
   

  	
  88

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 11          RIGHTS AND REMEDIES AFTER DEFAULT

  	
   

  	
  91

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 11.1

  	
   

  	
  Rights and Remedies

  	
   

  	
  91

  
	
  Section 11.2

  	
   

  	
  Agent’s Discretion

  	
   

  	
  92

  
	
  Section 11.3

  	
   

  	
  Setoff

  	
   

  	
  92

  
	
  Section 11.4

  	
   

  	
  Rights and Remedies not
  Exclusive

  	
   

  	
  92

  
	
  Section 11.5

  	
   

  	
  Allocation of Payments
  After Event of Default

  	
   

  	
  92

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 12          WAIVERS AND JUDICIAL PROCEEDINGS

  	
   

  	
  93

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 12.1

  	
   

  	
  Waiver of Notice

  	
   

  	
  93

  
	
  Section 12.2

  	
   

  	
  Delay

  	
   

  	
  93

  
	
  Section 12.3

  	
   

  	
  Jury Waiver

  	
   

  	
  93

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 13          EFFECTIVE DATE AND TERMINATION

  	
   

  	
  93

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 13.1

  	
   

  	
  Term

  	
   

  	
  93

  
	
  Section 13.2

  	
   

  	
  Termination

  	
   

  	
  94

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 14          REGARDING AGENT

  	
   

  	
  94

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 14.1

  	
   

  	
  Appointment

  	
   

  	
  94

  
	
  Section 14.2

  	
   

  	
  Nature of Duties

  	
   

  	
  94

  
	
  Section 14.3

  	
   

  	
  Lack of Reliance on Agent
  and Resignation

  	
   

  	
  95

  
	
  Section 14.4

  	
   

  	
  Certain Rights of Agent

  	
   

  	
  95

  
	
  Section 14.5

  	
   

  	
  Reliance

  	
   

  	
  95

  
	
  Section 14.6

  	
   

  	
  Notice of Default

  	
   

  	
  96

  
	
  Section 14.7

  	
   

  	
  Indemnification

  	
   

  	
  96

  
	
  Section 14.8

  	
   

  	
  Agent in its Individual
  Capacity

  	
   

  	
  96

  
	
  Section 14.9

  	
   

  	
  Delivery of Documents

  	
   

  	
  96

  
	
  Section 14.10

  	
   

  	
  Borrower’s Undertaking to
  Agent

  	
   

  	
  96

  
	
  Section 14.11

  	
   

  	
  No Reliance on Agent’s Customer
  Identification Program

  	
   

  	
  96

  

 

 iv
 

 

 

	
  Section 14.12

  	
   

  	
  Certifications from Banks
  and Participants regarding USA Patriot Act

  	
   

  	
  97

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 15          MISCELLANEOUS

  	
   

  	
  97

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 15.1

  	
   

  	
  Governing Law

  	
   

  	
  97

  
	
  Section 15.2

  	
   

  	
  Entire Understanding.

  	
   

  	
  97

  
	
  Section 15.3

  	
   

  	
  Successors and Assigns;
  Participations; New Lenders.

  	
   

  	
  99

  
	
  Section 15.4

  	
   

  	
  Application of Payments

  	
   

  	
  101

  
	
  Section 15.5

  	
   

  	
  Indemnity

  	
   

  	
  101

  
	
  Section 15.6

  	
   

  	
  Notice

  	
   

  	
  101

  
	
  Section 15.7

  	
   

  	
  Survival

  	
   

  	
  103

  
	
  Section 15.8

  	
   

  	
  Severability

  	
   

  	
  103

  
	
  Section 15.9

  	
   

  	
  Expenses

  	
   

  	
  104

  
	
  Section 15.10

  	
   

  	
  Injunctive Relief

  	
   

  	
  104

  
	
  Section 15.11

  	
   

  	
  Consequential Damages

  	
   

  	
  104

  
	
  Section 15.12

  	
   

  	
  Captions

  	
   

  	
  104

  
	
  Section 15.13

  	
   

  	
  Counterparts; Facsimile
  Signatures

  	
   

  	
  104

  
	
  Section 15.14

  	
   

  	
  Construction

  	
   

  	
  104

  
	
  Section 15.15

  	
   

  	
  Confidentiality; Sharing
  Information.

  	
   

  	
  104

  
	
  Section 15.16

  	
   

  	
  Publicity

  	
   

  	
  105

  
	
  Section 15.17

  	
   

  	
  Amendment and Restatement

  	
   

  	
  105

  
	
  Section 15.18

  	
   

  	
  Subordination Agreement and
  Term Loans B Intercreditor Agreement

  	
   

  	
  105

  

 

 v
 

 

List of Exhibits and Schedules

 

	
  Exhibits

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit 1.2(a)

  	
   

  	
  Borrowing Base
  Certificate

  
	
  Exhibit 2.1(a)

  	
   

  	
  Revolving Credit Note

  
	
  Exhibit 2.4

  	
   

  	
  Term Note

  
	
  Exhibit 5.5(b)

  	
   

  	
  Financial Projections

  
	
  Exhibit 8.1(k)

  	
   

  	
  Financial Condition
  Certificate

  
	
  Exhibit 15.3

  	
   

  	
  Commitment Transfer Supplement

  

 

	
  Schedules

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule 1.2(a)

  	
   

  	
  Permitted Encumbrances

  
	
  Schedule 1.2(b)

  	
   

  	
  Leasehold Properties

  
	
  Schedule 1.2(c)

  	
   

  	
  EBITDA for November
  2004 through October 2005

  
	
  Schedule 2.9

  	
   

  	
  Existing Letters of
  Credit

  
	
  Schedule 4.5

  	
   

  	
  Equipment and Inventory
  Locations

  
	
  Schedule 4.6

  	
   

  	
  Places for Assembly of
  Collateral

  
	
  Schedule 4.15(h)

  	
   

  	
  Bank Accounts

  
	
  Schedule 4.24

  	
   

  	
  Investment Property

  
	
  Schedule 4.25

  	
   

  	
  Real Property

  
	
  Schedule 5.2(a)

  	
   

  	
  States of Qualification
  and Good Standing

  
	
  Schedule 5.2(b)

  	
   

  	
  Subsidiaries

  
	
  Schedule 5.4

  	
   

  	
  Federal Tax
  Identification Number

  
	
  Schedule 5.6

  	
   

  	
  Prior Names

  
	
  Schedule 5.7

  	
   

  	
  Environmental

  
	
  Schedule 5.8(b)

  	
   

  	
  Litigation

  
	
  Schedule 5.8(d)

  	
   

  	
  Plans

  
	
  Schedule 5.9

  	
   

  	
  Intellectual Property,
  Source Code Escrow Agreements

  
	
  Schedule 5.9(a)

  	
   

  	
  Certain Exceptions
  regarding Intellectual Property

  
	
  Schedule 5.10

  	
   

  	
  Licenses and Permits

  
	
  Schedule 5.13

  	
   

  	
  Certain Contracts

  
	
  Schedule 5.14

  	
   

  	
  Labor Disputes

  
	
  Schedule 5.23

  	
   

  	
  Matters relating to Material Contracts

  

 

 vi

AMENDED AND RESTATED

REVOLVING CREDIT, TERM LOAN

AND

SECURITY AGREEMENT

Amended and Restated Revolving Credit, Term Loan and
Security Agreement (this “Agreement”) dated as of December 1, 2005 among
INSIGHT EQUITY A.P. X, LP, a Texas limited partnership (“Borrower”),
INSIGHT EQUITY A.P. X ASIA, LLC, a Delaware limited liability company (“Asia
LLC”), PT. VISION-EASE ASIA, an investment company organized under the
laws of the Republic of Indonesia (“Vision-Ease Asia”), INSIGHT EQUITY
A.P. X CANADA, LLC, a Delaware limited liability company (“Canada LLC”),
INSIGHT EQUITY A.P. X CANADA PARTNERS, LP, a Texas limited partnership (“Canada LP”),
VISION-EASE CANADA CO., an unlimited company organized under the laws of the
Province of Nova Scotia, Canada and successor in interest by amalgamation to
Vision-Ease Canada, Ltd. (“Vision-Ease Canada”), VISION EASE LENS EUROPE
LIMITED, a company limited by shares registered in England and Wales (“Vision-Ease
Europe”), VISION-EASE LENS LIMITED, a company limited by shares registered in
England and Wales (“Vision-Ease Lens”), INSIGHT EQUITY A.P. X COMPANY,
LLC, a Texas limited liability company and the general partner of Borrower (“General
Partner”), the financial institutions which are now or which hereafter become a
party hereto (collectively, “Lenders” and individually a “Lender”) and PNC
BANK, NATIONAL ASSOCIATION (“PNC”), as agent for Lenders (PNC and its
successors and assigns in such capacity, “Agent”).

RECITALS:

A.         Borrower,
certain of its Subsidiaries, General Partner, Lenders and Agent are parties to
that certain Revolving Credit, Term Loan and Security Agreement dated as of
October 31, 2004, pursuant to which, among other things, Lenders provided a
$25,000,000.00 revolving credit facility to Borrower (inclusive of a $2,000,000.00
sublimit for Letters of Credit) and made term loans to Borrower in the
aggregate, original principal amount of $12,526,000.00 (as modified or amended,
the “Existing Agreement”).

B.         Certain
terms and provisions of the Existing Agreement were affected by that certain
Wavier and Consent Agreement dated as of December 14, 2004, executed by
Borrower, Agent and PNC (the “Waiver and Consent Agreement”).

C.         The
Existing Agreement was previously amended by that certain First Amendment to
Revolving Credit, Term Loan and Security Agreement dated as of December 31,
2004.

D.         Each
of Vision-Ease Europe and Vision-Ease Lens became a Loan Party, and assumed all
indebtedness, liabilities and obligations of a Loan Party (except to the extent
such obligations would be construed as rendering unlawful assistance under the
laws of the jurisdictions under which Vision-Ease Europe and Vision-Ease Lens
are organized), under the Existing Agreement as a result of its execution of a
Joinder Agreement dated as of April 20, 2005.

E.          The
parties hereto desire to amend and restate the Existing Agreement to, among
other things, make additional term loans to Borrower in the aggregate, original
principal amount of $2,988,852.60.

 
 

 

 

IN CONSIDERATION of the mutual covenants and undertakings
herein contained, Borrower, Asia LLC, Vision-Ease Asia, Canada LLC,
Canada LP, Vision-Ease Canada, Vision-Ease Europe, Vision-Ease Lens,
General Partner, Lenders and Agent hereby agree as follows:

ARTICLE 1

DEFINITIONS

Section 1.1             Accounting
Terms.  As used in this Agreement,
the Other Documents or any certificate, report or other document made or
delivered pursuant to this Agreement, accounting terms not defined in Section
1.2 or elsewhere in this Agreement, and accounting terms partly defined in Section
1.2 to the extent not defined, shall have the respective meanings given to
them under GAAP; provided, however, whenever such accounting
terms are used for the purposes of determining compliance with financial
covenants in this Agreement, such accounting terms shall be defined in
accordance with GAAP based upon financial statements, financial attributes and
related information (as applicable) of Borrower and its Subsidiaries, if any,
on a consolidated basis.

Section 1.2             General
Terms.  For purposes of this
Agreement, the following terms shall have the following meanings:

“Accountants” shall have the meaning set forth
in Section 9.7 hereof.

“Acquired Contracts” means all “Designated
Contracts”, as such term is defined in the Acquisition Agreement, which are
identified on Schedule 2.8 to the Acquisition Agreement.

“Acquisition Agreement” shall mean that certain
Asset Purchase Agreement, including all exhibits and schedules thereto, dated
as of June 22, 2004, by and between Seller, BMC Industries, Inc. and Borrower,
as amended by that certain Amendment No. 1 to Asset Purchase Agreement dated as
of November 1, 2004.

“Acquisition Documents” means the Acquisition
Agreement, the Bankruptcy Order, the deeds, bills of sale, assignments of
leases, assignments of contracts and all other agreements, documents and
instruments executed and/or delivered in connection with the Acquisition
Agreement, including, without limitation, the “Bill of Sale”, the “Assignment
and Assumption Agreement”, the special warranty deeds for each parcel of owned “Real
Property”, the “Required Approvals”, the certificates referred to in Section
3.2(c)(v) and (vi) of the Acquisition Agreement, the further instruments (if
any) of sale, transfer, conveyance, assignment or delivery of the “Transferred
Assets” referred to in Section 3.2(c)(vii) of the Acquisition Agreement and the
other agreements, documents, instruments or certificates delivered pursuant to
the Acquisition Agreement (including, without limitation, Section 2.6 thereof
relating to post-closing purchase price adjustments), as such terms are defined
or used in the Acquisition Agreement.

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

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

“Affiliate” of any Person shall mean (a) any
Person which, directly or indirectly, is in control of, is controlled by, or is
under common control with such Person, or (b) any Person who is a director or
officer (i) of such Person, (ii) of any Subsidiary of such Person or (iii) of
any Person described in clause (a) above.  For purposes of this definition, control of a
Person shall mean the power, direct or indirect, (x) to vote five percent (5%)
or more of the securities having ordinary voting power for the 

 2
 

 

election of directors, or (as to a Person which is not
a corporation) for the election of individuals having power of authority
similar to that of a director of a corporation, of such Person, or (y) to
direct or cause the direction of the management and policies of such Person
whether by contract or otherwise.

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

“Anti-Terrorism Laws” shall mean any laws,
rules or regulations relating to terrorism or money laundering, including,
without limitation, Executive Order No. 13224, the USA Patriot Act, the laws
comprising or implementing the Bank Secrecy Act, and the laws administered by
the United States Treasury Department’s Office of Foreign Asset Control (as any
of the foregoing laws may from time to time be amended, renewed, extended or
replaced).

“Alternate Base Rate” shall mean, for any day,
a rate per annum equal to the higher of (a) the Base Rate in effect on such day
and (b) the Federal Funds Open Rate in effect on such day plus one-half of one
percent (0.5%).

“Applicable Law” shall mean all laws, rules and
regulations applicable to the Person, conduct, transaction, covenant, Other
Document or contract in question, including all applicable common law and
equitable principles, all provisions of all applicable state, federal and
foreign constitutions, statutes, rules, regulations and orders of any
Governmental Body, and all orders, judgments and decrees of all courts and
arbitrators.

“Asia LLC” shall have the meaning set forth in
the preamble to this Agreement and shall extend to all permitted successors and
assigns of such Person.

“Attributable Indebtedness Amount” shall mean,
on any date, (a) in respect of any Capitalized Lease Obligation of any Person,
the capitalized amount thereof that would appear on a balance sheet of such
Person prepared as of such date in accordance with GAAP, and (b) in respect of
any Synthetic Lease Obligation, the capitalized amount of the remaining lease
payments under the relevant lease that would appear on a balance sheet of such
Person prepared as of such date in accordance with GAAP if such lease were
accounted for as a capital lease.

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

“Bankruptcy Order” shall mean that certain
Order Pursuant to 11 U.S.C. §§ 105(a), 363 and 365 and Fed. R. Bankr. P.
2002, 6004 and 6006 (I) Approving Sale of All or Substantially All Assets of
Debtor Vision-Ease Lens, Inc. to Insight Equity A.P. X, LP, Free and Clear
of all Liens; and (II) Authorizing Assumption and Assignment of Executory
Contracts and Unexpired Leases, dated August 26, 2004, issued by the United
States Bankruptcy Court for the District of Minnesota in In re: BMC Industries,
Inc., et al., as debtors, Case Nos. 04-43515, 04-43516 and 04-43517.

“Base Rate” shall mean the base commercial
lending rate of PNC as publicly announced to be in effect from time to time,
such rate to be adjusted automatically, without notice, on the effective date
of any change in such rate.  This rate of
interest is determined from time to time by PNC as a means of pricing some
loans to its customers and is neither tied to any external rate of interest or
index nor does it necessarily reflect the lowest rate of interest actually
charged by PNC to any particular class or category of customers of PNC.

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

 3
 

 

 

“Blocked Person” shall have the meaning
assigned to such term in Section 5.24(b).

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

“Borrower’s Account” shall have the meaning set
forth in Section 2.8.

“Borrowing Base Certificate” shall mean a
certificate executed by an officer of Borrower appropriately completed and
substantially in the form of Exhibit 1.2(a) hereto.

“Borrower Partnership Interests” shall mean any
and all Capital Stock issued by, of or in Borrower.

“Business Day” shall mean any day other than
Saturday or Sunday or a legal holiday on which national banks are authorized or
required by law to be closed for business in East Brunswick, New Jersey and, if
the applicable Business Day relates to any Eurodollar Rate Loans, such day must
also be a day on which dealings are carried on in the London interbank market.

“Canada LLC” shall have the meaning set forth
in the preamble to this Agreement and shall extend to all permitted successors
and assigns of such Person.

“Canada LP” shall have the meaning set
forth in the preamble to this Agreement and shall extend to all permitted
successors and assigns of such Person.

“Capital Expenditures” shall all mean
expenditures made or liabilities incurred for the acquisition of any equipment,
fixed assets or improvements, replacements, substitutions or additions thereto
which have a useful life of more than one year, including the total principal
portion of Capitalized Lease Obligations, which, in accordance with GAAP, would
be classified as capital expenditures.

“Capitalized Lease Obligation” shall mean any
Indebtedness of Borrower or any of its Subsidiaries represented by obligations
under a lease that is required to be capitalized for financial reporting
purposes in accordance with GAAP.

“Capital Stock” shall mean, as of any date of
determination, any and all capital stock, shares, partnership interests
(general, limited or otherwise), membership interests or other equity or
ownership interests issued by, of or in any entity, and any and all warrants,
options or other rights (in any form) to purchase or acquire any of the
foregoing.

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

“Change of Control” shall mean (a) the
occurrence of any event (whether in one or more transactions) which results in
a transfer of control of General Partner or control of Borrower to a Person who
is not an Original Owner, (b) any merger or consolidation of Borrower or any of
its Subsidiaries into another Person in which Borrower (in the case of any such
merger or consolidation involving Borrower) or any of its Subsidiaries (in the
case of any such merger or consolidation not involving Borrower) is not the
surviving entity or any sale of all or substantially all of the property or
assets of Borrower or any of its Subsidiaries (other than a merger of any
Subsidiary of Borrower with and into Borrower or a wholly-owned Subsidiary of
Borrower or a sale of assets to Borrower (in the case of any such sale
involving Borrower) or any of its Subsidiaries (in the case of any such sale
not involving Borrower) which is permitted by this Agreement) or (c) the
occurrence of any event (whether in one or more transactions) 

 4
 

 

which results in Borrower, either directly or
indirectly through another wholly-owned Subsidiary or Subsidiaries of Borrower,
failing to own (either of record or beneficially) all of the issued and
outstanding Capital Stock of each of its Subsidiaries or which results in a
transfer of any voting control of any such Capital Stock to any Person other
than Borrower or a wholly-owned Subsidiary of Borrower.  For purposes of this definition, “control of
General Partner” and “control of Borrower” shall mean the power, direct or
indirect (i) to vote fifty percent (50%) or more of the securities having
ordinary voting power for the election of directors, or (as to a Person which
is not a corporation) for the election of individuals having power of authority
similar to that of a director of a corporation, of General Partner or Borrower
(as applicable) or (ii) to direct or cause, pursuant to direct or indirect
control of any voting securities of General Partner or Borrower (as
applicable), the direction of the management and policies of General Partner or
Borrower (as applicable) by contract or otherwise.  For purposes of this definition, “Subsidiaries”
shall include entities that, as a result of such transaction(s), become a
Subsidiary.

“Change of Ownership” shall mean (a) fifty
percent (50%) or more of the issued and outstanding Capital Stock of Borrower
or General Partner is no longer owned or controlled by a Person who is an
Original Owner or (b) any merger, consolidation or sale of substantially all of
the property or assets of Borrower or General Partner; provided that the sale
by General Partner of any Borrower Partnership Interests shall be deemed a sale
of substantially all of General Partner’s assets.

“Charges” shall mean all taxes, charges, fees,
imposts, levies or other assessments, including, without limitation, all net
income, gross income, gross receipts, sales, use, ad valorem, value added,
transfer, franchise, profits, inventory, capital stock, license, withholding,
payroll, employment, social security, unemployment, excise, severance, stamp,
occupation and property taxes, custom duties, fees, assessments, liens, claims
and charges of any kind whatsoever, together with any interest and any
penalties, additions to tax or additional amounts, imposed by any taxing or
other authority, domestic or foreign (including, without limitation, the
Pension Benefit Guaranty Corporation or any environmental agency or superfund),
upon the Collateral, Borrower or any of its Affiliates.

“Chattel Paper” shall mean as such term is
defined in the UCC.

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

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

“Collateral” shall mean and include (i) with
respect to each Loan Party, all rights, titles and interests of such Person in
and to the following property or assets, and (ii) with respect to each Limited
Partner, all rights, titles and interests of such Limited Partner in and to the
property or assets referred to in clause (o) below only and all
proceeds and products of such property or assets referred to in such clause (o)
only, in each case whether now owned or existing or hereafter acquired or
existing:

(a)        all cash and money;

(b)        all Chattel Paper;

(c)        all Commercial Tort Claims;

(d)        all Deposit Accounts;

(e)        all Documents;

 5
 

 

 

(f)         all Equipment;

(g)        all General Intangibles;

(h)        all Instruments;

(i)         all Intellectual Property;

(j)         all Inventory;

(k)        all Investment Property;

(l)         all Letter-of-Credit Rights and letters
of credit;

(m)       all Receivables;

(n)        all Real Property (including all
Leasehold Interests);

(o)        (i) all Borrower Partnership Interests,
(ii) all General Partner Membership Interests owned by any Limited Partner and
(iii) all Subsidiary Capital Stock;

(p)        all of such Person’s right, title and
interest in and to (i) its respective goods and other property, including, but
not limited to, all merchandise returned or rejected by Customers, relating to
or securing any of the Receivables; (ii) all of such Person’s rights as a
consignor, a consignee, an unpaid vendor, mechanic, artisan or other lienor,
including stoppage in transit, setoff, detinue, replevin, reclamation and
repurchase; (iii) all additional amounts due to such Person from any Customer
relating to the Receivables; (iv) all other property, including warranty
claims, relating to any goods securing this Agreement; (v) all of such Person’s
contract rights, rights of payment which have been earned under a contract
right, instruments (including promissory notes), documents, chattel paper
(including electronic chattel paper), warehouse receipts, deposit accounts,
letters of credit, letter of credit rights and money; (vi) all commercial tort
claims (whether now existing or hereafter arising); (vii) if and when obtained
by such Person, all real and personal property of third parties in which such
Person has been granted a lien or security interest as security for the payment
or enforcement of Receivables; and (viii) any other goods, personal property or
real property now owned or hereafter acquired in which such Person has
expressly granted a Lien or may in the future grant a Lien to Agent hereunder,
or in any amendment or supplement hereto or thereto, or under any other
agreement executed by such Person;

(q)        all of such Person’s ledger sheets,
ledger cards, files, correspondence, records, books of account, business
papers, computers, computer software (owned by any Loan Party or in which it
has an interest), computer programs, tapes, disks and documents relating to any
of the Collateral referred to in clauses (a) through (i) of
this definition; and

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

 6
 

 

 

“Commercial Tort Claims” shall mean as such
term is defined in the UCC.

“Commitment Percentage” of any Lender shall
mean the percentage set forth below such Lender’s name on its signature page
hereof as the same may be adjusted upon any assignment by a Lender pursuant to Section
15.3(c) hereof or, if a Lender’s name does not appear on a signature page
hereto, the percentage specified in the most recent Commitment Transfer
Supplement executed by such Lender.

“Commitment Transfer Supplement” shall mean a
document in the form of Exhibit 15.3 hereto, properly completed and otherwise
in form and substance satisfactory to Agent, pursuant to which the Purchasing
Lender purchases all or a portion of the Advances held by a Lender and/or
assumes all or a portion of the obligations of a Lender to make Advances under
this Agreement.

“Consents” shall mean all filings and all
licenses, permits, consents, approvals, authorizations, qualifications and
orders of Governmental Bodies and other third parties, domestic or foreign,
necessary to carry on Borrower’s business, including, without limitation, any
Consents required under all applicable federal, state or other Applicable Law.

“Contract Rate” shall mean, as applicable, the
Revolving Interest Rate or the Term Loans Rate.

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

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

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

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

“Defaulting Lender” shall have the meaning set
forth in Section 2.16(a) hereof.

“Deposit Account” shall mean any demand, time,
savings, passbook or similar account maintained with a bank or other financial
institution.

“Dollar” and the sign “$” shall mean lawful money
of the U.S.

“Documentation Information Questionnaire” shall
mean a certificate in form and substance satisfactory to Agent in its sole
discretion providing information pertinent and/or relevant to the Loan Parties
and the Limited Partners, the personal and real property of each such Person
(including, without limitation, the Collateral) and the perfection and priority
of Agent’s Lien against the Collateral for the benefit of Agent and Lenders.

“Documents” shall mean as such term is defined
in the UCC.

 7
 

 

 

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

“Domestic Subsidiary” shall mean any Subsidiary
that is organized under the laws of any political subdivision of the U.S.,
including, without limitation, Asia LLC, Canada LLC and Canada LP.

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

“Earnings Before Interest and Taxes” shall
mean, for any period and without duplication, the sum of (a) net income (or
loss) of Borrower and its consolidated Subsidiaries for such period (excluding
extraordinary gains and losses) plus (b) all interest expense of Borrower and
its consolidated Subsidiaries for such period, plus (c) all charges against
income of Borrower and its consolidated Subsidiaries for such period for
federal, state and local taxes.

“EBITDA” shall mean, for any period and without
duplication, the sum of (a) Earnings Before Interest and Taxes for such period,
plus (b) depreciation expenses of Borrower and its consolidated Subsidiaries
for such period, plus (c) amortization expenses of Borrower and its
consolidated Subsidiaries for such period, plus (d) management fee expenses of
Borrower, to the extent permitted under Section 7.7 hereof, for such
period, plus (e) if and to the extent not already included in clause (c)
above, fees, commissions and charges payable on the Closing Date under this
Agreement, the Fee Letter or the Term Loans B Credit Agreement and fees
previously amortized that are required to be expensed due to this amendment and
restatement of the Existing Agreement; provided, however, that,
EBITDA for each of the months of November 2004 through and including October
2005 shall be the amounts for such month set forth on Schedule 1.2(c)
hereto.

“Eligible Equipment” shall mean and include
Equipment of Borrower which Agent, in its sole credit judgment, shall deem to
be Eligible Equipment, based on such considerations as Agent may from time to
time deem appropriate, including, without limitation, whether the Equipment is
subject to Agent’s perfected, first priority security interest and no other
Lien (other than Liens of the type referred to in clause (b) of
Permitted Encumbrances).

“Eligible Inventory” shall mean and include (a)
domestic (i.e., located in the continental U.S.) raw material and finished
goods Inventory, excluding work in process, of Borrower which is in the
possession of Borrower valued at the lower of cost or market value, determined
on a first-in-first-out basis, and which is not, in Agent’s opinion, obsolete,
slow moving or unmerchantable (except if and to the extent that any appraisal
utilized by Agent in connection with its determination of the amount of
Eligible Inventory has taken into account the liquidation value of the
obsolete, slow moving or unmerchantable Inventory for purposes of determining
the value of the remaining Eligible Inventory) and which Agent, in its
discretion, shall not deem ineligible Inventory, based on such considerations
as Agent may from time to time determine to be appropriate, including, without
limitation, whether the Inventory is subject to a perfected, first priority
Lien in favor of Agent and whether the Inventory conforms to all standards
imposed by any Governmental Body which has regulatory authority over such goods
or the use or sale thereof, and (b) raw material and finished goods Inventory,
excluding work in process, of Borrower which has been shipped by Vision-Ease
Asia to Borrower but which is not in the possession of Borrower valued at the
lower of cost or market value, determined on a first-in-first-out basis, and
which is not, in Agent’s opinion, obsolete, slow moving or unmerchantable and
which Agent, in its discretion, shall not deem ineligible Inventory, based on
such considerations as Agent may from time to time determine to be appropriate,
including, without limitation, whether the Inventory is subject to a perfected,
first priority Lien in favor of Agent and whether the Inventory conforms to all
standards imposed by any Governmental Body which has regulatory authority over
such goods or the use or sale thereof, provided, however, that
(i) the Inventory referred to in this clause (b), in order to
constitute Eligible Inventory, must 

 8
 

 

meet each of the following additional
requirements:  (A) the payment for such
Inventory must be insured or bonded by a creditworthy insurer or bonding
company reasonably acceptable to the Agent, (B) title to such Inventory must
have passed to Borrower and (C) Agent must have in its possession, unless
otherwise agreed by Agent, all negotiable bills of lading properly endorsed and
all non-negotiable bills of lading issued in Agent’s name, and (ii) the product
of the lower of cost or fair market value of all of the Inventory referred to
in this clause (b) which is included as Eligible Inventory
multiplied by the Inventory Advance Rate shall not at any time exceed
$2,000,000.00.

“Eligible Receivables” shall mean and include
each Receivable of Borrower arising in the ordinary course of Borrower’s
business and which Agent, in its credit judgment, shall determine to be an
Eligible Receivable, based on such considerations as Agent may from time to
time determine to be appropriate.  A
Receivable shall not be eligible unless such Receivable is subject to Agent’s
first priority perfected security interest and no other Lien (other than
Permitted Encumbrances), and is evidenced by an invoice or other documentary
evidence reasonably satisfactory to Agent. 
In addition, no Receivable shall be an Eligible Receivable if:

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

(b)        it is due or unpaid more than (i) 60
days after the original due date and/or (ii) 120 days after the original
invoice date, whichever is earlier;

(c)        fifty percent (50%) or more of the
Receivables from such Customer are not determined to be Eligible Receivables
hereunder, which such percentage may, in Agent’s discretion, be increased or
decreased from time to time;

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

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

(f)         the sale is to a Customer outside the
continental U.S., unless the sale is on letter of credit, guaranty or
acceptance terms, in each case acceptable to Agent in its discretion;

(g)        the sale to the Customer is on a
bill-and-hold, guaranteed sale, sale-and-return, sale on approval, consignment
or any other repurchase or return basis or is evidenced by chattel paper;

(h)        Agent believes, in its discretion, that,
due to the Customer’s financial condition, collection of such Receivable is
doubtful;

(i)         the Customer is the U.S., any state or
any department, agency or instrumentality of the U.S. or any state, unless
Borrower assigns its right to payment of such Receivable to Agent 

 9
 

 

pursuant to and in accordance with the Assignment of
Claims Act of 1940, as amended (31 U.S.C. Sub-Section 3727 et seq. and 41
U.S.C. Sub-Section 15 et seq.) (if applicable) or (if not applicable) has
otherwise complied with other applicable statutes or ordinances;

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

(k)        the Receivables of the Customer exceed a
credit limit determined by Agent, in its discretion, to the extent such Receivable
exceeds such limit;

(l)         (i) the Receivable is subject to (A)
any offset or deduction, to the extent (and only to the extent) of the amount
of such offset or deduction or (B) any defense, dispute or counterclaim, (ii)
the Customer is also a creditor or supplier of Borrower, or (iii) the
Receivable is contingent in any respect or for any reason;

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

(n)        any return, rejection or repossession of
the merchandise has occurred or the rendition of services has been disputed;

(o)        such Receivable is not payable to
Borrower; or

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

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

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

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

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

“Eurodollar Rate” shall mean for any Eurodollar
Rate Loan for the then current Interest Period relating thereto the interest
rate per annum determined by Agent by dividing (the resulting quotient rounded
upwards, if necessary, to the nearest 1/100th of 1% per annum) (a) the rate of
interest determined by Agent in accordance with its usual procedures (which
determination shall be conclusive absent 

 10
 

 

manifest error) to be the average of the London
interbank offered rates for U.S. Dollars quoted by the British Bankers’
Association (“BBA”) as set forth on Moneyline Telerate (or appropriate
successor or, if the BBA or its successor ceases to provide such quotes, a
comparable replacement determined by Agent) display page 3750 (or such other
display page on the Moneyline Telerate service as may replace display page
3750) two (2) Business Days prior to the first day of such Interest Period for
an amount comparable to such Eurodollar Rate Loan and having a borrowing date
and a maturity comparable to such Interest Period by (b) a number equal to 1.00
minus the Reserve Percentage.  The
Eurodollar Rate may also be expressed by the following formula:

	
  Eurodollar Rate =

  	
   

  	
  Average of London interbank offered rates quoted by
  BBA or appropriate successor as shown on Moneyline Telerate Service display
  page 3750

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  divided by

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.00 – Reserve Percentage

  

 

The Eurodollar Rate shall be adjusted with respect to
any Eurodollar Rate Loan that is outstanding on the effective date of any
change in the Reserve Percentage as of such effective date.  Agent shall give prompt notice to Borrower of
the Eurodollar Rate as determined or adjusted in accordance herewith, which
determination shall be conclusive absent manifest error.

“Eurodollar Rate Loan” shall mean an Advance at
any time that bears interest based on the Eurodollar Rate.

“event” shall include any event, occurrence,
circumstance, condition, or state of facts.

“Event of Default” shall have the meaning set
forth in Article 10 hereof.

“Excess Cash Flow” shall mean, for any fiscal
period and without duplication, the EBITDA of Borrower and its consolidated
Subsidiaries for such fiscal period minus (a) Capital Expenditures actually
paid in cash (and not financed) by Borrower and its consolidated Subsidiaries
during such fiscal period minus (b) interest expense actually paid in cash by
Borrower and its consolidated Subsidiaries during such fiscal period minus (c)
all taxes actually paid in cash by Borrower and its consolidated Subsidiaries
during such fiscal period minus (d) all scheduled principal payments of
outstanding Indebtedness of Borrower and its consolidated Subsidiaries for
borrowed money actually paid by Borrower and its consolidated Subsidiaries
during such fiscal period.

“Executive Order No. 13224” shall mean the
Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001,
as the same has been, or shall hereafter be, renewed, extended, amended or
replaced.

“Existing Agreement” shall have the meaning set
forth in Recital A hereto.

“Existing Agreement Closing Date” shall mean
the “Closing Date” as such term is defined in the Existing Agreement.

“Existing Letters of Credit” shall have the
meaning set forth in Section 2.9 hereof.

“Existing Revolving Advances” shall have the
meaning set forth in Section 2.1(a) hereof.

 11
 

 

 

“Existing Term Loans” shall have the meaning
set forth in Section 2.4 hereof.

“Existing Term Loans Balance” shall mean
$10,736,571.40.

“Federal Funds Effective Rate” shall mean, for
any day, the rate per annum (based on a year of 360 days and actual days
elapsed and rounded upward to the nearest 1/100 of 1%) announced by the Federal
Reserve Bank of New York (or any successor) on such day as being the weighted
average of the rates on overnight federal funds transactions arranged by
federal funds brokers on the previous trading day, as computed and announced by
such Federal Reserve Bank (or any successor) in substantially the same manner
as such Federal Reserve Bank computes and announces the weighted average it
refers to as the “Federal Funds Effective Rate” as of the date of this
Agreement; provided, if such Federal Reserve Bank (or its successor)
does not announce such rate on any day, the “Federal Funds Effective Rate” for
such day shall be the Federal Funds Effective Rate for the last day on which
such rate was announced.

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

“Fee Letter” shall mean (a) that certain letter
agreement dated as of October 31, 2004, between Borrower and Agent and (b) that
certain letter agreement dated October 6, 2005, among PNC, PNC Capital Markets,
Inc. and Borrower, each relating to certain fees payable by Borrower.

“Financial Officer” of any Person shall mean
the chief financial officer, chief restructuring officer, principal accounting
officer, treasurer or controller of such Person.

“Fixed Charge Coverage Ratio” shall mean and
include, with respect to any fiscal period, the ratio of (a) (i) EBITDA minus
(ii) Capital Expenditures actually paid in cash (and not financed) by Borrower
and its consolidated Subsidiaries during such fiscal period minus (iii) all
cash taxes paid or payable by Borrower and its consolidated Subsidiaries during
such fiscal period, minus (iv) all dividends and/or distributions (but
excluding (A) management fees to the extent they have already been taken into
account in the calculation of EBITDA and (B) the payment, on or before the
Closing Date, of accrued dividends on the issued and outstanding Class A-1
Preferred Partnership Rights of Borrower in an aggregate amount not to exceed
$600,821.92 and accrued dividends on, and the redemption price of, the issued
and outstanding Class A-2 Preferred Partnership Rights of Borrower in an
aggregate amount not to exceed $2,000,000.00 and $12,500,000.00, respectively)
paid pursuant to Section 7.7 hereof or otherwise to (b) all Senior Debt
Payments, other than mandatory prepayments of principal based upon Excess Cash
Flow required pursuant to Section 2.14(b), plus all Subordinated Debt
Payments, in each case paid or payable during such fiscal period; provided,
however, that, for purposes of Section 6.5 hereof and the
calculation of the Fixed Charge Coverage Ratio for any four fiscal quarter
period ending on or before September 30, 2005, all components of the Fixed
Charge Coverage Ratio shall be determined in accordance with Section 6.5.

“Foreign Plan” shall mean any Plan (without
regard to whether it is exempted from coverage under ERISA) maintained outside
of, or governed by the laws of a jurisdiction other than, the U.S. primarily
for the benefit of individuals substantially all of whom are nonresident aliens.

“Foreign Subsidiary” shall mean any Subsidiary
that is not a Domestic Subsidiary, including, without limitation, Vision-Ease
Asia, Vision-Ease Canada, Vision-Ease Europe and Vision-Ease Lens.

 12
 

 

 

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

“GAAP” shall mean generally accepted accounting
principles in the U.S. in effect from time to time.

“General Intangibles” shall mean and include,
with respect to any Person, all of such Person’s general intangibles (as
defined in the UCC), whether now owned or hereafter acquired and shall also
mean and include (whether or not such items are included in the term “general
intangibles” as defined in the UCC), without limitation, (a) all payment
intangibles, choses in action, causes of action, corporate or other business
records, inventions, designs, patents, patent applications, equipment
formulations, manufacturing procedures, quality control procedures, trademarks,
trade names, trademark applications, service marks, trade secrets, goodwill,
copyrights, design rights, software, computer information, source codes, codes,
records and dates, registrations, licenses, franchises, customer lists, tax
refunds, tax refund claims, computer programs, claims under guaranties,
security interests or other security held by or granted to such Person to
secure payment of any of the Receivables by a Customer (other than to the
extent covered by Receivables), rights of indemnification and (b) all other
intangible property of every kind and nature (other than Receivables).  Without limiting the generality of the
foregoing, the term “General Intangibles” shall include the Acquisition
Documents and all rights thereunder, including, without limitation, Borrower’s
rights under the escrow account established under or in connection with the
Acquisition Documents.

“General Partner” shall have the meaning set
forth in the preamble to this Agreement and shall extend to all permitted
successors and assigns of such Person.

“General Partner Membership Interests” shall
mean any and all Capital Stock issued by, of or in General Partner.

“Governmental Authorization” means any consent,
approval, license, registration or permit issued, granted, given or otherwise
made available by or under the authority of any Governmental Body or pursuant
to any law, rule or regulation of any Governmental Body.

“Governmental Body” shall mean any nation or
government, any state or other political subdivision thereof or any entity
exercising the executive, legislative, judicial, regulatory or administrative
functions of or pertaining to a government and any corporation or other entity
owned or controlled, through stock or capital ownership, by any of the
foregoing.

“Guarantee” by any Person means any obligation,
contingent or otherwise, of such Person directly or indirectly guaranteeing any
Indebtedness or other obligation of any other Person and, without limiting the
generality of the foregoing, any indebtedness, liability or obligation, direct
or indirect, contingent or otherwise, of such Person (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or
other obligation (whether arising by virtue of partnership arrangements, by
agreement to keep-well, to purchase assets, goods, securities or services, to
take-or-pay or to maintain financial statement conditions or otherwise) or (b)
entered into for the purpose of assuring in any other manner the obligee of
such Indebtedness or other obligation as to the payment thereof or to protect
the obligee against loss in respect thereof (in whole or in part), provided
that the term “Guarantee” shall not include endorsements for collection or
deposit in the ordinary course of business. 
The term “Guarantee” used as a verb has a corresponding meaning.  The amount of any Guarantee shall be deemed
to be an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Guarantee is made or, if not stated or
determinable, the maximum anticipated liability in respect thereof (assuming
such Person is required to perform thereunder).

 13
 

 

 

“Guarantor” shall mean General Partner, each
Subsidiary of Borrower (other than a Foreign Subsidiary which is not obligated
to guaranty payment or performance of the Obligations in accordance with Section
4.21) and any other Person which may hereafter guarantee payment or
performance of the whole or any part of the Obligations, and “Guarantors” means
collectively all such Persons.

“Guarantor Security Agreement” shall mean any
security agreement, pledge agreement, collateral assignment or other similar
agreement, document or instrument creating a Lien executed by any Guarantor in
favor of Agent which secures the Guaranty of such Guarantor and/or the
Obligations, including, without limitation, the security agreement contained in
Section 4.1 hereof.

“Guaranty” shall mean any guaranty of the whole
or any part of the Obligations executed by a Guarantor in favor of Agent for
its benefit and for the ratable benefit of Lenders.

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

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

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

“Hedge Agreement” shall mean any and all
transactions, agreements or documents, now existing or hereafter entered into,
which provide for an interest rate, credit, commodity or equity swap, cap,
floor, collar, forward foreign exchange transaction, currency swap, cross
currency rate swap, currency option or any combination of, or option with
respect to, these or similar transactions, for the purpose of hedging Borrower’s
or any of its Subsidiary’s exposure to fluctuations in interest or exchange
rates, loan, credit exchange, security or currency valuations or commodity
prices.

“Hedge Termination Value” shall mean, in
respect of any Hedge Agreement, after taking into account the effect of any
legally enforceable netting agreement relating to such Hedge Agreement, (a) for
any date on or after the date such Hedge Agreement has been closed out and the
termination value determined in accordance therewith, such termination value,
and (b) for any date prior to the date such Hedge Agreement has been closed out
and the termination value determined, the amount determined as the
mark-to-market value for such Hedge Agreement as determined based upon one or
more mid-market or other readily available quotations provided by any
recognized dealer in such Hedge Agreement (which may include a Lender or any
Affiliate of a Lender).

“IEVP” shall mean Insight Equity Vision
Partners, LP, a Texas limited partnership.

“IEVP Pledge Agreement Ratification” means a
ratification, confirmation and reaffirmation, executed by IEVP, of IEVP’s
obligations under the Pledge Agreement executed by it, which agreement shall
include, without limitation, an agreement to the effect that the Liens granted
under such Pledge Agreement secure the increased amount of the Obligations.

“Indebtedness” of a Person at a particular date
shall mean all indebtedness, liabilities and obligations of such Person which
in accordance with GAAP would be classified upon a balance sheet as 

 14
 

 

liabilities (except capital stock and surplus earned
or otherwise) and in any event, without limitation by reason of enumeration,
shall include all indebtedness, debt and other similar monetary obligations of
such Person whether direct or guaranteed, and all premiums, if any, due at the
required prepayment dates of such indebtedness, and all indebtedness secured by
a Lien on assets owned by such Person, whether or not such indebtedness
actually shall have been created, assumed or incurred by such Person (provided
that the term “Indebtedness” shall not include the obligations of Borrower evidenced
by the “Warrant Notes” as such term is defined in the Subordinated Credit
Agreement in existence as of the Existing Agreement Closing Date).  Any indebtedness of such Person resulting
from the acquisition by such Person of any assets subject to any Lien shall be
deemed, for the purposes hereof, to be the equivalent of the creation,
assumption and incurring of the indebtedness secured thereby, whether or not
actually so created, assumed or incurred. 
In addition to and without limiting the generality of the foregoing, “Indebtedness”
of a Person at a particular date shall also mean and include all of the
following indebtedness, liabilities and obligations of such Person whether or
not included as liabilities of such Person in accordance with GAAP:

(a)        all indebtedness, liabilities and
obligations of such Person for borrowed money and all indebtedness, liabilities
and obligations of such Person evidenced by bonds, debentures, notes, loan
agreements or other similar instruments;

(b)        all direct or contingent obligations of
such Person arising under letters of credit (including standby and commercial),
bankers’ acceptances, bank guaranties, surety bonds and similar instruments;

(c)        all net obligations of such Person under
any Hedge Agreement;

(d)        all obligations of such Person to pay
the deferred purchase price of property or services (excluding, for the
purposes of this definition, trade accounts payable and accrued expenses
arising in the ordinary course of business);

(e)        indebtedness (excluding prepaid interest
thereon) secured by a Lien on property owned or being purchased by such Person
(including indebtedness arising under conditional sales or other title
retention agreements), whether or not such indebtedness shall have been assumed
by such Person or is limited in recourse;

(f)         Capitalized Lease Obligations and
Synthetic Lease Obligations; and

(g)        all Guarantees of such Person in respect
of any of the foregoing.

For all purposes hereof, the Indebtedness of any
Person shall include the Indebtedness of any partnership or joint venture
(other than a joint venture that is itself a corporation or limited liability
company) in which such Person is a general partner or a joint venturer, unless
such Indebtedness is expressly made non-recourse to such Person.  The amount of any net obligation under any
Hedge Agreement on any date shall be deemed to be the Hedge Termination Value
thereof as of such date.  The amount of
any Capitalized Lease Obligation or Synthetic Lease Obligation as of any date
shall be deemed to be the amount of Attributable Indebtedness Amount in respect
thereof as of such date.

“Initial Subordinated Notes” means that certain
(a) Senior Subordinate Promissory Note dated October 31, 2004, in the original
principal amount of $6,400,000 made by Borrower payable to the order of PNC
Venture Corp, (b) Senior Subordinate Promissory Note dated October 31, 2004, in
the original principal amount of $9,600,000 made by Borrower payable to the
order of PNC Equity Partners, L.P., and (c) Senior Subordinate Promissory Note
dated October 31, 2004, in the original principal amount of 

 15
 

 

$2,000,000 made by Borrower payable to the order of
Erie Indemnity Company, which promissory notes and the indebtedness evidenced
thereby are issued pursuant to the Subordinated Credit Agreement and are fully
subordinated to the payment and performance in full of the Obligations pursuant
to the terms of the Subordination Agreement, as the same may have been
transferred from time to time in accordance with the terms thereof.

“Instruments” shall mean as such term is
defined in the UCC.

“Intellectual Property” shall mean any U.S. or
foreign patents, patent applications, trademarks, trade names, service marks,
brand names, logos and other trade designations (including, without limitation,
unregistered names and marks), trademark and service mark registrations and
applications, copyrights and copyright registrations and applications,
inventions, invention disclosures, protected formulae, formulations, processes,
methods, trade secrets, computer software, computer programs and source codes,
manufacturing research and similar technical information, engineering know-how,
customer and supplier information, assembly and test data drawings or royalty
rights.

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

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

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

“Investment Property” shall mean and include,
with respect to such Person, all of such Person’s now owned or hereafter
investment property (as defined in the UCC) and other acquired securities
(whether certificated or uncertificated), securities entitlements, securities
accounts, commodities contracts and commodities accounts.

“Issuer” shall mean any Person who issues a
Letter of Credit and/or accepts a draft pursuant to the terms hereof.

“Knowledge” shall mean the actual knowledge of
the specific Person(s) referred to in the context in which such term is used
or, if no such specific Person is referred to, the following Persons:  (a) Theodore W. Beneski, (b) Ross Gatlin, (c)
Victor L. Vescovo, (d) Douglas Hepper, (e) Conner Searcy, (f) Richard
Faber, and (g) each member of the management of any Loan Party who, after the
Closing Date, may assume any of the duties of the Persons identified in clauses (a)
through (f) preceding or becomes a member of the executive management of
any Loan Party other than a Foreign Subsidiary. 
Without limiting the generality of the foregoing, any reference to the
Knowledge of any Loan Party shall mean and refer to the actual knowledge of the
Persons specified in clauses (a), (b), (c), (d), (e),
(f) and (g) preceding.

“Leasehold Interests” shall mean all of
Borrower’s right, title and interest in and to the premises identified as “Leasehold
Properties” on Schedule 1.2(b).

 16
 

 

 

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

“Lender Default” shall have the meaning set
forth in Section 2.16(a).

“letter of credit” shall mean as such term is
defined in the UCC.

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

“Letter-of-Credit Rights” shall mean as such
term is defined in the UCC.

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

“Lien” shall mean any mortgage, deed of trust,
pledge, hypothecation, assignment, security interest, lien (whether statutory
or otherwise), Charge, claim or encumbrance, or preference, priority or other
security agreement or preferential arrangement held or asserted in respect of
any property or asset of any kind or nature whatsoever, including, without
limitation, any conditional sale or other title retention agreement, any lease
having substantially the same economic effect as any of the foregoing and the
filing of, or agreement to give, any financing statement under the UCC or comparable
law of any jurisdiction.

“Limited Partner” shall mean Rosewood, IEVP or
any other owner or holder of any limited partnership interest in Borrower, and “Limited
Partners” means collectively all of such Persons.

“Loan Party” shall mean Borrower, each
Subsidiary of Borrower and General Partner, and “Loan Parties” means
collectively all of such Persons.

“Loans” shall mean the Term Loans and all of
the outstanding Revolving Advances.

“Management Fee Subordination Agreement” shall
mean that certain letter agreement regarding “Subordination of Management Fees”
dated as of December 1, 2005, among Insight Equity Vision Management, LLC,
Borrower, the Subsidiaries of Borrower, General Partner and Agent.

“Material Adverse Effect” shall mean a material
adverse effect on (a) the financial condition, operations, properties, assets,
businesses or prospects of Borrower or Borrower and its Subsidiaries taken as a
whole, (b) Borrower’s ability to pay the Obligations in accordance with the
terms thereof, (c) the value of the Collateral, or Agent’s Liens on the
Collateral or the priority of any such Lien or (d) the practical realization of
the benefits of Agent’s and each Lender’s rights and remedies under this
Agreement and the Other Documents.

“Material Contracts” means (a) the contracts
which are material to the business or operations of Borrower or any of its
Subsidiaries and (b) as to Borrower or any of its Subsidiaries, each supply,
purchase, service, employment, tax, indemnity or other agreement or contract
(other than this Agreement and the Other Documents) (i) for which the aggregate
amount or value of services performed or to be performed for or by, or funds of
other Property transferred or to be transferred to or by, Borrower or any of
its Subsidiaries as a party to such agreement or contract, or by which Borrower
or any of its Subsidiaries or any of its Properties is otherwise bound, during
any calendar year exceeds $2,500,000 (or the equivalent amount in any currency)
and any and all amendments, restatements or other modifications thereof or (ii)
which, if terminated, could reasonably be expected to have a Material Adverse
Effect with respect to Borrower or any of its Subsidiaries.

“Maturity Date” shall mean the last day of the
Term.

 17
 

 

 

“Maximum Face Amount” shall mean, with respect
to any outstanding Letter of Credit, the face amount of such Letter of Credit
including all automatic increases provided for in such Letter of Credit,
whether or not any such automatic increase has become effective.

“Maximum Rate” shall mean, at any time and with
respect to any Lender, the maximum rate of nonusurious interest under
Applicable Law that such Lender may charge Borrower.  The Maximum Rate shall be calculated in a
manner that takes into account any and all fees, payments and other charges
contracted for, charged or received in connection with this Agreement and the
Other Documents that constitute interest under Applicable Law.  Each change in any interest rate provided for
herein based upon the Maximum Rate resulting from a change in the Maximum Rate
shall take effect without notice to Borrower or any other Loan Party at the
time of such change in the Maximum Rate. 
To the extent that Agent and/or Lenders are relying on Chapter 303 of
the Texas Finance Code to determine the Maximum Rate payable on the Loans
and/or other Obligations, Agent and Lenders will utilize the weekly ceiling
from time to time in effect as provided in such Chapter 303, as amended.  To the extent U.S. federal law permits Agent
and/or Lenders to contract for, charge, take, receive or reserve a greater
amount of interest than under Texas law, Agent and Lenders will rely on U.S.
federal law instead of such Chapter 303 for the purpose of determining the
Maximum Rate.  Additionally, to the
extent permitted by Applicable Law now or hereafter in effect, Agent and/or
Lenders may, at their option and from time to time, utilize any other method of
establishing the Maximum Rate under such Chapter 303 or under other Applicable
Law by giving notice, if required, to Borrower as provided by Applicable Law
now or hereafter in effect.

“Maximum Revolving Advance Amount” shall mean
$25,000,000.00.

“Maximum Undrawn Amount” shall mean, with
respect to any outstanding Letter of Credit, the amount of such Letter of
Credit that is or may become available to be drawn, including all automatic
increases provided for in such Letter of Credit, whether or not any such
automatic increase has become effective.

“Mortgages” shall mean the mortgages and deeds
of trust on the Real Property securing the Obligations, together with all
extensions, renewals, amendments, supplements, modifications, substitutions and
replacements thereto and thereof.

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

“Net Orderly Liquidation Value” means, as to
any particular Equipment or Inventory of Borrower (as applicable), an amount
equal to (a) the estimated net proceeds that could be realized from a sale of
such property given a reasonable period of time to find purchasers with a
seller compelled to sell such property on an as-is, where-is basis, plus
(b) an allocation of certain fixed expenses over all portions of such property,
which amount shall be determined from time to time based upon an appraisal of
such property acceptable to Agent in its credit judgment.

“Note” shall mean any Revolving Credit Note or
Term Note, and “Notes” means, collectively, the Revolving Credit Notes
and the Term Notes.

“Obligations” shall mean and include any and
all loans, advances, debts, liabilities, obligations, covenants and duties
owing by Borrower and the other Loan Parties and Limited Partner (or any one or
more of them) to Lenders and Agent (or any one or more of them) or to any other
direct or indirect subsidiary or affiliate of Agent or any Lender of any kind
or nature, present or future (including, without limitation, any interest
accruing thereon or other payment or charge required to be paid by or in
respect of Borrower under Article 3 hereof or any other term or
provision of this Agreement or the Other 

 18
 

 

Documents, whether before or after maturity, or after
the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding relating to Borrower or any other
Loan Party or any Limited Partner, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding), whether or not evidenced
by any note, guaranty or other instrument, whether arising under any agreement,
instrument or document (including, without limitation, this Agreement and the
Other Documents), whether or not for the payment of money, whether arising by
reason of an extension of credit, opening of a letter of credit, loan,
equipment lease or guarantee, under any interest or currency swap, future,
option or other similar agreement, or in any other manner, whether arising out
of overdrafts or deposit or other accounts or electronic funds transfers
(whether through automated clearing houses or otherwise) or out of Agent’s or
any Lenders non-receipt of or inability to collect funds or otherwise not being
made whole in connection with depository transfer check or other similar
arrangements, whether direct or indirect (including those acquired by
assignment or participation), absolute or contingent, joint or several, due or
to become due, now existing or hereafter arising, contractual or tortious,
liquidated or unliquidated, regardless of how such indebtedness or liabilities
arise or by what agreement or instrument they may be evidenced or whether
evidenced by any agreement or instrument, including, but not limited to, any
and all of Borrower’s or any other Loan Party’s or any Limited Partner’s
Indebtedness, liabilities and/or obligations under this Agreement, the Other
Documents or under any other agreement between Agent or Lenders and Borrower or
any other Loan Party or any Limited Partner and any amendments, extensions,
renewals or increases and all costs and expenses of Agent and any Lender
incurred in the documentation, negotiation, modification, enforcement,
collection or otherwise in connection with any of the foregoing, including but
not limited to reasonable attorneys’ fees and expenses and all obligations of
Borrower or any other Loan Party or any Limited Partner to Agent or Lenders to
perform acts or refrain from taking any action.

“Organizational Documents” means, as to any
Loan Party or Limited Partner, all of such Person’s certificate or articles of
incorporation and bylaws, certificate of limited partnership and partnership
agreement, certificate of organization or formation and operating agreement or
regulations and/or other similar agreements, documents and/or instruments
relating to the formation or organization of such entity or the conduct of its
business or affairs (as applicable).

“Original Owners” shall mean General Partner,
Rosewood and IEVP.

“Other Documents” shall mean the Mortgages, the
Notes, the Acquisition Documents, any Guaranty, any Guarantor Security
Agreement, the Pledge Agreements, the Mortgage Over Shares dated as of April
20, 2005 executed by Borrower to and in favor of Agent relating to shares of
Vision-Ease Europe, any other Security Documents, the Term Loans B
Intercreditor Agreement, the Management Fee Subordination Agreement, the Fee
Letter, each Questionnaire, agreements relating to the Blocked Accounts,
control agreements relating to any Investment Property or Deposit Accounts,
financing statements, any Hedge Agreement permitted by this Agreement which is
entered into between Borrower and PNC (or any direct or indirect Subsidiary or
Affiliate of PNC), the Term Loans B Credit Documents and any and all other
agreements, instruments and documents, including, without limitation,
guaranties, pledges, powers of attorney, consents, interest or currency swap
agreements or other similar agreements and all other writings heretofore, now
or hereafter executed by Borrower or any other Loan Party or any Limited
Partner and/or delivered to Agent or any Lender in respect of the transactions
contemplated by this Agreement (and shall include, without limitation, any
amendment, restatement, renewal, supplement, ratification, confirmation,
reaffirmation or other modification to any of the foregoing).

“Out-of-Formula Loans” shall have the meaning
set forth in Section 15.2(b).

 19
 

 

 

“Parent” of any Person shall mean a corporation
or other entity owning, directly or indirectly, at least fifty percent (50%) of
the Capital Stock having ordinary voting power to elect a majority of the
directors of the Person or other Persons performing similar functions for such
Person.

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

“Payment Office” shall mean initially Two Tower
Center Boulevard, 8th Floor, East Brunswick, New Jersey 08816; thereafter, such
other office of Agent, if any, which it may designate by notice to Borrower and
to each Lender to be the Payment Office.

“PBGC” shall mean the Pension Benefit Guaranty
Corporation or any Governmental Body succeeding to the functions thereof.

“Permitted
Encumbrances” shall mean:

(a)        (i)
Liens in favor of Agent for the benefit of Agent and Lenders, and (ii) Liens in
favor of the Term Loans B Agent for the benefit of the Term Loans B
Agent and the Term Loans B Lenders securing the Term Loans B, provided
that all such Liens securing the Term Loans B (A) shall be permitted only
to the extent they are permitted by the Term Loans B Intercreditor
Agreement and (B) shall be expressly junior and subordinate to the Liens
securing the Obligations as provided in the Term Loans B Intercreditor
Agreement;

(b)        Liens
for taxes, assessments or other governmental charges not delinquent or being
contested in good faith and by appropriate proceedings and with respect to
which proper reserves have been taken by the owner of the property or asset
affected thereby, provided that the Lien shall have no effect on the
priority of the Liens in favor of Agent or the value of the assets in which
Agent has such a Lien and a stay of enforcement of any such Lien shall be in
effect;

(c)        deposits
or pledges to secure obligations under worker’s compensation, social security
or similar laws, or under unemployment insurance;

(d)        deposits
or pledges to secure bids, tenders, contracts (other than contracts for the
payment of money), leases, statutory obligations, surety and appeal bonds and
other obligations of like nature arising in the ordinary course of Borrower’s
business;

(e)        judgment
Liens that have been stayed or bonded arising in the ordinary course of
Borrower’s business with respect to obligations which are not due or which are
being contested in good faith by Borrower;

(f)         purchase
money Liens placed upon equipment or fixed assets hereafter acquired to secure
all or a portion of the purchase price thereof, provided that (i) any
such Lien shall not encumber any property of any Loan Party other than the
equipment or fixed assets so acquired and (ii) the aggregate amount of
Indebtedness secured by such Liens at any time outstanding shall not exceed the
amount thereof permitted by clause (e) of Section 7.8;

(g)        other
Liens incidental to the conduct of Borrower’s business or the ownership of its
property and assets which were not incurred in connection with the borrowing of
money or the obtaining of advances or credit, which do not in the aggregate
detract from or impair Agent’s or Lenders’ rights in and to the Collateral or
the value of property or assets of Borrower or its Subsidiaries or the 

 20
 

 

intended
use thereof in the operation of the business of Borrower or its Subsidiaries
and which do not have priority over the Liens of Agent in or to the Collateral;

(h)        encumbrances
on real property consisting of easements, rights of way, zoning restrictions,
restrictions on the use of real property and defects, deficiencies and
irregularities in the title thereto which do not in the aggregate detract from
or impair the value or intended use of the property or assets affected thereby
to any material extent;

(i)         Liens
incurred in connection with the extension, renewal or refinancing of the
Indebtedness secured by the Liens described in clause (f) above or clause (j)
below, provided that any extension, renewal or replacement Lien (i) is
limited to the property covered by the existing Lien and (ii) secures
Indebtedness which is no greater in amount and has material terms no less
favorable to any Loan Party, Agent or Lenders than the terms of the
Indebtedness secured by the existing Lien;

(j)         Liens
of mechanics, materialmen, warehousemen, carriers, landlords or other similar
statutory Liens created in the ordinary course of business securing obligations
that are not overdue or are being contested in good faith by appropriate
proceedings diligently pursued and for which adequate reserves have been
established in accordance with GAAP;

(k)        Liens
disclosed on Schedule 1.2(a); and

(l)         Liens
in favor of a trade creditor of Borrower attaching to Inventory owned by such
trade creditor which is in the possession of Borrower and which is delivered by
such trade creditor to Borrower pursuant to a consignment arrangement.

Notwithstanding the foregoing, however, none of the
Permitted Liens referred to in clauses (b) through (k) of
this definition preceding may, if and to the extent that they attach to any
Receivables or Inventory, have priority over the Liens on Receivables and
Inventory in favor of Agent for the benefit of Agent and Lenders.

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

“PIK Subordinated Notes” means any promissory
notes issued after the Existing Agreement Closing Date pursuant to, and in
accordance with the terms and provisions of, the Initial Subordinated Notes in
effect as of the Existing Agreement Closing Date, which (a) promissory notes
(if and when issued) represent deferred interest on the Initial Subordinated
Notes that has been paid in kind and (b) promissory notes and the indebtedness
evidenced thereby are fully subordinated to the payment and performance in full
of the Obligations pursuant to the terms of the Subordination Agreement.

“Plan” shall mean any employee benefit plan
within the meaning of Section 3(3) of ERISA, (a) maintained or sponsored by
Borrower, any of its Subsidiaries or any member of the Controlled Group; (b) to
which any such entity has any obligation or liability; or (c) any such Plan to
which Borrower, any of its Subsidiaries or any member of the Controlled Group
makes contributions or is required to contribute on behalf of any of its
employees.

“Pledge Agreement” shall mean (a) for Borrower
or any Subsidiary of Borrower, a pledge agreement, security agreement,
collateral assignment or other similar agreement, document or instrument
executed by Borrower or a Subsidiary (as applicable) to and in favor of Agent
in form and substance

 21

 

satisfactory to Agent pursuant to which Borrower or
such Subsidiary grants to Agent, as security for the payment and performance of
the Obligations, all Subsidiary Capital Stock owned by Borrower or such
Subsidiary, (b) for each Limited Partner, a pledge agreement, security
agreement, collateral assignment or other similar agreement, document or
instrument executed by such Limited Partner to and in favor of Agent in form
and substance satisfactory to Agent pursuant to which such Limited Partner
grants to Agent, as security for the payment and performance of the
Obligations, all of his or its Borrower Partnership Interests and General
Partner Membership Interests, and (c) for General Partner, a pledge agreement,
security agreement, collateral assignment or other similar agreement, document
or instrument executed by General Partner to and in favor of Agent in form and
substance satisfactory to Agent pursuant to which General Partner grants to
Agent, as security for the payment and performance of the Obligations, all of
General Partner’s Borrower Partnership Interests; provided, however,
that the term “Pledge Agreement” shall not include any of the agreements
referred to in clause (b) or (c) preceding at any time after Agent
is obligated to release its security interests in the Borrower Partnership
Interests and the General Partner Membership Interests in accordance with Section
4.22.

“PNC” shall mean PNC Bank, National
Association.

“Pro Forma Balance Sheet” shall have the
meaning set forth in Section 5.5(a) hereof.

“Pro Forma Financial Statements” shall have the
meaning set forth in Section 5.5(b) hereof.

“Projections” shall have the meaning set forth
in Section 5.5(b) hereof.

“Property” means, for any Person, property or
assets of all kinds, real, personal or mixed, tangible or intangible
(including, without limitation, all rights relating thereto), whether owned or
acquired on or after the Existing Agreement Closing Date.

“Public Offering” shall mean an offering of
securities (whether debt or equity or other securities) pursuant to a
registration statement declared effective by the United States Securities and
Exchange Commission.

“Purchasing Lender” shall have the meaning set
forth in Section 15.3(c) hereof.

“Put Subordinated Notes” means any promissory
notes issued after the Existing Agreement Closing Date pursuant to, and in
accordance with the terms and provisions of, the Subordinated Credit Agreement
upon a “put” of one or more of the Warrants or of the securities acquirable
upon exercise of the Warrants, which promissory notes and the indebtedness
evidenced thereby are fully subordinated to the payment and performance in full
of the Obligations pursuant to the terms of the Subordination Agreement and
shall, in each case, be in form and substance reasonably satisfactory to Agent.

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

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

“Real Property” shall mean all of Borrower’s or
any Subsidiary’s right, title and interest in and to (a) each of the owned and
leased premises identified on Schedule 4.25 hereto and (b) any other
real property or interest therein now owned or hereafter acquired by Borrower
or any of its Subsidiaries.

 22
 

 

 

“Receivables” shall mean and include, as to any
Person, all of such Person’s accounts, contract rights, instruments (including
those evidencing indebtedness owed to such Person by its Affiliates),
documents, chattel paper (including electronic chattel paper), general
intangibles relating to accounts, drafts and acceptances, credit card
receivables and all other forms of obligations owing to such Person arising out
of or in connection with the sale or lease of Inventory or the rendition of
services, all supporting obligations, guarantees and other security therefor,
whether secured or unsecured, now existing or hereafter created, and whether or
not specifically sold or assigned to Agent hereunder.

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

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

“Reportable Event” shall mean a reportable
event described in Section 4043(b) of ERISA or the regulations promulgated
thereunder.

“Required Consents” means those consents or
approvals required from parties to the Material Contracts or Governmental
Authorizations required from any Governmental Body that are necessary or
required in order to give effect to the transactions contemplated by the
Acquisition Documents, this Agreement or the Other Documents (including,
without limitation, to permit the grant of a security interest therein or the
exercise of any right or remedy of Agent in connection therewith) or to enable
Borrower to operate the property and business acquired pursuant to the
Acquisition Agreement.

“Required Lenders” shall mean Lenders holding
at least sixty-six and two-thirds percent (66-2/3%) of the Advances and, if no
Advances are outstanding, shall mean Lenders holding at least sixty-six and
two-thirds percent (66-2/3%) of the Commitment Percentages; provided, however,
if there are fewer than three Lenders, “Required Lenders” shall include all
Lenders.

“Reserve Percentage” shall mean the maximum
effective percentage in effect for Agent (in its individual capacity as a bank)
on any day as prescribed by the Board of Governors of the Federal Reserve
System (or any successor) for determining the reserve requirements (including,
without limitation, supplemental, marginal and emergency reserve requirements)
with respect to eurocurrency funding.

“Rosewood” means Rosewood Vision Corporation, a
Delaware corporation.

“Rosewood Pledge Agreement Ratification” means
a ratification, confirmation and reaffirmation, executed by Rosewood, of
Rosewood’s obligations under the Pledge Agreement executed by it, which
agreement shall include, without limitation, an agreement to the effect that
the Liens granted under such Pledge Agreement secure the increased amount of
the Obligations.

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

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

“Revolving Interest Rate” shall mean an interest
rate per annum equal to (a) the Alternate Base Rate with respect to Domestic
Rate Loans and (b) the sum of the Eurodollar Rate plus two and one-half of one
percent (2.50%) with respect to Eurodollar Rate Loans.

“Security Documents” shall have the meaning set
forth in Section 4.26(b).

“Seller” shall mean Vision-Ease Lens, Inc., a
Minnesota corporation.

 23
 

 

 

“Senior Debt Payments” shall mean, for any
period and without duplication, the sum of (a) all interest accrued with
respect to any Indebtedness for borrowed money (including, without limitation,
the Loans and the Term Loans B) of Borrower and its Subsidiaries during
such period, other than interest accrued under the Subordinated Notes, plus (b)
all scheduled principal payments and mandatory prepayments (but excluding
optional prepayments) on any Indebtedness for borrowed money (including,
without limitation, the Loans and the Term Loans B) of Borrower and its
Subsidiaries during such period, other than any such principal payments under
the Subordinated Notes, plus (c) payments for all fees, commissions and charges
set forth herein and with respect to any Advances during such period (other
than the fees, commissions and charges payable on the Closing Date under this
Agreement, the Fee Letter and the Term Loans B Credit Agreement, and other
than fees previously amortized that are required to be expensed due to this
amendment and restatement of the Existing Agreement), plus (d) all payments
made with respect to Capitalized Lease Obligations during such period.

“Settlement Date” shall mean the Closing Date
and thereafter Wednesday or Thursday of each week or more frequently if Agent
deems appropriate unless such day is not a Business Day in which case it shall
be the next succeeding Business Day.

“Subordinated Credit Agreement” shall mean that
certain Securities Purchase Agreement dated as of October 31, 2004, by and
among Borrower, General Partner, the Subsidiaries of Borrower which are
Guarantors, PNC Venture Corp, PNC Equity Partners, L.P. and Erie Indemnity Company,
as the same may be amended or modified from time to time in accordance with
(but only in accordance with) this Agreement and the Subordination Agreement.

“Subordinated Credit Documents” shall mean the
Subordinated Credit Agreement, the Subordinated Notes, the Subordination
Agreement, the Warrants, the “Warrant Securities” as defined in the
Subordinated Credit Agreement and any and all other agreements, documents and
instruments executed and/or delivered in connection with any of the foregoing,
in each case as the same may be amended or modified from time to time in
accordance with (but only in accordance with) this Agreement and the
Subordination Agreement.

“Subordinated Debt Payments” shall mean and
include all cash actually expended to make payments of principal or interest on
the Subordinated Notes.

“Subordinated Loans” shall mean the loans or
indebtedness evidenced by the Subordinated Notes.

“Subordinated Notes” shall mean, collectively,
the Initial Subordinated Notes, the PIK Subordinated Notes and the Put
Subordinated Notes.

“Subordination Agreement” shall mean that
certain Amended and Restated Intercreditor Agreement dated as of December 1,
2005, among Agent, the Term Loans B Agent, PNC Venture Corp, PNC Equity
Partners, L.P., Erie Indemnity Company, Connecticut General Life Insurance
Company, Connecticut General Life Insurance Company in Respect of a Separate
Account, Life Insurance Company of North America, Borrower, General Partner and
the Subsidiaries of Borrower which are Guarantors, as the same may be amended
or modified from time to time.

“Subsidiary” shall mean, as to Borrower or, if
otherwise specified, such other Person specified, a corporation or other entity
of whose Capital Stock having ordinary voting power (other than Capital Stock
having such power only by reason of the happening of a contingency) to elect a
majority of the directors of such corporation, or other Persons performing
similar functions for such entity, are owned, directly or indirectly, by
Borrower or such other Person (as applicable).

 24
 

 

 

“Subsidiary Capital Stock” shall mean, with
respect to any Person, all issued and outstanding (at any time and from time to
time) Capital Stock issued by, of or in any Subsidiary of such Person.

“Synthetic Lease Obligation” shall mean the
monetary obligation of a Person under any (a) synthetic, off-balance sheet or
tax retention lease, or (b) agreement for the use or possession of property
creating obligations that do not appear on the balance sheet of such Person but
which, upon the insolvency or bankruptcy of such Person, would be characterized
as the indebtedness of such Person (without regard to accounting treatment).

“Tangible Net Worth” shall mean, at a
particular date and without duplication, (a) the aggregate amount of all assets
of Borrower and its consolidated Subsidiaries as may be properly classified as
such in accordance with GAAP consistently applied excluding, subject to the
proviso below, such other assets as are properly classified as intangible
assets under GAAP (which assets so excluded include, without limitation, all
Receivables of Borrower and its consolidated Subsidiaries, whether owed by an
Affiliate or employee of Borrower and/or any of its consolidated Subsidiaries,
any third-party or otherwise) less (b) the aggregate amount of all liabilities
of Borrower and its consolidated Subsidiaries as may be properly classified as
such in accordance with GAAP; provided, however, that intangible
assets acquired on or after December 1, 2005, shall not be so excluded from the
calculation of Tangible Net Worth.

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

“Term Loans” shall mean the Existing Term Loans
and the additional Advances made pursuant to Section 2.4 hereof.

“Term Loans Amount” shall mean $13,725,424.00.

“Term Loans B” shall mean the “Term Loans”
as defined in the Term Loans B Credit Agreement.

“Term Loans B Agent” shall mean the “Agent”
as such term is defined in the Term Loans B Credit Agreement.

“Term Loans B Credit Agreement” shall mean
that certain Loan and Security Agreement dated as of December 1, 2005, among
ORIX Finance Corp. and the other lenders identified therein or parties thereto
from time to time, ORIX Finance Corp. in its capacity as agent for such
lenders, Borrower, the Subsidiaries of Borrower and General Partner, as such
agreement may be amended, modified, supplemented, renewed, restated or replaced
from time to time if and to the extent permitted by the Term Loans B
Intercreditor Agreement.

“Term Loans B Credit Documents” shall mean
the Term Loans B Credit Agreement, the Term Loans B Notes, the Term
Loans B Intercreditor Agreement and the “Other Documents” as defined in
the Term Loans B Credit Agreement.

“Term Loans B Debt Payments” shall mean
and include all cash actually expended to make payments of principal or
interest on the Term Loans B Notes.

“Term Loans B Lenders” shall mean the “Lenders”
as such term is defined in the Term Loans B Credit Agreement.

“Term Loans B Notes” shall mean the “Term
Notes” as defined in the Term Loans B Credit Agreement.

 25
 

 

 

“Term Loans B Intercreditor Agreement”
shall mean that certain Intercreditor Agreement dated as of December 1, 2005,
among Agent, the Term Loans B Agent, Borrower, the Subsidiaries of
Borrower and General Partner, as the same may be amended, modified,
supplemented, renewed, restated or replaced from time to time.

“Term Loans Overadvance Amount” shall mean
$5,000,000.00.

“Term Loans Rate” shall mean an interest rate
per annum equal to (a) the sum of the Alternate Base Rate plus one-half of one
percent (0.50%) with respect to Domestic Rate Loans and (b) the sum of the
Eurodollar Rate plus three and one-half of one percent (3.50%) with respect to
Eurodollar Rate Loans.

“Term Notes” shall have the meaning set forth
in Section 2.4 hereof.

“Termination Event” shall mean (a) a Reportable
Event with respect to any Plan or Multiemployer Plan; (b) the withdrawal of
Borrower or any member of the Controlled Group from a Plan or Multiemployer
Plan during a plan year in which such entity was a “substantial employer” as
defined in Section 4001(a)(2) of ERISA or a cessation of operations which is
treated as such a withdrawal under Section 4062(e) of ERISA; (c) the providing
of notice of intent to terminate a Plan, the treatment of a Plan amendment as a
termination under Section 4041 or 4041A of ERISA, or the termination,
insolvency or reorganization of a Multiemployer Plan; (d) the institution by
the PBGC of proceedings to terminate a Plan; (e) any event or condition (i)
which might constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Plan, or (ii) that may
result in termination of a Multiemployer Plan pursuant to Section 4041A of
ERISA; (f) the partial or complete withdrawal within the meaning of Sections
4203 and 4205 of ERISA of Borrower or any member of the Controlled Group from a
Multiemployer Plan or notification that a Multiemployer Plan is in
reorganization or insolvent; and (g) the imposition of any liability under
Title IV of ERISA, other than for PBGC premiums due but not delinquent under
Section 4007 of ERISA, upon Borrower or any member of the Controlled
Group.  For purposes of this definition,
the term “Plan” shall be limited to Plans which are subject to Title IV of
ERISA.

“Total Financing Amount” shall mean an amount
equal to the sum of (a) the Maximum Revolving Advance Amount plus (b) the Term
Loans Amount.

“Total Leverage Ratio”
shall mean, as of any date of determination (the “calculation date”),
the ratio of (a) Total Debt to (b) EBITDA. 
For purposes of this definition:

(i)         the “Total
Debt” shall mean, as of any calculation date, the sum of all Indebtedness
of Borrower and its Subsidiaries as of such calculation date and consolidated
in accordance with GAAP; and

(ii)        the
“EBITDA” shall mean EBITDA for the twelve month period ending on the
date of such determination; provided, however, that in
calculating the Total Leverage Ratio for any period ending on or before
September 30, 2005, EBITDA shall be annualized based on the actual period
elapsed between the Existing Agreement Closing Date and the calculation date
(i.e., by determining what EBITDA was for the period commencing on the Existing
Agreement Closing Date and continuing through the calculation date and
multiplying such amount by the quotient obtained by dividing (A) 365 days by
(B) the number of days actually elapsed between the Existing Agreement Closing
Date and the calculation date.

“Toxic Substance” shall mean and include any
material present on the Real Property or the Leasehold Interests which has been
shown to have significant adverse effect on human health or which is 

 26
 

 

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

“Transactions” means (a) the actions or
transactions which are required to be taken or consummated to satisfy the
conditions precedent set forth in Section 8.1 of the Existing Agreement and Section
8.1 hereof, (b) the Advances made by Lenders to Borrower under the Existing
Agreement or this Agreement, and (c) the use of the proceeds of such Advances
in accordance with Section 2.15 of the Existing Agreement and Section 2.15
hereof.

“Transferee” shall have the meaning set forth
in Section 15.3(b) hereof.

“UCC” shall mean the Uniform Commercial Code as
in effect from time to time in the State of Texas and/or any other
jurisdiction, the laws of which are applicable to or in connection with the
creation, perfection or priority of any Lien or any Property created pursuant
to this Agreement or any Other Document.

“Unadjusted EBITDA” shall mean, for any period
and without duplication, the sum of (a) Earnings Before Interest and Taxes for
such period, plus (b) depreciation expenses of Borrower and its consolidated
Subsidiaries for such period, plus (c) amortization expenses of Borrower and
its consolidated Subsidiaries for such period, plus (d) management fee expenses
of Borrower, to the extent permitted under Section 7.7 hereof, for such
period, plus (e) if and to the extent not already included in clause (c)
above, fees, commissions and charges payable on the Closing Date under this
Agreement, the Fee Letter or the Term Loans B Credit Agreement and fees
previously amortized that are required to be expensed due to this amendment and
restatement of the Existing Agreement.

“Undrawn Availability” at a particular date
shall mean an amount equal to (a) the lesser of (i) the Formula Amount or (ii)
the Maximum Revolving Advance Amount, minus (b) the sum of (i) the outstanding
amount of Advances (other than Term Loans and, if the Formula Amount is the
lesser amount under clause (a) preceding, the outstanding Letters
of Credit up to an aggregate amount of such Letters of Credit not to exceed the
remainder of the Maximum Revolving Advance Amount minus the Formula Amount)
plus (ii) all amounts due and owing to Borrower’s trade creditors which are 60
days or more past due, plus (iii) fees and expenses for which Borrower is
liable but which have not been paid or charged to Borrower’s Account.

“U.S.” shall mean the United States of America.

“USA Patriot Act” shall mean the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001, Public Law 107-56, as the same has been, or
shall hereafter be, renewed, extended, amended or replaced.

“Vision-Ease Asia” shall have the meaning set
forth in the preamble to this Agreement and shall extend to all permitted
successors and assigns of such Person.

“Vision-Ease Canada” shall have the meaning set
forth in the preamble to this Agreement and shall extend to all permitted
successors and assigns of such Person.

“Vision-Ease Europe” shall have the meaning set
forth in the preamble to this Agreement and shall extend to all permitted
successors and assigns of such Person.

 27
 

 

 

“Vision-Ease Lens” shall have the meaning set
forth in the preamble to this Agreement and shall extend to all permitted
successors and assigns of such Person.

“Warrants” means any of the warrants issued or
issuable under the Subordinated Credit Agreement, including any replacements or
substitutions thereof permitted under this Agreement and the Subordination
Agreement.

“Week” shall mean the time period commencing
with the opening of business on a Wednesday and ending on the close of business
the following Tuesday.

“Working Capital Adjustment” shall mean the
anticipated working capital adjustment relating to Borrower’s acquisition of
assets pursuant to the Acquisition Agreement, which adjustment is anticipated
to result in an adjustment to the purchase price previously paid by Borrower under
the Acquisition Agreement and a corresponding refund to Borrower.

Section 1.3             UCC
Terms.  All terms used herein and
defined in the UCC as adopted in the State of Texas from time to time shall
have the meanings given therein unless otherwise defined herein.  To the extent the definition of any category
or type of Collateral is expanded by any amendment, modification or revision to
the UCC, such expanded definition will apply automatically as of the date of
such amendment, modification or revision.

Section 1.4             Certain
Matters of Construction.  The terms “herein”,
“hereof” and “hereunder” and other words of similar import refer to this
Agreement as a whole and not to any particular section, paragraph or
subdivision.  Any pronoun used shall be
deemed to cover all genders.  Wherever
appropriate in the context, terms used herein in the singular also include the
plural and vice versa.  All references to
statutes and related regulations shall include any amendments of same and any
successor statutes and regulations. 
Unless otherwise provided or not permitted herein, all references to any
agreement, documents or instruments to which Agent is a party, including,
without limitation, references to any of the Other Documents, shall include any
and all modifications or amendments thereto and any and all extensions or
renewals thereof.

ARTICLE 2

ADVANCES, PAYMENTS

Section 2.1             Advances.

(a)           Revolving Advances.  Lenders previously made revolving loans or
advances to Borrower under the terms of the Existing Agreement, which loans or
advances are in the aggregate, outstanding principal amount of $18,025,081.49
as of the Closing Date (the “Existing Revolving Advances”).  The parties hereto acknowledge and agree that
the Existing Revolving Advances shall, for all purposes of this Agreement and
the Other Documents, constitute a part of the Revolving Advances (as
hereinafter defined) which are outstanding under, governed by and payable in
accordance with this Agreement and the Revolving Credit Notes.  Subject to the terms and conditions set forth
in this Agreement, including, without limitation, Section 2.1(b), each
Lender, severally and not jointly, will make revolving credit loans or advances
(collectively, and inclusive of the Existing Revolving Advances, “Revolving
Advances”) from time to time during the Term to Borrower at Borrower’s
request (in accordance with Section 2.2) up to an aggregate principal
amount outstanding at any time not to exceed such Lender’s Commitment
Percentage of the lesser of (x) the Maximum Revolving Advance Amount less the
aggregate amount of outstanding Letters of Credit or (y) an amount equal to the
sum of:

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

(ii)           up to 85% of the Net
Orderly Liquidation Value of Eligible Inventory, subject to the provisions of Section
2.1(b) hereof (“Inventory Advance Rate”) (the Receivables Advance
Rate and the Inventory Advance Rate shall be referred to collectively, as the “Advance
Rates”), plus

(iii)          during the period (and
only during the period) from the Closing Date through and including May 31,
2006, up to 50% of the lesser of $2,077,152.93 or the amount of the Working
Capital Adjustment which, at such time of determination, has been unconditionally
awarded to Borrower in accordance with the binding arbitrator’s report of
Steven Skalak dated November 8, 2005, but which has not yet been paid to
Borrower by Seller or BMC Industries, Inc.; provided, however,
that this clause (iii) shall not apply on or after June 1, 2006,
minus

(iv)          the aggregate amount of
outstanding Letters of Credit, minus

(v)           such reserves as Agent
may reasonably deem proper and necessary from time to time.

The amount derived from the sum of (A) Sections
2.1(a)(y)(i), (ii) and (iii) minus (B) Sections
2.1(a)(y)(iv) and (v) at any time and from time to time shall be
referred to as the “Formula Amount”. 
Such Formula Amount for each Business Day shall be determined in good
faith by Agent.  The Revolving Advances
shall be evidenced by one or more secured promissory notes (collectively, the “Revolving
Credit Notes”) substantially in the form attached hereto as Exhibit 2.1(a).

(b)           Discretionary Rights.  The Advance Rates may be increased or
decreased by Agent at any time and from time to time in the exercise of its
reasonable discretion.  Borrower consents
to any such increases or decreases and acknowledges that decreasing the Advance
Rates or increasing or imposing any reserves may limit or restrict Advances
requested by Borrower.  The rights of
Agent under this Section 2.1(b) are subject to Section 15.2(b).

Section 2.2             Procedure
for Borrowing Advances.

(a)           Borrower may notify
Agent prior to 11:00 a.m. on a Business Day of Borrower’s request to borrow, on
that day, a Revolving Advance hereunder. 
Should any amount required to be paid as interest hereunder, or as fees
or other charges under this Agreement or any other agreement with Agent or
Lenders, or with respect to any other Obligation, become due, the same shall be
deemed a request for a Revolving Advance as of the date such payment is due, in
the amount required to pay in full such interest, fee, charge or Obligation
under this Agreement or any other agreement with Agent or Lenders, and such
request shall be irrevocable.

(b)           Notwithstanding the
provisions of Section 2.2(a) above, in the event Borrower desires to
obtain a Eurodollar Rate Loan, Borrower shall give Agent at least three (3)
Business Days’ prior written notice, specifying (i) the date of the proposed
borrowing (which shall be a Business Day), (ii) the type of borrowing and the
amount on the date of such Advance to be borrowed, which amount shall be in a
minimum amount of $500,000 and in integral multiples of $100,000 in excess of
such amount, and (iii) the duration of the first Interest Period therefor.  Interest Periods for Eurodollar Rate Loans
shall be for one, two, three or six months; provided, if an Interest
Period would end on a day that is not a Business Day, it shall end on the next 

 29
 

 

succeeding Business Day unless such day falls
in the next succeeding calendar month in which case the Interest Period shall
end on the next preceding Business Day. 
No Eurodollar Rate Loan shall be made available to Borrower during the
continuance of a Default or an Event of Default.

(c)           Each Interest Period of
a Eurodollar Rate Loan shall commence on the date such Eurodollar Rate Loan is
made and shall end on such date as Borrower may elect as set forth in clause (iii)
of Section 2.2(b) above, provided that the exact length of each
Interest Period shall be determined in accordance with the practice of the
interbank market for offshore Dollar deposits and no Interest Period shall end
after the Maturity Date.

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

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

(e)           At its option and upon
three (3) Business Days’ prior written notice, Borrower may prepay the
Eurodollar Rate Loans in whole at any time or in part from time to time with
accrued interest on the principal being prepaid to the date of such
repayment.  Borrower shall specify the
date of prepayment of Advances which are Eurodollar Rate Loans and the amount
of such prepayment.  In the event that
any prepayment of a Eurodollar Rate Loan is required or permitted on a date
other than the last Business Day of the then current Interest Period with respect
thereto, Borrower shall indemnify Agent and Lenders therefor in accordance with
Section 2.2(f) hereof.

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

 30
 

 

pursuant to the foregoing sentence submitted
by Agent or any Lender to Borrower shall be deemed conclusive absent manifest
error.

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

Section 2.3             Disbursement
of Advance Proceeds.  All Advances
shall be disbursed from whichever office or other place Agent may designate
from time to time and, together with any and all other Obligations of Borrower
to Agent or Lenders, shall be charged to Borrower’s Account on Agent’s
books.  During the Term, Borrower may use
the Revolving Advances by borrowing, prepaying and reborrowing, all in
accordance with the terms and conditions hereof.  Subject to Section 2.15, the proceeds
of each Revolving Advance requested by Borrower or deemed to have been
requested by Borrower under Section 2.2(a) hereof shall, with respect to
requested Revolving Advances to the extent Lenders make such Revolving
Advances, be made available to Borrower on the day so requested by way of
credit to Borrower’s operating account at PNC, or such other bank as Borrower
may designate following notification to Agent, in immediately available federal
funds or other immediately available funds or, with respect to Revolving
Advances deemed to have been requested by Borrower, be disbursed to Agent to be
applied to the outstanding Obligations giving rise to such deemed request.

Section 2.4             Term
Loans.  Lenders previously made term
loans to Borrower under the terms of the Existing Agreement, which Loans are in
the aggregate, outstanding principal amount equal to the Existing Term Loans
Balance as of the Closing Date (the “Existing Term Loans”).  The parties hereto acknowledge and agree that
the Existing Term Loans (and all accrued and unpaid interest thereon) shall,
for all purposes of this Agreement and the Other Documents, constitute a part
of the Term Loans (as hereinafter defined) which are outstanding under,
governed by and payable in accordance with this Agreement and the Term
Notes.  Subject to the terms and
conditions of this Agreement, each Lender, severally and not jointly, will make
an additional term loan (collectively, and inclusive of the Existing Term
Loans, the “Term Loans”) to Borrower in the sum equal to such Lender’s
Commitment Percentage of the remainder of (a) the Term Loans Amount minus (b)
the Existing Term Loans Balance.  Once
repaid, the Term Loans may not be reborrowed. 
The Term Loans shall be advanced on the Closing Date (exclusive of the
Existing Term Loans which were advanced on the Existing Agreement Closing Date)
and shall be (inclusive of the Existing Term Loans Balance of the Existing Term
Loans), with respect to unpaid principal, payable as follows, subject, however,
to acceleration upon the occurrence of an Event of Default under this Agreement
or early termination of this Agreement for any reason:  (i) monthly principal installments in the
amount of $138,888.89 each due and payable on the first Business Day of each
calendar month commencing January 1, 2006 and continuing through and including
December 1, 

 31
 

 

2008, and (ii)
a final principal installment in an amount equal to the then outstanding
principal of all of the Term Loans, due and payable on the Maturity Date; provided,
however, that the unpaid balance of all of the Term Loans shall be due
and payable in full at the earlier of Borrower’s refinancing of any part of the
Loans advanced under this Agreement or the end of the Term.  Additionally, as set forth in and subject to Section
2.14(b), certain of  Borrower’s
Excess Cash Flow will be applied to the unpaid balance of the Term Loans, such
application to be applied to installments of principal in the inverse order of
maturities thereof.  The Term Loans shall
be evidenced by one or more secured promissory notes (collectively, the “Term
Notes”) in substantially the form attached hereto as Exhibit 2.4.

Section 2.5             Maximum
Advances.  Subject to the minimum
Undrawn Availability required as of the Closing Date by this Agreement, the
aggregate balance of Revolving Advances outstanding at any time shall not
exceed the lesser of (a) the Maximum Revolving Advance Amount less outstanding
Letters of Credit or (b) the Formula Amount.

Section 2.6             Repayment
of Advances.

(a)           The Revolving Advances
shall be due and payable in full on the Maturity Date subject to earlier
prepayment as herein provided.  The Term
Loans shall be due and payable as provided in Section 2.4 hereof and in
the Term Notes, subject to mandatory prepayments as herein provided.

(b)           Borrower recognizes
that the amounts evidenced by checks, notes, drafts or any other items of
payment relating to, and proceeds of, Collateral may not be collectible by
Agent on the date received.  In
consideration of Agent’s agreement to conditionally credit Borrower’s Account
as of the Business Day on which Agent receives those items of payment, Borrower
agrees that, in computing the interest and other charges under this Agreement,
all items of payment shall be deemed applied by Agent on account of the
Obligations one (1) Business Day after (i) the Business Day on which Agent
receives such payments via wire transfer or electronic depository check; (ii)
in the case of any payment made by depository check, the Business Day on which
Agent receives such payment in a Blocked Account established at PNC; or (iii)
in the case of payments received by Agent in any other form or upon any other
terms, the Business Day such payment constitutes good funds in Agent’s
account.  Agent is not, however, required
to credit Borrower’s Account for the amount of any item of payment which is not
made in the form required pursuant to this Section 2.6(b) and which is
unsatisfactory to Agent and Agent may charge Borrower’s Account for the amount
of any such item of payment which is returned to Agent unpaid.

(c)           All payments of
principal, interest and other amounts payable hereunder or under any of the
Other Documents shall be made to Agent at the Payment Office not later than
1:00 p.m. (New York time) on the due date therefor in lawful money of the U.S.
in federal funds or other funds immediately available to Agent.  Agent shall have the right to effectuate
payment on any and all Obligations due and owing hereunder by charging Borrower’s
Account or, if Agent so determines in its sole discretion, by making Advances
as provided in Section 2.2 hereof.

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

Section 2.7             Repayment
of Excess Advances.  The aggregate
balance of Advances outstanding at any time in excess of the maximum amount of
Advances permitted hereunder shall be 

 32
 

 

immediately
due and payable without the necessity of any demand, at the Payment Office,
whether or not a Default or Event of Default has occurred.

Section 2.8             Statement
of Account.  Agent shall maintain, in
accordance with its customary procedures, a loan account (“Borrower’s
Account”) in the name of Borrower in which Agent shall record the date and
amount of each Advance and the date and amount of each payment in respect
thereof; provided, however, the failure by Agent to record the
date and amount of any Advance shall not adversely affect Agent or any
Lender.  Each month, Agent shall send to
Borrower a statement showing the accounting for the Advances made, payments
made or credited in respect thereof, fees charged and any other transactions
between Agent and Borrower, during such month. 
The monthly statements shall be deemed correct and binding upon Borrower
in the absence of manifest error and shall constitute an account stated between
Lenders and Borrower unless Agent receives a written statement of Borrower’s
specific exceptions thereto within 30 days after such statement is received by
Borrower.  The records of Agent with
respect to Borrower’s Account shall be conclusive evidence absent manifest
error of the amounts of Advances and other charges thereto and of payments
applicable thereto.

Section 2.9             Letters
of Credit.  Lender previously issued
letters of credit to Borrower under the terms of the Existing Agreement, which
letters of credit that remain outstanding as of the Closing Date are described
on Schedule 2.9 hereto (the “Existing Letters of Credit”).  The parties hereto acknowledge and agree that
the Existing Letters of Credit shall, for all purposes of this Agreement and
the Other Documents, constitute a part of the Letters of Credit (as hereinafter
defined) which are issued and outstanding under, governed by and payable in
accordance with this Agreement and any applicable Other Documents.  Subject to the terms and conditions hereof,
Agent shall issue or cause the issuance of standby and/or commercial letters of
credit for the account of Borrower (inclusive of the Existing Letters of Credit,
“Letters of Credit”); provided, however, that Agent will
not be required to issue or cause to be issued any Letters of Credit to the
extent that the issuance thereof would then cause the sum of (a) the
outstanding Revolving Advances plus (b) the Maximum Undrawn Amount of all
outstanding Letters of Credit to exceed the lesser of (i) the Maximum Revolving
Advance Amount or (ii) the Formula Amount. 
The Maximum Undrawn Amount of all outstanding Letters of Credit shall
not exceed $2,000,000 in the aggregate at any time.  All disbursements or payments related to
Letters of Credit shall be deemed to be Domestic Rate Loans consisting of
Revolving Advances and shall bear interest at the Revolving Interest Rate for
Domestic Rate Loans; Letters of Credit that have not been drawn upon shall not
bear interest.

Section 2.10           Issuance
and Requirements of Letters of Credit, etc.

(a)           Request for Issuance.  Borrower may request Agent to issue or cause
the issuance of a Letter of Credit by delivering to Agent, at the Payment
Office, prior to 10:00 a.m. (New York time), at least five (5)  Business Days’ prior to the proposed date of
issuance, Agent’s form of Letter of Credit Application (the “Letter of
Credit Application”) completed to the satisfaction of Agent; and, such
other certificates, documents and other papers and information as Agent may
reasonably request.  Borrower also has
the right to give instructions and make agreements with respect to any
application, any applicable letter of credit and security agreement, any
applicable letter of credit reimbursement agreement and/or any other applicable
agreement, any letter of credit and the disposition of documents, disposition
of any unutilized funds, and to agree with Agent upon any amendment, extension
or renewal of any Letter of Credit.

(b)           Certain Terms.  Each Letter of Credit shall, among other
things, (i) provide for the payment of sight drafts, other written demands for
payment, or acceptances of usance drafts when presented for honor thereunder in
accordance with the terms thereof and when accompanied by the documents
described therein and (ii) have an expiry date not later than six months (as to
commercial Letters of Credit) or 12 months (as to standby Letters of Credit)
after such Letter of 

 33
 

 

Credit’s date of issuance and in no event
later than the last day of the Term. 
Each standby Letter of Credit shall be subject either to the Uniform
Customs and Practice for Documentary Credits (1993 Revision), International
Chamber of Commerce Publication No. 500, and any amendments or revision thereof
adhered to by the Issuer (“UCP 500”) or the International Standby
Practices (ISP98-International Chamber of Commerce Publication Number 590) (“ISP98
Rules”), as determined by Agent, and each trade Letter of Credit shall be
subject to UCP 500.

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

Section 2.11           Requirements
for Issuance of Letters of Credit, etc.  

(a)           Borrower as Account
Party.  Borrower shall authorize and
direct any Issuer to name Borrower as the “Applicant” or “Account Party” of
each Letter of Credit.  If Agent is not
the Issuer of any Letter of Credit, Borrower shall authorize and direct the
Issuer to deliver to Agent all instruments, documents and other writings and
property received by the Issuer pursuant to the Letter of Credit and to accept
and rely upon Agent’s instructions and agreements with respect to all matters
arising in connection with the Letter of Credit, the application therefor or
any acceptance therefor.

(b)           Disbursements,
Reimbursement

(i)            Immediately upon the
issuance of each Letter of Credit, each Lender shall be deemed to, and hereby
irrevocably and unconditionally agrees to, purchase from Issuer a participation
in such Letter of Credit and each drawing thereunder in an amount equal to such
Lender’s Commitment Percentage of the Maximum Face Amount of such Letter of
Credit and the amount of such drawing, respectively.

(ii)           In the event of any
request for a drawing under a Letter of Credit by the beneficiary or transferee
thereof, Issuer will promptly notify Agent and Borrower.  Provided that it shall have received such
notice, Borrower shall reimburse (such obligation to reimburse Issuer shall
sometimes be referred to as a “Reimbursement Obligation”) Issuer prior
to 12:00 noon, New York time on each date that an amount is paid by Issuer
under any Letter of Credit (each such date, a “Drawing Date”) in an
amount equal to the amount so paid by Issuer. 
In the event Borrower fails to reimburse Issuer for the full amount of
any drawing under any Letter of Credit by 12:00 noon, New York time, on the
Drawing Date, Issuer will promptly notify Agent and each Lender thereof, and
Borrower shall be deemed to have requested that a Domestic Rate Loan be made by
Lenders to be disbursed on the Drawing Date under such Letter of Credit,
subject to the amount of the unutilized portion of the lesser of the Maximum
Revolving Advance Amount or the Formula Amount and subject to Section 8.2
hereof.  Any notice given by Issuer
pursuant to this Section 2.11(b)(ii) may be oral if immediately
confirmed in writing; provided that the lack of such an immediate
confirmation shall not affect the conclusiveness or binding effect of such
notice.

(iii)          Each Lender shall upon
any notice pursuant to Section 2.11(b)(ii) make available to Agent an
amount in immediately available funds equal to its Commitment Percentage of the
amount of the drawing, whereupon the participating Lenders shall (subject to Section
2.11(b)(iv)) each be deemed to have made a Domestic Rate Loan to Borrower
in that amount.  If any Lender so
notified fails to make available to Agent the amount of such Lender’s
Commitment Percentage of such amount by no later than 2:00 p.m.,

 34
 

 

New York time on the Drawing Date, then interest
shall accrue on such Lender’s obligation to make such payment, from the Drawing
Date to the date on which such Lender makes such payment (A) at a rate per
annum equal to the Federal Funds Effective Rate during the first three days
following the Drawing Date and (B) at a rate per annum equal to the rate
applicable to Domestic Rate Loans on and after the fourth day following the
Drawing Date.  Agent will promptly give
notice of the occurrence of the Drawing Date, but failure of Agent to give any
such notice on the Drawing Date or in sufficient time to enable any Lender to
effect such payment on such date shall not relieve such Lender from its
obligation under this Section 2.11(b)(iii), provided that such
Lender shall not be obligated to pay interest as provided in clause (A)
and (B) above until and commencing from the date of receipt of notice
from Agent of a drawing.

(iv)          With respect to any
unreimbursed drawing that is not converted into a Domestic Rate Loan to
Borrower in whole or in part as contemplated by Section 2.11(b)(ii),
because of Borrower’s failure to satisfy the conditions set forth in Section
8.2 (other than any notice requirements) or for any other reason, Borrower
shall be deemed to have incurred from Agent a borrowing (each a “Letter of Credit
Borrowing”) in the amount of such drawing. 
Such Letter of Credit Borrowing shall be due and payable on demand
(together with interest) and shall bear interest at the rate per annum
applicable to a Domestic Rate Loan.  Each
Lender’s payment to Agent pursuant to Section 2.11(b)(iii) shall be
deemed to be a payment in respect of its participation in such Letter of Credit
Borrowing and shall constitute a “Participation Advance” from such
Lender in satisfaction of its Participation Commitment under this Section
2.11(b).

(v)           Each Lender’s
Participation Commitment shall continue until the last to occur of any of the
following events:  (A) Agent ceases to be
obligated to issue or cause to be issued Letters of Credit hereunder; (B) no
Letter of Credit issued or created hereunder remains outstanding and
uncancelled and (C) all Persons (other than the Borrower) have been fully
reimbursed for all payments made under or relating to Letters of Credit.

(c)           Repayment of
Participation Advances 

(i)            Upon (and only upon)
receipt by Agent for its account of immediately available funds from Borrower
(A) in reimbursement of any payment made by Issuer under the Letter of Credit
with respect to which any Lender has made a Participation Advance to Agent, or
(B) in payment of interest on such a payment made by Agent under such a Letter
of Credit, Agent will pay to each Lender, in the same funds as those received
by Agent, the amount of such Lender’s Commitment Percentage of such funds,
except Agent shall retain the amount of the Commitment Percentage of such funds
of any Lender that did not make a Participation Advance in respect of such
payment by Agent.

(ii)           If Agent is required at
any time to return to Borrower, or to a trustee, receiver, liquidator,
custodian or any official in any insolvency proceeding, any portion of the
payments made by Borrower to Agent pursuant to Section 2.11(c)(i) in
reimbursement of a payment made under the Letter of Credit or interest or fee
thereon, each Lender shall, on demand of Agent, forthwith return to Agent the
amount of its Commitment Percentage of any amounts so returned by Agent plus
interest at the Federal Funds Effective Rate.

 35
 

 

(d)           Documentation.  Borrower agrees to be bound by the terms of
the Letter of Credit Application and by Issuer’s interpretations of any Letter
of Credit issued for Borrower’s account and by Issuer’s written regulations and
customary practices relating to letters of credit, though Issuer’s
interpretations may be different from Borrower’s own.  In the event of a conflict between the Letter
of Credit Application and this Agreement, this Agreement shall govern.  It is understood and agreed that, except in
the case of gross negligence or willful misconduct, neither Issuer nor Agent shall
be liable for any error, negligence and/or mistakes, whether of omission or
commission, in following Borrower’s instructions or those contained in the
Letters of Credit or any modifications, amendments or supplements thereto.

(e)           Determination to
Honor Drawing Request.  In
determining whether to honor any request for drawing under any Letter of Credit
by the beneficiary thereof, Issuer shall be responsible only to determine that
the documents and certificates required to be delivered under such Letter of
Credit have been delivered and that they comply on their face with the
requirements of such Letter of Credit and that any other drawing condition
appearing on the face of such Letter of Credit has been satisfied in the manner
so set forth.

(f)            Nature of
Participation and Reimbursement Obligations.  Each Lender’s obligation in accordance with
this Agreement to make the Revolving Advances or Participation Advances as a
result of a drawing under a Letter of Credit, and the obligations of Borrower
to reimburse Issuer or Agent upon a draw under a Letter of Credit, shall be
absolute, unconditional and irrevocable, and shall be performed strictly in
accordance with the terms of this Section 2.11(f) under all
circumstances, including the following circumstances:

(i)            any set-off,
counterclaim, recoupment, defense or other right which such Lender may have
against Issuer, Agent, Borrower or any other Person for any reason whatsoever;

(ii)           the failure of Borrower
or any other Person to comply, in connection with a Letter of Credit Borrowing,
with the conditions set forth in this Agreement for the making of a Revolving
Advance, it being acknowledged that such conditions are not required for the
making of a Letter of Credit Borrowing and the obligation of the Lenders to
make Participation Advances under this Section 2.11;

(iii)          any lack of validity or
enforceability of any Letter of Credit;

(iv)          any claim of breach of
warranty that might be made by Borrower or any Lender against the beneficiary
of a Letter of Credit, or the existence of any claim, set-off, recoupment,
counterclaim, crossclaim, defense or other right which Borrower or any Lender
may have at any time against a beneficiary, any successor beneficiary or any
transferee of any Letter of Credit or the proceeds thereof (or any Persons for
whom any such transferee may be acting), Issuer, Agent or any Lender or any
other Person, whether in connection with this Agreement, the transactions
contemplated herein or any unrelated transaction (including any underlying
transaction between Borrower or any Subsidiaries of Borrower and the
beneficiary for which any Letter of Credit was procured);

(v)           the lack of power or
authority of any signer of (or any defect in or forgery of any signature or
endorsement on) or the form of or lack of validity, sufficiency, accuracy,
enforceability or genuineness of any draft, demand, instrument, certificate or
other document presented under or in connection with any Letter of Credit, or
any fraud or alleged fraud in connection with any Letter of Credit, or the
transport of 

 36
 

 

any property or provisions of services
relating to a Letter of Credit, in each case even if Issuer or Agent or any of
their Affiliates has been notified thereof;

(vi)          payment by Issuer or
Agent under any Letter of Credit against presentation of a demand, draft or certificate
or other document which does not comply with the terms of such Letter of
Credit;

(vii)         the solvency of, or any
acts or omissions by, any beneficiary of any Letter of Credit, or any other
Person having a role in any transaction or obligation relating to a Letter of
Credit, or the existence, nature, quality, quantity, condition, value or other
characteristic of any property or services relating to a Letter of Credit;

(viii)        any failure by Issuer or
Agent or any of their Affiliates to issue any Letter of Credit in the form
requested by Borrower, unless Issuer has received written notice from Borrower
of such failure within three (3) Business Days after Issuer shall have
furnished Borrower a copy of such Letter of Credit and such error is material and
no drawing has been made thereon prior to receipt of such notice;

(ix)           any Material Adverse
Effect on Borrower or any Guarantor;

(x)            any breach of this
Agreement or any Other Document by any party thereto;

(xi)           the occurrence or
continuance of an insolvency proceeding with respect to Borrower or any
Guarantor;

(xii)          the fact that a Default
or Event of Default shall have occurred and be continuing;

(xiii)         the fact that the Term
shall have expired or this Agreement or the Obligations hereunder shall have been
terminated; and

(xiv)        any other circumstance or
happening whatsoever, whether or not similar to any of the foregoing.

(g)           Indemnity.  In addition to amounts payable as provided in
Section 15.5, Borrower and each other Loan Party hereby agrees to
protect, indemnify, pay and save harmless Issuer, Agent and any of their
Affiliates that have issued a Letter of Credit from and against any and all
claims, demands, liabilities, damages, taxes, penalties, interest, judgments,
losses, costs, charges and expenses (including reasonable fees, expenses and
disbursements of counsel and allocated costs of internal counsel) which such
Issuer, Agent or any of such Affiliates may incur or be subject to as a
consequence, direct or indirect, of the issuance of any Letter of Credit, other
than as a result of (i) the gross negligence or willful misconduct of such
Issuer or Agent as determined by a final and non-appealable judgment of a court
of competent jurisdiction or (ii) the wrongful dishonor by such Issuer or Agent
or any of such Affiliates of a proper demand for payment made under any Letter
of Credit, except if such dishonor resulted from any act or omission, whether
rightful or wrongful, of any present or future de jure or de facto Governmental
Body (all such acts or omissions herein called “Governmental Acts”).

(h)           Liability for Acts
and Omissions.  As between Borrower
and Issuer, Agent and Lenders, Borrower assumes all risks of the acts and
omissions of, or misuse of the Letters of 

 37
 

 

Credit by, the respective beneficiaries of
such Letters of Credit.  In furtherance
and not in limitation of the respective foregoing, neither Issuer nor Agent
shall be responsible for:  (i) the form,
validity, sufficiency, accuracy, genuineness or legal effect of any document
submitted by any party in connection with the application for an issuance of
any such Letter of Credit, even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged (even if
Issuer or Agent shall have been notified thereof); (ii) the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any such Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be invalid
or ineffective for any reason; (iii) the failure of the beneficiary of any such
Letter of Credit, or any other party to which such Letter of Credit may be
transferred, to comply fully with any conditions required in order to draw upon
such Letter of Credit or any other claim of Borrower against any beneficiary of
such Letter of Credit, or any such transferee, or any dispute between or among
Borrower and any beneficiary of any Letter of Credit or any such transferee;
(iv) errors, omissions, interruptions or delays in transmission or delivery of
any messages, by mail, cable, telegraph, telex or otherwise, whether or not
they be in cipher; (v) errors in interpretation of technical terms; (vi) any
loss or delay in the transmission or otherwise of any document required in
order to make a drawing under any such Letter of Credit or of the proceeds
thereof; (vii) the misapplication by the beneficiary of any such Letter of
Credit of the proceeds of any drawing under such Letter of Credit; or (viii)
any consequences arising from causes beyond the control of Issuer or Agent,
including any governmental acts, and none of the above shall affect or impair,
or prevent the vesting of, any of Issuer or Agent’s rights or powers
hereunder.  Nothing in the preceding
sentence shall relieve Issuer or Agent from liability for its gross negligence
or willful misconduct in connection with actions or omissions described in such
clauses (i) through (viii) of such sentence.  In no event shall Issuer, Agent or any of
their Affiliates be liable to Borrower for any indirect, consequential,
incidental, punitive, exemplary or special damages or expenses (including
without limitation attorneys’ fees), or for any damages resulting from any
change in the value of any property relating to a Letter of Credit.

Without limiting the generality of the foregoing,
Issuer or Agent and each of its Affiliates (i) may rely on any oral or other
communication believed in good faith by Issuer, Agent or  such Affiliate to have been authorized or
given by or on behalf of the applicant for a Letter of Credit, (ii) may honor
any presentation if the documents presented appear on their face substantially
to comply with the terms and conditions of the relevant Letter of Credit; (iii)
may honor a previously dishonored presentation under a Letter of Credit,
whether such dishonor was pursuant to a court order, to settle or compromise
any claim of wrongful dishonor, or otherwise, and shall be entitled to
reimbursement to the same extent as if such presentation had initially been
honored, together with any interest paid by Issuer, Agent or its Affiliates;
(iv) may honor any drawing that is payable upon presentation of a statement
advising negotiation or payment, upon receipt of such statement (even if such
statement indicates that a draft or other document is being delivered
separately), and shall not be liable for any failure of any such draft or other
document to arrive, or to conform in any way with the relevant Letter of
Credit; (v) may pay any paying or negotiating bank claiming that it rightfully
honored under the laws or practices of the place where such bank is located;
and (vi) may settle or adjust any claim or demand made on Issuer, Agent or its
Affiliate in any way related to any order issued at the applicant’s request to
an air carrier, a letter of guarantee or of indemnity issued to a carrier or
any similar document (each an “Order”) and honor any drawing in
connection with any Letter of Credit that is the subject of such Order,
notwithstanding that any drafts or other documents presented in connection with
such Letter of Credit fail to conform in any way with such Letter of Credit.

In furtherance and extension and not in limitation of
the specific provisions set forth above, any action taken or omitted by Issuer
or Agent under or in connection with the 

 38
 

 

Letters of Credit issued
by it or any documents and certificates delivered thereunder, if taken or
omitted in good faith and without gross negligence, shall not put Issuer or
Agent under any resulting liability to Borrower or any Lender.

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

Section 2.12           Additional
Payments.  Any sums expended by Agent
or any Lender due to Borrower’s failure to perform or comply with its
obligations under this Agreement or any Other Document including, without
limitation, Borrower’s obligations under Sections 4.2, 4.4, 4.12,
4.13, 4.14 and 6.1 hereof, may be charged to Borrower’s
Account as a Revolving Advance and added to the Obligations.

Section 2.13           Manner
of Borrowing and Payment.

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

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

(c)           (i) Notwithstanding
anything to the contrary contained in Sections 2.13(a) and (b)
hereof, commencing with the first Business Day following the Closing Date, each
borrowing of Revolving Advances shall be advanced by Agent and each payment by
Borrower on account of Revolving Advances shall be applied first to those
Revolving Advances advanced by Agent.  On
or before 1:00 p.m., New York time, on each Settlement Date commencing with the
first Settlement Date following the Closing Date, Agent and Lenders shall make
certain payments as follows:  (A) if the
aggregate amount of new Revolving Advances made by Agent during the preceding
Week (if any) exceeds the aggregate amount of repayments applied to outstanding
Revolving Advances during such preceding Week, then each Lender shall provide
Agent with 

 39
 

 

funds in an amount equal to its applicable
Commitment Percentage of the difference between (w) such Revolving Advances and
(x) such repayments and (B) if the aggregate amount of repayments applied to
outstanding Revolving Advances during such Week exceeds the aggregate amount of
new Revolving Advances made during such Week, then Agent shall provide each
Lender with funds in an amount equal to its applicable Commitment Percentage of
the difference between (y) such repayments and (z) such Revolving Advances.

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

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

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

(e)           Unless Agent shall have
been notified by telephone, confirmed in writing, by any Lender that such
Lender will not make the amount which would constitute its applicable
Commitment Percentage of the Advances available to Agent, Agent may (but shall
not be obligated to) assume that such Lender shall make such amount available
to Agent on the next Settlement Date and, in reliance upon such assumption,
make available to Borrower a corresponding amount.  Agent will promptly notify Borrower of its
receipt of any such notice from a Lender. 
If such amount is made available to Agent on a date after such next
Settlement Date, such Lender shall pay to Agent on demand an amount equal to
the product of (i) the daily average Federal Funds Open Rate (computed on the
basis of a year of 360 days) during such period as quoted by Agent, times (ii)
such amount, times (iii) the number of days from and including such Settlement
Date to the date on which such amount becomes immediately available to Agent.  A certificate of Agent submitted to any
Lender with respect to any amounts owing under this Section 2.13(e)
shall be conclusive, in the absence of manifest error.  If such amount is not in fact made available
to Agent by such Lender within three (3) Business Days after such Settlement
Date, Agent shall be entitled to recover such an amount, with interest thereon
at the rate per annum then applicable to such Revolving Advances hereunder, on
demand from Borrower; provided, however, that Agent’s right to
such recovery shall not prejudice or otherwise adversely affect Borrower’s
rights (if any) against such Lender.

 40
 

 

 

Section 2.14           Prepayments.

(a)           Subject to Section
4.3 hereof, when Borrower or any of its Subsidiaries sells or otherwise
disposes of any Collateral, other than Inventory in the ordinary course of
business, Borrower shall repay the Advances in an amount equal to the net
proceeds of such sale or other disposition (i.e., gross proceeds less the
reasonable costs of such sales or other dispositions), such repayments to be
made promptly, but in no event more than one (1) Business Day following receipt
of such net proceeds, and, until the date of payment, such proceeds shall be
held in trust for Agent.  The foregoing
shall not be deemed to be implied consent to any such sale otherwise prohibited
by the terms and conditions hereof.  Such
repayments shall be applied (A) first, to the outstanding principal
installments of the Term Loans, in the inverse order of the maturities thereof,
and (B) second, to the remaining Advances in such order as Agent may determine,
subject to Borrower’s ability to reborrow Revolving Advances in accordance with
the terms hereof.

(b)           Borrower shall, at all
times during which all or any part of the Term Loans or Revolving Advances are
outstanding, commencing with the fiscal year ending December 31, 2005, prepay
the outstanding principal amount of the Term Loans or, after the Term Loans
have been repaid in full, Revolving Advances in an amount equal to the
remainder of (i) fifty percent (50%) of Excess Cash Flow for each fiscal year
less (ii) all unscheduled prepayments of the outstanding principal amount of
the Term Loans made by Borrower during such fiscal year, payable upon delivery
of the annual financial statements to Agent referred to in and required by Section
9.7 for such fiscal year but in any event not later than 120 days after the
end of each such fiscal year, which amount shall be applied, first, to the
outstanding principal installments of the Term Loans in the inverse order of
the maturities thereof and, second (after the Term Loans are paid in full), to
the outstanding principal amount of the Revolving Advances.  In the event that the financial statements
are not so delivered when due, then a calculation based upon estimated amounts
shall be made by Agent upon which calculation Borrower shall make the
prepayment required by this Section 2.14(b), subject to adjustment when
the financial statements are delivered to Agent as required hereby.  The calculation made by Agent shall not be
deemed a waiver of any rights Agent or Lenders may have as a result of the
failure by Borrower to deliver such financial statements.

(c)           Promptly after Borrower’s
receipt of the proceeds of any issuance of any Capital Stock of Borrower or
Borrower’s or any of its Subsidiaries’ receipt of the proceeds of a Public
Offering, Borrower shall prepay the outstanding principal amount of the
Advances equal to the net proceeds of such issuance or offering (i.e., gross
proceeds less the reasonable costs of such issuance or offering); provided,
however, that, with respect to a Public Offering, the net proceeds
thereof that are required to be prepaid in accordance with this Section
2.14(c) shall not exceed the Term Loans Overadvance Amount.  Such repayments shall be applied (i) with
respect to the net proceeds of an issuance that is not a Public Offering,
first, to the outstanding principal installments of the Term Loans in the
inverse order of the maturities thereof and, second (after the Term Loans are
paid in full and with respect to the net proceeds of an issuance that is not a
Public Offering), to the outstanding principal amount of the Revolving
Advances, and (ii) with respect to the net proceeds of an issuance in
connection with, or otherwise with respect to, a Public Offering, to the
outstanding principal installments of the Term Loans in the direct order of the
maturities thereof.

(d)           Promptly after Borrower’s
receipt of a refund or purchase price adjustment in connection with the Working
Capital Adjustment, Borrower shall prepay the principal amount of the Advances
in an amount equal to the amount of such refund or adjustment; provided,
however,

 41

 

that an amount not to exceed $2,300,000 of
such refund or adjustment anticipated to be received by Borrower prior to or on
or about the Closing Date shall not be required to be applied as a prepayment
under this Section 2.14(d).  Such
repayments shall be applied to the outstanding principal amount of the
Revolving Advances.

(e)           In the event of any
Change of Control or Change of Ownership, Borrower shall prepay all Loans and
other Obligations (including any applicable prepayment premium) then
outstanding, which prepayment shall be made within five Business Days after the
date of the occurrence of such Change of Control or Change of Ownership.

(f)            Subject to any
applicable prepayment penalty, Borrower may prepay the Term Loans in whole or
in part at any time and from time to time. 
Any such prepayment shall be applied to the outstanding principal
installments of the Term Loans in the inverse order of the maturities thereof.

(g)           Each prepayment of the
principal of the Term Loans shall be accompanied by Borrower’s payment of
accrued interest on the principal being prepaid to the date of such prepayment.

Section 2.15           Use
of Proceeds.  Borrower represents and
warrants to Agent and Lenders that Borrower applied the proceeds of all
Advances previously made on the Existing Agreement Closing Date in accordance
with the requirements of Section 2.15 of the Existing Agreement.  Borrower shall apply the proceeds of the
Advances made to it on the Closing Date to (a) pay in full the outstanding
principal amount of, and all accrued and unpaid interest on, the Subordinated
Loans, (b) pay accrued dividends on the issued and outstanding Class A-1
Preferred Partnership Rights of Borrower, which payment on such accrued
dividends shall not exceed $600,821.92 in aggregate amount, (c) subject to Section
7.7(e), pay accrued dividends on and redeem in full the issued and
outstanding Class A-2 Preferred Partnership Rights of Borrower, which
payment on such accrued dividends shall not exceed $2,000,000 in aggregate
amount and which redemption price shall not exceed $12,500,000.00 in aggregate
amount, (d) pay fees and expenses relating to the foregoing and this Agreement
and the Term Loans B Credit Agreement, and (e) provide for the working
capital needs of Borrower and its Subsidiaries.

Section 2.16           Defaulting
Lender.

(a)           Notwithstanding
anything to the contrary contained herein, in the event any Lender (i) has
refused (if such refusal constitutes a breach by such Lender of its obligations
under this Agreement) to make available its portion of any Advance or (ii)
notifies either Agent or Borrower that it does not intend to make available its
portion of any Advance (if the actual refusal would constitute a breach by such
Lender of its obligations under this Agreement) (each, a “Lender Default”),
all rights and obligations hereunder of such Lender (a “Defaulting Lender”)
as to which a Lender Default is in effect and of the other parties hereto shall
be modified to the extent of the express provisions of this Section 2.16
while such Lender Default remains in effect.

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

 42
 

 

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

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

(d)           Other than as expressly
set forth in this Section 2.16, the rights and obligations of a
Defaulting Lender (including the obligation to indemnify Agent) and the other
parties hereto shall remain unchanged. 
Nothing in this Section 2.16 shall be deemed to release any
Defaulting Lender from its obligations under this Agreement and the Other
Documents, shall alter such obligations, shall operate as a waiver of any
default by such Defaulting Lender hereunder or shall prejudice any rights which
Borrower, Agent or any Lender may have against any Defaulting Lender as a
result of any default by such Defaulting Lender hereunder.

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

ARTICLE 3

INTEREST AND FEES

Section 3.1             Interest.  Interest on Advances (including, without
limitation, accrued and unpaid interest on Advances made under the Existing
Agreement) shall be payable in arrears on the first day of each month with
respect to Domestic Rate Loans and, with respect to Eurodollar Rate Loans, at
the end of each Interest Period or, for Eurodollar Rate Loans with an Interest
Period in excess of three months, at the earlier of (a) each three months after
the date of the commencement of such Eurodollar Rate Loan or (b) the end of the
Interest Period.  Interest charges shall
be computed on the actual principal amount of Advances outstanding during the
month at a rate per annum equal to (i) with respect to Revolving Advances, the applicable
Revolving Interest Rate, and (ii) with respect to the Term Loans, the
applicable Term Loans Rate (as applicable, the “Contract Rate”).  Whenever, subsequent to the date of this
Agreement, the Alternate Base Rate is increased or decreased, the applicable
Contract Rate referencing the Alternate Base Rate shall be similarly changed
without notice or demand of any kind by an amount equal to the amount of such
change in the Alternate Base Rate during the time such change or changes remain
in effect.  The Eurodollar Rate shall be
adjusted with respect to Eurodollar Rate Loans without notice or demand of any
kind on the effective date of any change in the Reserve Percentage as of such
effective date.  Notwithstanding anything
to the contrary contained in this Agreement, upon and after the occurrence of
an Event of Default, and during the continuation thereof, at the option of
Agent or at the direction of Required Lenders, the Obligations shall bear
interest at the applicable Contract Rate plus two percent (2%) per annum (as
applicable, the “Default Rate”) and the fees with respect to Letters of
Credit referred to in clause (i) of Section 3.2(a) hereof
shall be calculated and payable at the rate that is two percent (2%) per annum
in excess of the otherwise applicable rate set forth in such clause.

Section 3.2             Letter
of Credit Fees.

(a)           Borrower shall pay (i)
to Agent, for the benefit of Lenders and subject to Section 3.1 hereof,
fees for each Letter of Credit for the period from and excluding the date of
issuance of 

 43
 

 

same to and including the date of expiration
or termination, equal to the average daily face amount of each outstanding
Letter of Credit multiplied by two and one-half of one percent (2.50%) per
annum, to be paid monthly in arrears on the first day of each month and on the
last day of the Term, (ii) with respect to (and only with respect to) each
documentary or commercial Letter of Credit, to the Issuer, for its account only
and subject to Section 3.1 hereof, a fronting fee equal to the face
amount of such documentary or commercial Letter of Credit multiplied by
one-quarter of one percent (0.25%), to be paid monthly in arrears on the first
day of each month and on the last day of the Term until the expiration of such
documentary or commercial Letter of Credit, and (iii) with respect to each
Letter of Credit (including, without limitation, each documentary or commercial
Letter of Credit), to the Issuer for its account only, any and all other fees
and expenses as agreed upon by the Issuer and Borrower in connection with any
Letter of Credit, including, without limitation, in connection with the
opening, amendment or renewal of any such Letter of Credit and any acceptances
created thereunder and shall reimburse Agent for any and all fees and expenses,
if any, paid by Agent to the Issuer (all of the foregoing fees, the “Letter
of Credit Fees”).  All such charges
shall be deemed earned in full on the date when the same are due and payable
hereunder and shall not be subject to rebate or proration upon the termination
of this Agreement for any reason.  Any
such charge in effect at the time of a particular transaction shall be the
charge for that transaction, notwithstanding any subsequent change in the
Issuer’s prevailing charges for that type of transaction.  All Letter of Credit Fees payable hereunder
shall be deemed earned in full on the date when the same are due and payable
hereunder and shall not be subject to rebate or proration upon the termination
of this Agreement for any reason.

(b)           After the occurrence of
an Event of Default and during the continuation thereof or in the event of the
termination of this Agreement, on demand, Borrower will cause cash to be
deposited and maintained in an account with Agent, as cash collateral, in an
amount equal to the sum of one hundred five percent (105%) of the outstanding
Letters of Credit plus all fees and expenses then or thereafter payable in
connection with such Letters of Credit, and Borrower hereby irrevocably
authorizes Agent, after such occurrence and/or event, in its reasonable
discretion, on Borrower’s behalf and in Borrower’s name, to open such an
account and to make and maintain deposits therein, or in an account opened by
Borrower, in the amounts required to be made by Borrower, out of the proceeds
of Receivables or other Collateral or out of any other funds of Borrower coming
into any Lender’s possession at any time. 
Agent will invest such cash collateral (less applicable reserves) in
such short-term money-market items as to which Agent and Borrower mutually
agree and the net return on such investments shall be credited to such account
and constitute additional cash collateral. 
Borrower may not withdraw amounts credited to any such account except
upon payment and performance in full of all Obligations and termination of this
Agreement.

Section 3.3             Certain
Fees.

(a)           Fee Letter.  Borrower shall pay to Agent and/or PNC (as
applicable) all fees, costs, expenses and other amounts referred to in the Fee
Letter, as and when the same are due or payable in accordance with the Fee
Letter.

(b)           Facility Fee.  Subject to Section 3.6, if, for any
month during the Term, the average daily sum of the aggregate, unpaid principal
amount of the Revolving Advances plus the aggregate, undrawn face amount of the
outstanding Letters of Credit for each day of such month does not equal the
Maximum Revolving Advance Amount, then Borrower shall pay to Agent for the
ratable benefit of Lenders a fee at a rate equal to three-eighths of one
percent (0.375%) per annum, in any case on the amount by which the Maximum
Revolving Advance Amount exceeds 

 44
 

 

such average daily sum.  Such fee shall be payable to Agent quarterly
in arrears on the first day of January, April, July and October of each year
with respect to the previous three months then most recently ended.

Section 3.4             Collateral
Fees.

(a)           Collateral
Management Fee.  Subject to Section
3.6, Borrower shall pay Agent a collateral management fee equal to the
amount set forth in the Fee Letter commencing on the first day of the month
following the Closing Date and on the first day of each month thereafter during
the Term.  The collateral management fee
shall be deemed earned in full on the date when same is due and payable
hereunder and shall not be subject to rebate or proration upon termination of
this Agreement for any reason.

(b)           Collateral
Monitoring Fee.  Subject to Section
3.6, Borrower shall pay to Agent on the first day of each month following
any month in which Agent performs any collateral monitoring (namely any field
examination, collateral analysis or other business analysis, the need for which
is to be determined by Agent and which monitoring is undertaken by Agent or for
Agent’s benefit) a collateral monitoring fee in the amounts and at the times
set forth in the Fee Letter, plus all costs and disbursements incurred by Agent
in the performance of such examination or analysis.

Section 3.5             Computation
of Interest and Fees.  Subject to Section
3.6, interest and fees hereunder shall be computed on the basis of a year
of 360 days and for the actual number of days elapsed.  If any payment to be made hereunder becomes
due and payable on a day other than a Business Day, the due date thereof shall
be extended to the next succeeding Business Day and interest thereon shall
accrue and shall be payable at the applicable Contract Rate during such
extension.

Section 3.6             Maximum
Charges.

(a)           Notwithstanding
anything to the contrary contained in this Agreement or any Other Document, no
interest rate or amount of interest contracted for, charged or received (after
taking into account any and all fees, charges or other amounts which constitute
interest under Applicable Law) specified in this Agreement or any Other
Document shall at any time exceed the Maximum Rate or the maximum amount
thereof that would result from the Maximum Rate.  If at any time the Contract Rate (after
taking into account any and all fees, charges and other amounts which
constitute interest under Applicable Law) for any Obligation shall exceed the
Maximum Rate, thereby causing the interest accruing on such Obligation to be
limited to the Maximum Rate, then any subsequent reduction in the Contract Rate
for such Obligation shall not reduce the rate of interest on such Obligation
below the Maximum Rate until the aggregate amount of interest accrued on such
Obligation equals the aggregate amount of interest which would have accrued on
such Obligation if the Contract Rate for such Obligation had at all times been
in effect.

(b)           Notwithstanding
anything to the contrary contained in this Agreement or the Other Documents,
none of the terms and provisions of this Agreement or the Other Documents shall
ever be construed to create a contract or obligation to pay interest at a rate
in excess of the Maximum Rate; and neither Agent nor any Lender shall ever
charge, receive, take, collect, reserve or apply, as interest on the
Obligations, any amount in excess of the Maximum Rate.  The parties hereto agree that any interest,
charge, fee, expense or other obligation provided for in this Agreement or in
the Other Documents which constitutes interest under applicable law shall
be,  ipso facto and under any and all
circumstances, limited or reduced to an amount equal to the 

 45
 

 

lesser of (i) the amount of such interest,
charge, fee, expense or other obligation that would be payable in the absence
of this Section 3.6 or (ii) an amount, which when added to all other
interest payable under this Agreement and the Other Documents, equals the
Maximum Rate.  If, notwithstanding the
foregoing, Agent or any Lender ever contracts for, charges, receives, takes,
collects, reserves or applies as interest any amount in excess of the Maximum
Rate, such amount which would be deemed excessive interest shall be deemed a
partial payment or prepayment of principal of the Obligations and treated
hereunder as such; and if the Obligations, or applicable portions thereof, are
paid in full, any remaining excess shall promptly be paid to Borrower or the
other appropriate Loan Party.  In
determining whether the interest paid or payable, under any specific
contingency, exceeds the Maximum Rate, each Loan Party, Agent and Lenders
shall, to the maximum extent permitted by Applicable Law, (A) characterize any
nonprincipal payment as an expense, fee or premium rather than as interest, (B)
exclude voluntary prepayments and the effects thereof, and (C) amortize,
prorate, allocate and spread in equal or unequal parts the total amount of
interest throughout the entire contemplated term of the Obligations, or
applicable portions thereof, so that the interest rate does not exceed the Maximum
Rate at any time during the term of the Obligations; provided, however,
that, if the unpaid principal balance is 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 Rate, Agent and/or
Lenders, as appropriate, shall refund to Borrower or the other appropriate Loan
Party the amount of such excess and, in such event, Agent and Lenders shall not
be subject to any penalties provided by any laws for contracting for, charging,
receiving, taking, collecting, reserving or applying interest in excess of the
Maximum Rate.

(c)           Pursuant to Chapter 346
of the Texas Finance Code, as amended, Loan Parties agree that such Chapter 346
(which regulates certain revolving credit loan accounts and revolving tri-party
accounts) shall not govern or in any manner apply to this Agreement or any
Other Document or any of the Obligations.

Section 3.7             Increased
Costs.  In the event that any change
in any applicable law, treaty or governmental regulation, or in the
interpretation or application thereof, or compliance by any Lender (for
purposes of this Section 3.7, the term “Lender” shall include Agent or
any Lender and any corporation or bank controlling Agent or any Lender) and the
office or branch where Agent or any Lender (as so defined) makes or maintains
any Eurodollar Rate Loans with any request or directive (whether or not having
the force of law) from any central bank or other financial, monetary or other authority,
shall:

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

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

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

and the result of any of the foregoing is to increase
the cost to Agent or any Lender of making, renewing or maintaining its Advances
hereunder by an amount that Agent or such Lender deems to be material or to 

 46
 

 

reduce the amount of any payment (whether of
principal, interest or otherwise) in respect of any of the Advances by an
amount that Agent or such Lender deems to be material, then, in any case
Borrower shall promptly pay Agent or such Lender, upon its demand, such
additional amount as will compensate Agent or such Lender for such additional
cost or such reduction, as the case may be, provided that the foregoing
shall not apply to increased costs which are reflected in the Eurodollar Rate,
as the case may be.  Agent or such Lender
shall certify the amount of such additional cost or reduced amount to Borrower,
and such certification shall be conclusive absent manifest error.

Section 3.8             Basis
For Determining Interest Rate Inadequate or Unfair.  In the event that Agent or any Lender shall
have determined that:

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

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

then Agent shall give Borrower prompt written,
telephonic or telegraphic notice of such determination.  If such notice is given, (i) any such
requested Eurodollar Rate Loan shall be made as a Domestic Rate Loan, unless
Borrower shall notify Agent, no later than 10:00 a.m. (New York City time) two
(2) Business Days prior to the date of such proposed borrowing, that its
request for such borrowing shall be cancelled or made as an unaffected type of
Eurodollar Rate Loan, (ii) any Domestic Rate Loan or Eurodollar Rate Loan which
was to have been converted to an affected type of Eurodollar Rate Loan shall be
continued as or converted into a Domestic Rate Loan, or, if Borrower shall
notify Agent, no later than 10:00 a.m. (New York City time) two (2) Business
Days prior to the proposed conversion, shall be maintained as an unaffected
type of Eurodollar Rate Loan, and (iii) any outstanding affected Eurodollar
Rate Loans shall be converted into a Domestic Rate Loan, or, if Borrower shall
notify Agent, no later than 10:00 a.m. (New York City time) two (2) Business
Days prior to the last Business Day of the then current Interest Period applicable
to such affected Eurodollar Rate Loan, shall be converted into an unaffected
type of Eurodollar Rate Loan, on the last Business Day of the then current
Interest Period for such affected Eurodollar Rate Loans.  Until such notice has been withdrawn, Lenders
shall have no obligation to make an affected type of Eurodollar Rate Loan or
maintain outstanding affected Eurodollar Rate Loans and Borrower shall not have
the right to convert a Domestic Rate Loan or an unaffected type of Eurodollar
Rate Loan into an affected type of Eurodollar Rate Loan.

Section 3.9             Capital
Adequacy.

(a)           In
the event that Agent or any Lender shall have determined that any change in any
applicable law, rule, regulation or guideline regarding capital adequacy, or
any change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by Agent or any Lender (for purposes of
this Section 3.9, the term “Lender” shall include Agent or any Lender
and any corporation or bank controlling Agent or any Lender) and the office or
branch where Agent or any Lender (as so defined) makes or maintains any
Eurodollar Rate Loans with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on Agent or any Lender’s capital as a consequence of its obligations hereunder
to a level below that which Agent or such Lender could have achieved but for
such adoption, change or compliance (taking into consideration Agent’s and each
Lender’s policies 

 47
 

 

with respect
to capital adequacy) by an amount deemed by Agent or any Lender to be material,
then, from time to time, Borrower shall pay upon demand to Agent or such Lender
such additional amount or amounts as will compensate Agent or such Lender for
such reduction.  In determining such
amount or amounts, Agent or such Lender may use any reasonable averaging or
attribution methods.  The protection of
this Section 3.9 shall be available to Agent and each Lender regardless
of any possible contention of invalidity or inapplicability with respect to the
applicable law, regulation or condition.

(b)           A certificate of Agent
or such Lender setting forth such amount or amounts as shall be necessary to
compensate Agent or such Lender with respect to Section 3.9(a) hereof
when delivered to Borrower shall be conclusive absent manifest error.

Section 3.10           Gross
Up for Taxes.

(a)           All payments by
Borrower or any other Loan Party of principal of and interest on the Loans and
of all fees and other amounts payable under this Agreement and the Other
Documents shall be made free and clear of, and without withholding or deduction
by reason of, any present or future taxes, levies, duties, imposts, assessments
or other charges levied or imposed by any Governmental Body (other than
franchise taxes and taxes on or measured by the overall net income of any
Lender) (collectively, “Taxes”). 
If Borrower or any other Loan Party shall be required by Applicable Law
to withhold or deduct any Taxes from or in respect of any sum payable under
this Agreement or any of the Other Documents, (i) the sum payable to Agent or
such Lender shall be increased as may be necessary so that, after making all
required withholding or deductions, Agent or such Lender (as the case may be)
receives an amount equal to the sum it would have received had no such
withholding or deductions been made, (ii) Borrower or such other Loan Party, as
applicable, shall make such withholding or deductions, and (iii) Borrower or
such other Loan Party, as applicable, shall pay the full amount withheld or
deducted to the relevant taxation authority or other Governmental Body in
accordance with Applicable Law.  Borrower
and each other Loan Party shall promptly furnish to Agent for distribution to
each affected Lender, as the case may be, upon request of Agent or such Lender,
official receipts evidencing such withholding, deduction or payment.

(b)           Borrower and each other
Loan Party will indemnify Agent and each Lender (without duplication) against,
and reimburse Agent and each Lender for, all present and future Taxes
(including interest and penalties) levied or collected (whether or not legally
or correctly imposed, assessed, levied or collected) on or with respect to this
Agreement or any Other Document or the Obligations or any portion thereof.  Each such indemnification shall be on an after-tax
basis, taking into account any such Taxes imposed on the amounts paid as
indemnity.

(c)           Without prejudice to
the survival of any other term or provision of this Agreement, the Obligations
of Borrower and the other Loan Parties under this Section 3.10 shall
survive the payment of the Loans and other Obligations and the termination of
the Commitments.

Section 3.11           Tax
Withholding Clause.  Each Lender or
assignee or participant of a Lender that is not incorporated or organized under
the laws of the U.S. or a state thereof (and, upon the written request of
Agent, each other Lender or assignee or participant of a Lender) agrees that it
will deliver to each of Borrower and Agent two (2) duly completed appropriate
valid Withholding Certificates (as defined under § 1.1441-1(c)(16) of the
Income Tax Regulations (the “Regulations”)) certifying its status (i.e.
U.S. or foreign person) and, if appropriate, making a claim of reduced, or
exemption from, U.S. withholding tax on the basis of an income tax treaty or an
exemption provided by the Code.  The term
“Withholding Certificate” means a Form W-9; a Form W-8BEN; a Form W-8ECI;
a Form W-8IMY and 

 48
 

 

the related
statements and certifications as required under § 1.1441-1(e)(2) and/or
(3) of the Regulations; a statement described in § 1.871-14(c)(2)(v) of
the Regulations; or any other certificates under the Code or Regulations that
certify or establish the status of a payee or beneficial owner as a U.S. or
foreign person.  Each Lender, assignee or
participant required to deliver to Borrower and Agent a Withholding Certificate
pursuant to the preceding sentence shall deliver such valid Withholding
Certificate as follows:  (a) each Lender
which is a party hereto on the Closing Date shall deliver such valid
Withholding Certificate at least five (5) Business Days prior to the first date
on which any interest or fees are payable by Borrower hereunder for the account
of such Lender; and (b) each assignee or participant shall deliver such valid
Withholding Certificate at least five (5) Business Days before the effective
date of such assignment or participation (unless Agent in its sole discretion
shall permit such assignee or participant to deliver such valid Withholding
Certificate less than five (5) Business Days before such date in which case it
shall be due on the date specified by Agent). 
Each Lender, assignee or participant which so delivers a valid
Withholding Certificate further undertakes to deliver to each of Borrower and
Agent two (2) additional copies of such Withholding Certificate (or a successor
form) on or before the date that such Withholding Certificate expires or
becomes obsolete or after the occurrence of any event requiring a change in the
most recent Withholding Certificate so delivered by it, and such amendments
thereto or extensions or renewals thereof as may be reasonably requested by
Borrower or Agent.  Notwithstanding the
submission of a Withholding Certificate claiming a reduced rate of or exemption
from U.S. withholding tax, Agent shall be entitled to withhold U.S. federal
income taxes at the full 30% withholding rate if in its reasonable judgment it
is required to do so under the due diligence requirements imposed upon a
withholding agent under § 1.1441-7(b) of the Regulations.  Further, Agent is indemnified under
§ 1.1461-1(e) of the Regulations against any claims and demands of any
Lender or assignee or participant of a Lender for the amount of any tax it
deducts and withholds in accordance with regulations under § 1441 of the
Code.

ARTICLE 4

COLLATERAL AND
GUARANTIES:  GENERAL TERMS

Section 4.1             Security
Interests and Liens in and to the Collateral.

(a)           To secure the prompt
payment and performance to Agent and each Lender of the Obligations, each Loan
Party hereby assigns, pledges and grants to Agent for its benefit and for the
ratable benefit of each Lender a continuing security interest and Lien in and
to all of such Loan Party’s Collateral, whether now owned or existing or
hereafter acquired or arising and wherever located; provided, however,
that (i) such assignment, pledge and grant of a security interest and Lien in
and to the Capital Stock of a Foreign Subsidiary of Borrower shall be subject
to Section 4.1(b) and (ii) such assignment, pledge and grant of a
security interest and Lien in and to any property or assets of a Foreign
Subsidiary shall be subject to Section 4.21(b).  Each such Loan Party shall mark its books and
records as may be necessary or appropriate to evidence, protect and perfect
Agent’s security interest and shall cause its financial statements to reflect
such security interest.  Each such Loan
Party shall promptly provide Agent with written notice of all commercial tort
claims in which it is the plaintiff, such notice to contain the case title
together with the applicable court and a brief description of the
claim(s).  Upon delivery of each such
notice, each such Loan Party shall be deemed to hereby grant to Agent a
security interest and Lien in and to such commercial tort claims and all
proceeds thereof.

(b)           Without limiting the
generality of Section 4.1(a) above, to secure the prompt payment and
performance to Agent and each Lender of the Obligations, each of Borrower and
each of its Subsidiaries hereby assigns, pledges and grants to Agent for its
benefit and for the ratable benefit of each Lender a continuing security interest
in and to (i) 100% of the issued and 

 49
 

 

outstanding Subsidiary Capital Stock of each
Domestic Subsidiary and (ii) 66% (or such greater percentage that, due to a
change in an Applicable Law after the date hereof, (A) could not reasonably be
expected to cause the undistributed earnings of such Foreign Subsidiary as
determined for U.S. federal income tax purposes to be treated as a deemed
dividend to such Foreign Subsidiary’s U.S. parent and (B) could not reasonably
be expected to cause any material adverse tax consequences) of the issued and
outstanding Subsidiary Capital Stock entitled to vote (within the meaning of
Treas. Reg. Section 1.956-2(c)(2)) and 100% of the issued and outstanding
Subsidiary Capital Stock not entitled to vote (within the meaning of Treas.
Reg. Section 1.956-2(c)(2)) in each Foreign Subsidiary directly owned by
Borrower or any Domestic Subsidiary. 
Promptly after any request therefor made by Agent to Borrower after the
Existing Agreement Closing Date, each Loan Party which owns any Capital Stock
of any Foreign Subsidiary shall cause to be executed and delivered to Agent (1)
a Pledge Agreement in form and substance satisfactory to Agent which is in form
and substance appropriate for use in, and valid and enforceable under the laws of,
the foreign jurisdiction in which such Foreign Subsidiary is organized and (2)
all such further agreements, documents, instruments and legal opinions as Agent
may request in connection therewith to perfect such security interest or to
ensure or confirm the validity and enforceability thereof, in each case under
the laws of such foreign jurisdiction.

(c)           As to the Collateral
which consists of Real Property, Borrower and each Subsidiary which owns any
such Real Property or interest therein shall execute and deliver to Agent, as
security for the Obligations, a Mortgage in form and substance satisfactory to
Agent, which Mortgage shall be executed and delivered on or before the Existing
Agreement Closing Date, with respect to Real Property so owned on such date, or
within 30 days after the acquisition of such Real Property, with respect to
Real Property acquired after the Existing Agreement Closing Date; provided,
however, that, unless Agent subsequently requests such a Mortgage in
writing after the occurrence of an Event of Default, Borrower and its
Subsidiaries shall not be obligated to execute or deliver a Mortgage covering
the Real Property consisting of any leasehold interest or consisting of any
Real Property located in a foreign country.

(d)           Notwithstanding
anything to the contrary contained in any Pledge Agreement executed prior to
the Closing Date, such Pledge Agreement is hereby amended and modified to (i)
permit the grant of a security interest in the Collateral covered by such
Pledge Agreement to and in favor of the Term Loans B Agent as security for
the Term Loans B Notes, which security interest shall be subject to the
terms and provisions of the Term Loans B Intercreditor Agreement, and (ii)
permit the payment of fees, income or monies to Rosewood and/or IEVP in the
form of distributions, dividends or otherwise as and to the extent referred to
in Sections 2.15 and 7.7 of this Agreement.

Section 4.2             Perfection
of Security Interest.  Each Loan
Party shall each take all actions that may be necessary or desirable, or that
Agent may reasonably request, so as at all times to maintain the validity,
perfection, enforceability and priority of Agent’s security interest in the
Collateral or to enable Agent to protect, exercise or enforce its rights
hereunder and in the Collateral, including, but not limited to, (a) promptly
discharging all Liens other than Permitted Encumbrances, (b) upon Agent’s
request to Borrower made not earlier than 30 days after the Closing Date,
obtaining any landlords’, bailees’ or mortgagees’ waivers, subordinations
and/or access agreements related to Real Property (whether owned in fee simple
or leased by Borrower or any of its Subsidiaries) located in the U.S. and not
obtained as of the Closing Date, provided, however, that (i)
Borrower shall, without further request by Agent and within 30 days after the
Closing Date, obtain such a landlords’ waiver, subordination and/or access
agreement with respect to the leasehold interest of Borrower located in or near
Ramsey, Minnesota and (ii) to the extent Borrower does not obtain any such
waivers, subordinations and/or access agreements, Agent may, 

 50
 

 

in its
reasonable discretion, institute a reserve, (c) delivering to Agent, endorsed
or accompanied by such instruments of assignment as Agent may specify, and
stamping or marking, in such manner as Agent may specify, any and all chattel
paper, instruments, letters of credits and advices thereof and documents
evidencing or forming a part of the Collateral, (d) entering into warehousing,
lockbox and other custodial arrangements satisfactory to Agent, and (e)
executing and delivering financing statements, control agreements, security
agreements, instruments of pledge, mortgages, notices, assignments and
amendments and/or modifications of any of the foregoing, this Agreement and
each Other Loan Document in each case in form and substance satisfactory to
Agent, relating to the creation, validity, perfection, maintenance or
continuation of Agent’s security interest under the UCC or other Applicable
Law.  Agent is hereby authorized to file
financing statements without signature in accordance with the UCC as in effect
in the State of Texas or any other jurisdiction from time to time.  By its signature hereto, each Loan Party
hereby authorizes Agent to file against such Loan Party one or more financing
continuation or amendment statements pursuant to the UCC in form and substance
satisfactory to Agent (which statements may have a description of collateral
which is broader than that set forth herein, provided that the
description of the Collateral set forth in the Security Documents shall be
controlling as to the property or assets in which Agent has been granted a
Lien).  All charges, expenses and fees
Agent may incur in doing any of the foregoing, and any local taxes relating
thereto, shall be charged to Borrower’s Account as a Revolving Advance of a
Domestic Rate Loan and added to the Obligations, or, at Agent’s option, shall
be paid to Agent for its benefit and for the ratable benefit of Lenders
promptly upon demand.

Section 4.3             Disposition
of Collateral.  Each Loan Party will
safeguard and protect all Collateral for Agent’s general account and make no
disposition thereof whether by sale, lease or otherwise except (a) the sale of
Inventory in the ordinary course of business, (b) the disposition or transfer
of Equipment to Foreign Subsidiaries of Borrower during any fiscal year having
an aggregate fair market value of not more than $2,500,000.00 and (c) the
disposition or transfer of obsolete and worn-out Equipment or unusable
Inventory in the ordinary course of business during any fiscal year having an
aggregate fair market value of not more than $500,000.00 and only to the extent
that (i) any proceeds of any such disposition of Equipment are used to acquire
replacement Equipment which is subject to Agent’s first priority security
interest or (ii) any proceeds of any such disposition are remitted to Agent to
be applied pursuant to Section 2.14; provided, however,
that, with respect to dispositions or transfers referred to in clause (b)
preceding, the Equipment so disposed of or transferred shall be disposed of or
transferred expressly subject to Agent’s first priority security interest
therein (which security interest shall continue in full force and effect) and,
substantially concurrently with such disposition or transfer, such Equipment
shall be replaced with newly acquired Equipment of equal or greater value owned
by Borrower or a Domestic Subsidiary of Borrower and located in the U.S. in
which Agent has a perfected, first priority security interest as security for
the Obligations.

Section 4.4             Preservation
of Collateral.  Following the
occurrence and during the continuance of a Default or Event of Default and in
addition to the rights and remedies set forth in Section 11.1 hereof,
Agent:  (a) may at any time take such
steps as Agent deems necessary to protect Agent’s interest in and to preserve
the Collateral, including the hiring of such security guards or the placing of
other security protection measures as Agent may deem appropriate; (b) may
employ and maintain at any of any Loan Party’s premises a custodian who shall
have full authority to do all acts necessary to protect Agent’s interests in
the Collateral; (c) may lease warehouse facilities to which Agent may move all
or part of the Collateral; (d) may use any Loan Party’s owned (or, to the
extent permitted by the applicable lease, leased) lifts, hoists, trucks and
other facilities or equipment for handling or removing the Collateral; and (e)
shall have, and is hereby granted, a right of ingress and egress to the places
where the Collateral is located, and may proceed over and through any of any
Loan Party’s owned or leased property. 
Each Loan Party shall cooperate fully with all of Agent’s efforts to
preserve the Collateral and will take such actions to preserve the Collateral
as Agent may direct.  All of Agent’s
expenses of preserving the 

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Collateral,
including any expenses relating to the bonding of a custodian, shall be charged
to Borrower’s Account as a Revolving Advance of a Domestic Rate Loan and added
to the Obligations.

Section 4.5             Ownership
of Collateral.  With respect to the
Collateral, at the time the Collateral becomes subject to Agent’s security
interest:  (a) each Loan Party (as
applicable) shall be the sole owner of and fully authorized and able to sell,
transfer, pledge and/or grant a first priority security interest in each and
every item of the its respective Collateral to Agent, and, except for Permitted
Encumbrances, the Collateral shall be free and clear of all Liens and
encumbrances whatsoever; (b) each document and agreement executed by any Loan
Party or delivered to Agent or any Lender in connection with this Agreement
shall be true and correct in all respects; (c) all signatures and endorsements
of each Loan Party that appear on such documents and agreements shall be
genuine and each Loan Party shall have full capacity to execute same; and (d)
each Loan Party’s Equipment and Inventory shall be located at the places for
such Loan Party as set forth on Schedule 4.5 and shall not be removed
from such location(s) without the prior written consent of Agent except with
respect to the sale of Inventory in the ordinary course of business and
Equipment to the extent permitted in Section 4.3 hereof.  Each Loan Party has acquired, and at all
times will continue to have, good and marketable title to all of the property
and assets purported to be owned by it, free and clear of all Liens, security
interests, claims or encumbrances of any kind except Permitted Encumbrances.

Section 4.6             Defense
of Agent’s and Lenders’ Interests. 
Until (a) payment and performance in full of all of the Obligations and
(b) termination of this Agreement, Agent’s interests in the Collateral shall
continue in full force and effect.  During
such period none of the Loan Parties shall, without Agent’s prior written
consent, pledge, sell (except to the extent permitted in Section 4.3
hereof), assign, transfer, create or suffer to exist a Lien upon or encumber or
allow or suffer to be encumbered in any way, except for Permitted Encumbrances,
any part of the Collateral.  Each Loan
Party shall defend Agent’s interests in the Collateral against any and all
Persons whatsoever.  At any time
following demand by Agent for payment of all Obligations in accordance with the
terms of this Agreement, Agent shall have the right to take possession of the
indicia of the Collateral and the Collateral in whatever physical form
contained, including without limitation: 
labels, stationery, documents, instruments and advertising
materials.  If Agent exercises this right
to take possession of the Collateral, the Loan Parties shall, upon demand,
assemble it in the best manner possible and make it available to Agent at a
place reasonably convenient to Agent within the continental U.S. (for purposes
hereof, the places set forth on Schedule 4.6 shall be deemed reasonably
convenient to Agent).  In addition, with
respect to all Collateral, Agent and Lenders shall be entitled to all of the
rights and remedies set forth herein and further provided by the UCC or other
applicable law.  After the occurrence of
an Event of Default, the Loan Parties shall, and Agent may, at its option,
instruct all suppliers, carriers, forwarders, warehousers or others receiving
or holding cash, checks, Inventory, documents or instruments in which Agent
holds a security interest to deliver same to Agent and/or subject to Agent’s
order and, if they shall come into any Loan Party’s possession, they, and each
of them, shall be held by such Loan Party in trust as Agent’s trustee, and such
Loan Party will immediately deliver them to Agent in their original form
together with any necessary endorsement.

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

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Section 4.8             Financial
Disclosure.  Each Loan Party hereby
irrevocably authorizes and directs all accountants and auditors engaged or
employed by such Loan Party at any time during the Term to exhibit and deliver
to Agent and each Lender copies of any of such Loan Party’s financial
statements, trial balances or other accounting records of any sort in the
accountant’s or auditor’s possession, and to disclose to Agent and each Lender
any information such accountants may have concerning each such Loan Party’s
financial status and business operations. 
Each Loan Party hereby authorizes all federal, state and municipal
authorities to furnish to Agent and each Lender copies of reports or
examinations relating to such Loan Party, whether made by any such Loan Party
or otherwise.  Notwithstanding anything
to the contrary in this Section 4.8, Agent and each Lender will attempt
to obtain such information or materials directly from the Loan Parties prior to
obtaining such information or materials from such accountants or such
authorities, as the case may be.

Section 4.9             Compliance
with Laws.  Each Loan Party shall
comply in all material respects with all acts, rules, regulations and orders of
any legislative, administrative or judicial body or official applicable to the
Collateral or any part thereof or to the operation of its business.  Each Loan Party may, however, contest or
dispute any acts, rules, regulations, orders and directions of those bodies or
officials in any reasonable manner, provided that any related Lien is
inchoate or stayed and sufficient reserves are established to the reasonable
satisfaction of Agent to protect Agent’s Lien on or security interest in the
Collateral.  The assets of the Loan
Parties at all times shall be maintained in accordance with the requirements of
all insurance carriers which provide insurance with respect to the assets of
the Loan Parties so that such insurance shall remain in full force and effect.

Section 4.10           Examinations,
Inspection of Premises and Appraisals. 
At all reasonable times and in any event no less than twice during each
fiscal year, Agent and each Lender shall have full access to and the right to
audit, check, inspect and make abstracts and copies from each of the Loan
Parties’ books, records, audits, correspondence and all other papers relating
to the Collateral and the operation of its business.  Agent, any Lender and their agents may enter
upon any of the Loan Party’s premises at any time during business hours and at
any other reasonable time, and from time to time, for the purpose of conducting
field examinations and inspecting the Collateral and any and all records
pertaining thereto and the operation of each Loan Party’s business.  Notwithstanding the foregoing, at any time
after the occurrence and during the continuance of a Default or Event of
Default, Agent may conduct any examination, inspection or appraisal without any
restriction or limitation and at Borrower’s sole expense.

Section 4.11           Insurance.  Borrower and each Loan Party shall bear the
full risk of any loss of any nature whatsoever with respect to the
Collateral.  At Borrower’s own cost and
expense in amounts and with carriers acceptable to Agent, each of the Loan
Parties shall (a) keep all its insurable properties and properties in which it
has an interest insured against the hazards of fire, flood (provided
that flood insurance shall not be required with respect to Real Property that
is not located in a flood plain), sprinkler leakage, those hazards covered by
extended coverage insurance and such other hazards, and for such amounts, as is
customary in the case of companies engaged in businesses similar to such Loan
Party’s business, including, without limitation, business interruption
insurance; (b) maintain a bond in such amounts as is customary in the case of
companies engaged in businesses similar to such Loan Party’s insuring against
larceny, embezzlement or other criminal misappropriation of insured’s officers
and employees who may either singly or jointly with others at any time have
access to the assets or funds of any Loan Party either directly or through
authority to draw upon such funds or to direct generally the disposition of
such assets; (c) maintain public and product liability insurance against claims
for personal injury, death or property damage suffered by others; (d) maintain
all such worker’s compensation or similar insurance as may be required under
the laws of any state or jurisdiction in which such Loan Party is engaged in
business; (e) maintain all such other types of insurance as may be required by
Agent in its reasonable credit judgment from time to time; (f) furnish Agent
with (i) copies of all policies and evidence of the maintenance of such
policies by the renewal thereof at least 30 days before any expiration 

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date, and (ii)
appropriate loss payable endorsements in form and substance satisfactory to
Agent, naming Agent as a co-insured and loss payee as its interests may
appear with respect to all insurance coverage referred to in clauses (a)
and (c) above, and either (1) providing (A) that all proceeds thereunder
shall be payable to Agent, (B) no such insurance shall be affected by any act
or neglect of the insured or owner of the property described in such policy,
and (C) that such policy and loss payable clauses may not be cancelled, amended
or terminated unless at least 30 days’ prior written notice is given to Agent
or (2) otherwise acceptable to Agent.  In
the event of any loss thereunder, the carriers named therein hereby are
directed by Agent and each Loan Party to make and deliver payment for such loss
to Agent and not to any Loan Party and Agent jointly.  If any insurance losses are paid by check,
draft or other instrument payable to any Loan Party and Agent jointly, each
Loan Party hereby appoints Agent or Agent’s designee as such Loan Party’s
attorney-in-fact with the power to endorse such Loan Party’s name thereon and
do such other things as Agent may deem advisable to reduce the same to
cash.  Agent is hereby authorized to
adjust and compromise claims under insurance coverage referred to in clauses (a),
(b) and (c) above.  All
loss recoveries received by Agent upon any such insurance shall be applied to
the Obligations, in such order as Agent in its sole discretion shall
determine.  Any surplus shall be paid by
Agent to Borrower or applied as may be otherwise required by law.  Any deficiency thereon shall be paid by
Borrower to Agent on demand.

Section 4.12           Failure
to Pay Insurance.  If any Loan Party
fails to obtain insurance as hereinabove provided, or to keep the same in
force, Agent, if Agent so elects, may obtain such insurance and pay the premium
therefor on behalf of such Loan Party, and charge Borrower’s Account therefor
as a Revolving Advance of a Domestic Rate Loan and such expenses so paid shall
be part of the Obligations.

Section 4.13           Payment
of Taxes.  Each Loan Party will pay,
when due, all taxes, assessments and other Charges lawfully levied or assessed
upon such Loan Party or any of the Collateral, including, without limitation,
real and personal property taxes, assessments and charges and all franchise,
income, employment, social security benefits, withholding, and sales taxes,
other than taxes contested by such Loan Party in good faith by appropriate
proceedings diligently pursued and for which adequate reserves have been
established in accordance with GAAP and with respect to which no Lien has been
filed.  If any tax by any Governmental
Body is or may be imposed on or as a result of any transaction between any Loan
Party and Agent or any Lender which Agent or any Lender may be required to
withhold or pay or if any taxes, assessments or other Charges remain unpaid
after the date fixed for their payment, or if any claim shall be made which, in
Agent’s or any Lender’s opinion, may possibly create a valid Lien on the
Collateral, Agent may without notice to any Loan Party pay the taxes,
assessments or other Charges and each Loan Party hereby indemnifies and holds
Agent and each Lender harmless in respect thereof.  The amount of any payment by Agent under this
Section 4.13 shall be charged to Borrower’s Account as a Revolving
Advance of a Domestic Rate Loan and added to the Obligations and, until
Borrower shall furnish Agent with an indemnity therefor (or supply Agent with
evidence satisfactory to Agent that due provision for the payment thereof has
been made), Agent may hold without interest any balance standing to Borrower’s
and each Loan Party’s credit and Agent shall retain its security interest in
any and all Collateral held by Agent.

Section 4.14           Payment
of Leasehold Obligations.  Each Loan
Party shall at all times pay, when and as due, its rental obligations under all
leases under which it is a tenant, other than rental obligations contested by
such Loan Party in good faith by appropriate proceedings diligently pursued and
for which adequate reserves have been established in accordance with GAAP and
with respect to which no Lien has been filed, and shall otherwise comply, in
all material respects, with all other terms of such leases and keep them in
full force and effect and, at Agent’s request, will provide evidence of having
done so.

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Section 4.15           Receivables.

(a)           Nature of Receivables.  Each of the Receivables of any Loan Party
shall be a bona fide and valid account representing a bona fide indebtedness
incurred by the Customer therein named, for a fixed sum as set forth in the
invoice relating thereto (provided immaterial or unintentional invoice
errors shall not be deemed to be a breach hereof) with respect to an absolute
sale or lease and delivery of goods upon stated terms of such Loan Party, or
work, labor or services theretofore rendered by such Loan Party as of the date each
Receivable is created.  The same shall be
due and owing in accordance with Borrower’s standard terms of sale without
dispute, setoff or counterclaim except as may be permitted pursuant to the
definition of “Eligible Receivables” hereof and/or stated on the accounts
receivable schedules delivered by Borrower to Agent.

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

(c)           Location of Loan
Parties.  The chief executive office
of each Loan Party is located at 7000 Sunwood Drive NW, Ramsey, Minnesota  55303. 
Until written notice is given to Agent by Borrower of any other office
at which any Loan Party keeps its records pertaining to Receivables, all such
records shall be kept at such executive office.

(d)           Collection of
Receivables.  Until any Loan Party’s
authority to do so is terminated by Agent (which notice Agent may give at any
time following the occurrence of an Event of Default or a Default or when Agent
in its sole discretion deems it to be in Lenders’ best interest to do so), each
Loan Party will, at such Loan Party’s sole cost and expense, but on Agent’s
behalf and for Agent’s account, collect as Agent’s property and in trust for
Agent all amounts received on Receivables, and shall not commingle such
collections with any Loan Party’s funds or use the same except to pay
Obligations and the Term Loans B Debt Payments if and to the extent
permitted by the Intercreditor Agreement. 
Borrower shall deposit in a Blocked Account or, upon request by Agent,
deliver to Agent, in original form and on the date of receipt thereof, all
checks, drafts, notes, money orders, acceptances, cash and other evidences of
Indebtedness.

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

(f)            Power of Agent to
Act on Borrower’s Behalf.  Agent
shall have the right, at any time following the occurrence and during the
continuance of a Default, to receive, endorse, assign and/or deliver in the
name of Agent or any Loan Party any and all checks, drafts and other
instruments for the payment of money relating to the Receivables, and such Loan
Party hereby waives notice of presentment, protest and non-payment of any
instrument so endorsed.  Each Loan Party
hereby appoints Agent or Agent’s designee as such Loan Party’s attorney with
power, 

 55
 

 

at any time following the occurrence and
during the continuance of a Default, (i) to endorse such Loan Party’s name upon
any notes, acceptances, checks, drafts, money orders or other evidences of
payment or Collateral; (ii) to sign such Loan Party’s name on any invoice or
bill of lading relating to any of the Receivables, drafts against Customers,
assignments and verifications of Receivables; (iii) to send verifications of
Receivables to any Customer; (iv) to sign such Loan Party’s name on all
financing statements or any other documents or instruments deemed necessary or
appropriate by Agent to preserve, protect, or perfect Agent’s interest in the
Collateral and to file same; (v) to demand payment of the Receivables; (vi) to
enforce payment of the Receivables by legal proceedings or otherwise; (vii) to
exercise all of such Loan Party’s rights and remedies with respect to the
collection of the Receivables and any other Collateral; (viii) to settle,
adjust, compromise, extend or renew the Receivables; (ix) to settle, adjust or
compromise any legal proceedings brought to collect Receivables; (x) to
prepare, file and sign such Loan Party’s name on a proof of claim in bankruptcy
or similar document against any Customer; (xi) to prepare, file and sign such
Loan Party’s name on any notice of Lien, assignment or satisfaction of Lien or
similar document in connection with the Receivables; and (xii) to do all other
acts and things necessary to carry out this Agreement.  All acts of said attorney or designee are
hereby ratified and approved, and said attorney or designee shall not be liable
for any acts of omission or commission or for any error of judgment or mistake
of fact or of law, unless done maliciously or with gross (not mere) negligence;
this power being coupled with an interest is irrevocable while any of the
Obligations remain unpaid.  Agent shall
have the right, at any time following the occurrence and during the continuance
of an Event of Default or Default, to change the address for delivery of mail
addressed to any Loan Party to such address as Agent may designate and to
receive, open and dispose of all mail addressed to any Loan Party.

(g)           No Liability.  Neither Agent nor any Lender shall, under any
circumstances or in any event whatsoever, have any liability for any error or
omission or delay of any kind occurring in the settlement, collection or
payment of any of the Receivables or any instrument received in payment
thereof, or for any damage resulting therefrom. 
Following the occurrence and during the continuance of an Event of
Default or Default, Agent may, without notice to or consent from any Loan
Party, sue upon or otherwise collect, extend the time of payment of, compromise
or settle for cash, credit or upon any terms any of the Receivables or any
other securities, instruments or insurance applicable thereto and/or release
any obligor thereof.  Agent is authorized
and empowered to accept, following the occurrence and during the continuance of
an Event of Default, the return of the goods represented by any of the Receivables,
without notice to or consent by any Loan Party, all without discharging or in
any way affecting any Loan Party’s liability hereunder.

(h)           Establishment of a
Lockbox Account, Dominion Account. 
All proceeds of Collateral shall be deposited by Borrower into a lockbox
account, dominion account or such other “blocked account” (“Blocked Accounts”)
maintained with PNC as Agent may require pursuant to an arrangement with such
bank as may be acceptable to Agent. 
Borrower shall grant to Agent exclusive control over the Blocked
Accounts (unless and until all Obligations are paid and performed in full and
this Agreement has been terminated, subject to Section 13.2) and shall
issue to any such bank irrevocable instructions directing said bank to transfer
such funds so deposited to Agent, either to any account maintained by Agent at
said bank or by wire transfer to appropriate account(s) of Agent.  All funds deposited in such Blocked Accounts
shall immediately become the property of Agent and Borrower shall obtain the
agreement by such bank to waive any offset rights against the funds so
deposited.  Neither Agent nor any Lender
assumes any responsibility for such blocked account arrangement, including,
without limitation, any claim of accord and satisfaction or release with
respect to deposits accepted by any bank 

 56
 

 

thereunder. 
All depository accounts and other bank accounts of any Loan Party,
including, without limitation, all Blocked Accounts, are described and set
forth on Schedule 4.15(h) hereto.

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

Section 4.16           Inventory.  To the extent Inventory held for sale or
lease has been produced by any Loan Party, it has been and will be produced by
such Loan Party in accordance with the Federal Fair Labor Standards Act of
1938, as amended, and all rules, regulations and orders thereunder.

Section 4.17           Maintenance
of Equipment.  The Equipment shall be
maintained in good operating condition and repair (reasonable wear and tear
excepted) and all necessary replacements of and repairs thereto shall be made
so that the value and operating efficiency of the Equipment shall be maintained
and preserved.  No Loan Party shall use
or operate the Equipment in violation of any law, statute, ordinance, code,
rule or regulation.  Each Loan Party
shall have the right to sell its Equipment to the extent set forth in Section
4.3 hereof.

Section 4.18           Exculpation
of Liability.  Nothing herein
contained shall be construed to constitute Agent or any Lender as any Loan
Party’s agent for any purpose whatsoever, nor shall Agent or any Lender be
responsible or liable for any shortage, discrepancy, damage, loss or
destruction of any part of the Collateral wherever the same may be located and
regardless of the cause thereof.  Neither
Agent nor any Lender, whether by anything herein or in any assignment or
otherwise, assumes any of any Loan Party’s obligations under any contract or
agreement assigned to Agent or such Lender, and neither Agent nor any Lender
shall be responsible in any way for the performance by any Loan Party of any of
the terms and conditions thereof.

Section 4.19           Environmental
Matters.

(a)           Each Loan Party shall ensure
that the Real Property is maintained in compliance in all material respects
with all applicable Environmental Laws and shall not place or permit to be
placed any Hazardous Substances on any Real Property except as authorized by
Applicable Law or appropriate Governmental Bodies.

(b)           Each Loan Party which
owns any fee interest in any Real Property on which Hazardous Substances or
Hazardous Waste may be produced, generated, stored, used or maintained shall
establish and maintain a system to assure and audit continued compliance with
all applicable Environmental Laws, which system shall include periodic reviews
of such compliance.

(c)           Each Loan Party shall
dispose of any and all Hazardous Waste generated at the Real Property only at
facilities authorized under applicable Environmental Laws to manage Hazardous
Wastes.  Each Loan Party shall use its
best efforts to obtain certificates of disposal, such as hazardous waste
manifest receipts, from all treatment, transport, storage or disposal
facilities or operators employed by such Loan Party in connection with the
transport or disposal of any Hazardous Waste generated at the Real Property.

(d)           In the event any Loan
Party obtains, gives or receives notice of any Release or threat of Release of
a reportable quantity of any Hazardous Substances at the Real Property (any 

 57
 

 

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

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

(f)            Each Loan Party shall
respond in accordance with applicable Environmental Laws to any Hazardous
Discharge or Environmental Complaint and take all action reasonably necessary
to avoid subjecting the Collateral or Real Property to any Lien.  If neither Borrower nor the applicable Loan
Party shall respond in accordance with applicable Environmental Laws to any
Hazardous Discharge or Environmental Complaint, Agent on behalf of Lenders may,
but without the obligation to do so, for the sole purpose of protecting Agent’s
interest in the Collateral:  (A) give
such notices or (B) enter onto the Real Property (or authorize third parties to
enter onto the Real Property) and take such actions as Agent (or such third
parties as directed by Agent) deems reasonably necessary or advisable, to clean
up, remove, mitigate or otherwise remediate any such Hazardous Discharge or
Environmental Complaint, as may be required by Applicable Law.  All reasonable costs and expenses incurred by
Agent and Lenders (or such third parties) in the exercise of any such rights,
including any sums paid in connection with any judicial or administrative
investigation or proceedings, fines and penalties, together with interest
thereon from the date expended at the Default Rate for Domestic Rate Loans
constituting Revolving Advances shall be paid upon demand by Borrower, and
until paid shall be added to and become a part of the Obligations secured by
the Liens created by the terms of this Agreement or any other agreement between
Agent, any Lender and any Loan Party.

(g)           Promptly upon the
written request of Agent following receipt by Agent of written notice of a
Hazardous Discharge pursuant to Section 4.19(d), Borrower shall provide
Agent, at Borrower’s expense, with an environmental site assessment or
environmental audit report prepared by an environmental engineering firm
acceptable in the reasonable opinion of Agent, to assess with a reasonable
degree of certainty the existence of a Hazardous Discharge and, in the event
(i) the existence of such Hazardous Discharge violates applicable Environmental
Laws and (ii) a third party is not reasonably expected to take clean-up
responsibility, the costs reasonably 

 58
 

 

expected to be required by the applicable
authority to achieve the required level of abatement, cleanup and remediation
of such Hazardous Discharge in accordance with standards applicable to
commercial properties.  If such
estimates, individually or in the aggregate, exceed $250,000, Agent shall have
the right to require Borrower to post a bond, letter of credit or other
security reasonably satisfactory to Agent to secure payment of these costs and
expenses.  Any report or investigation of
such Hazardous Discharge proposed and acceptable to an appropriate Authority
that is charged to oversee the clean-up of such Hazardous Discharge shall be
acceptable to Agent.  Borrower shall
deliver to Agent, within 20 days after receipt thereof by Borrower, a copy of
any environmental site assessment or environmental audit report in Borrower’s
possession or control concerning and created by or on behalf of any third party
deemed responsible by an Authority for the release and/or presence of any
Hazardous Substance on, under, at or within the Real Property.

(h)           Borrower shall defend
and indemnify Agent and Lenders and hold Agent, Lenders and their respective
employees, agents, directors and officers harmless from and against all loss,
liability, damage and expense, claims, costs, fines and penalties, including
attorney’s fees, suffered or incurred by Agent or Lenders under or on account
of any Environmental Laws, including, without limitation, the assertion of any
Lien thereunder, with respect to any Hazardous Discharge, the presence of any
Hazardous Substances affecting the Real Property, whether or not the same
originates or emerges from the Real Property or any contiguous real estate,
including any loss of value of the Real Property as a result of the foregoing
except to the extent such loss, liability, damage and expense is attributable
to any Hazardous Discharge resulting from actions on the part of Agent or any
Lender.  Borrower’s obligations under
this Section 4.19 shall arise upon the discovery of the presence of any
Hazardous Substances at the Real Property, whether or not any federal, state or
local environmental agency has taken or threatened any action in connection
with the presence of any Hazardous Substances. 
Borrower’s obligation and the indemnifications hereunder shall survive
the termination of this Agreement.

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

Section 4.20           Financing
Statements.  Except for the financing
statements filed by Agent, the financing statements described on Schedule
1.2(a) and any other financing statements filed to evidence or perfect
Permitted Encumbrances, no financing statement covering any of the Collateral
or any proceeds thereof is on file in any public office.

Section 4.21           Guaranties
and Security Agreements of Subsidiaries.

(a)           Except as provided in Section
4.21(b), Borrower will, as of the Existing Agreement Closing Date (with
respect to each Subsidiary of Borrower existing as of the Existing Agreement
Closing Date) or contemporaneously with the creation or acquisition of any
Subsidiary of Borrower (with respect to each Subsidiary of Borrower organized
or created after the Existing Agreement Closing Date), cause such Subsidiary of
Borrower to (a) guarantee the payment and performance of the Obligations
pursuant to a Guaranty in form and substance satisfactory to Agent and (b)
grant to Agent, as security for the payment and performance of the Obligations,
a Lien in and to all Collateral of such Subsidiary pursuant to a Guarantor
Security Agreement in form and substance satisfactory to Agent.  In connection with each Guarantor Security
Agreement, Borrower will cause its Subsidiary executing such Guarantor Security
Agreement to authorize Agent to file all financing statements necessary or
appropriate, in its discretion, to perfect its Lien on the Collateral covered
thereby.

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(b)           Notwithstanding
anything to the contrary contained in this Agreement, if execution of a
Guaranty or a Guarantor Security Agreement by a Foreign Subsidiary in
accordance with Section 4.21(a) could reasonably be expected to (i)
cause the undistributed earnings of such Foreign Subsidiary as determined for
U.S. federal income tax purposes to be treated as a deemed dividend to such
Foreign Subsidiary’s U.S. parent or could reasonably be expected to cause any
other material adverse tax consequences to Borrower under U.S. tax law or (ii)
violate the laws of the jurisdiction in which such Foreign Subsidiary is
organized, then such Foreign Subsidiary shall not be required to execute a
Guaranty and/or shall not be required to execute (and shall not be deemed to have
executed pursuant to Section 4.1 of this Agreement) a Guarantor Security
Agreement (as applicable, whichever causes such adverse tax or legal
consequences) in accordance with Section 4.21(a).

Section 4.22           Pledge
Agreements of Limited Partners and General Partner.  To further secure the prompt payment and
performance to Agent and each Lender of the Obligations, (a) each Loan Party
will cause each Limited Partner to execute and deliver to Agent a Pledge
Agreement pursuant to which such Limited Partner grants to Agent a security
interest in all of his or its Borrower Partnership Interests and General
Partner Membership Interests (it being agreed and understood, however, that no
Person who becomes a limited partner of Borrower as a result of the exercise of
a Warrant, other than a Limited Partner existing on the Existing Agreement
Closing Date or a transferee or assignee of any of such a Limited Partner’s
Borrower Partnership Interests or a transferee or assignee of such a Limited
Partner’s or its assignees’ or transferees’ rights with respect to such
Warrant, shall be required to deliver any such Pledge Agreement), (b) General
Partner will execute and deliver to Agent a Pledge Agreement pursuant to which
General Partner grants to Agent a security interest in all of its Borrower
Partnership Interests and (c) each Loan Party shall cause each Limited Partner
to, and General Partner will, deliver to Agent the certificates representing
such Capital Stock so pledged by it, together with duly executed (in blank) stock
powers or other instruments of transfer in form and substance satisfactory to
Agent.  Notwithstanding anything to the
contrary contained in this Section 4.22, Agent’s security interest in
the Borrower Partnership Interests and the General Partner Membership Interests
shall be released concurrently with the consummation of a Public Offering if,
at such time (i) no Event of Default has occurred and is continuing and (ii)
the Term Loans B have been paid in full and the Term Loans B Agent
shall have released all of its Liens securing the “Obligations”, as defined in
the Term Loans B Credit Agreement, or any portion of such obligations.

Section 4.23           “Opt
In” to Article 8.  Each Loan
Party which is a limited partnership, general partnership or limited liability
company agrees that it will, at all times during the Term of this Agreement and
thereafter until the Obligations are paid in full and pursuant to its
applicable Organizational Documents as Agent may reasonably request, (a) “opt
in” to Article 8 of the UCC so that the partnership interests, membership
interests or other equity interests issued by such Loan Party are treated as a
security for purposes of Articles 8 and 9 of the UCC and (b) ensure that
such partnership interests, membership interests or other equity interests
issued by such Loan Party are certificated; provided, however,
that the obligation of any Foreign Subsidiary pursuant to this Section 4.23
shall arise only after request is made by Agent to Borrower for such Foreign
Subsidiary to comply with this Section 4.23 and in connection with Agent’s
request for execution and delivery of a Pledge Agreement covering the Capital
Stock of such Foreign Subsidiary that is valid under the laws of the foreign
jurisdiction in which such Foreign Subsidiary is organized made in accordance
with the last sentence of Section 4.1(b).

Section 4.24           Investment
Property.  As of the Closing Date,
each Loan Party represents and warrants that all of each Loan Party’s right,
title and/or interest in and to its Investment Property is described and set
forth in Section 4.24 hereto.

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Section 4.25           Real
Property.  As of the Closing Date,
each Loan Party represents and warrants that all of each Loan Party’s right,
title and/or interest in and to both its owned and leased premises are
identified on Schedule 4.25 hereto.

Section 4.26           Ratification,
Confirmation and Reaffirmation of Guaranties, Security Agreements and Pledge
Agreements.

(a)           Guaranties.   Each Guarantor acknowledges that it has
guaranteed the prompt payment and performance of the “Obligations” as such term
is defined in the Existing Agreement as amended, increased, restated or
otherwise modified from time to time. 
Accordingly, each Guarantor agrees that the Guaranty executed by it
constitutes a guarantee of the prompt payment and performance of all
Obligations as such term is defined in this Agreement (as this Agreement
constitutes an amendment to and modification of the Existing Agreement) as this
Agreement may be amended, restated, increased or otherwise modified from time
to time, including, without limitation, the increased amount of the Obligations
resulting from the increase in the Term Loans Amount.

(b)           Security Documents.  Each Loan Party acknowledges that it has,
pursuant to Section 4.1 of the Existing Agreement, a Pledge Agreement, a
Mortgage, a Mortgage Over Shares and/or another security agreement or security
agreements executed by it (including, without limitation and in the case of
Borrower, a patent security agreement, a trademark security agreement, a blocked
account agreement and a deposit account control agreement) (collectively, and
inclusive of any such agreements which may be executed at any time and from
time to time and which secure the Obligations or any portion thereof, the “Security
Documents”), granted a Lien in and to all of its right, title and interest
in and to the Collateral to Agent to secure the prompt payment and performance
of the “Obligations” as such term is defined in the Existing Agreement as
amended, restated, increased or otherwise modified from time to time.  Accordingly, each Loan Party agrees that all
such Liens granted by it constitute Liens securing the prompt payment and
performance of all Obligations as such term is defined in this Agreement (as
this Agreement constitutes an amendment to and modification of the Existing
Agreement) as this Agreement may be amended, restated, increased or otherwise
modified from time to time, including, without limitation, the increased amount
of the Obligations resulting from the increase in the Term Loans Amount.

(c)           Ratification, etc.  Each Loan Party hereby (i) consents to and
approves of all of the terms and provisions of this Agreement and the Other
Documents, (ii) ratifies, confirms and reaffirms all of its indebtedness,
liabilities and/or obligations under the Guaranty, Security Documents and/or
Other Documents executed by it (as such indebtedness, liabilities and/or
obligations have been increased as provided in Sections 4.26(a) and 4.26(b)
hereof above and as otherwise modified by this Agreement), (iii) ratifies,
confirms and reaffirms that, after giving effect to this Agreement, all of its
representations and/or warranties contained in the Guaranty, Security Documents
and/or Other Documents executed by it remain true and correct as of the date of
this Agreement (except to the extent that such representations and/or
warranties are expressly made only as of another specific date), (iv) ratifies,
confirms and reaffirms all of its covenants, agreements, indebtedness,
liabilities and/or obligations under the Guaranty, Security Documents and/or
Other Documents executed by it, as the same have been modified by this
Agreement, (v) agrees that the Guaranty, Security Documents and/or Other
Documents executed by it remain in full force and effect and shall and do
continue to constitute the legal, valid and binding obligations of such Loan
Party enforceable against it in accordance with the terms thereof and shall not
be discharged or affected by any amendment, modification, renewal or extension
of the terms of the Existing Agreement, this Agreement or any Other Document,
including, without

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limitation, any increase in the Obligations
(except for the effect of any express, written amendment or modification to
such Guaranty, Security Documents or Other Documents), and (vi) agrees and
acknowledges that there are no defenses, counterclaims or set-offs to the
Existing Agreement, this Agreement or the Other Documents or the covenants,
agreements, indebtedness, liabilities and/or obligations of such Loan Party
thereunder, and agrees that any (if any) such defenses, counterclaims or
set-offs are hereby expressly waived.

(d)           Each of the Security
Documents at any time executed by any Loan Party shall constitute a “First
Priority Security Document” for purposes of the Term Loans B Intercreditor
Agreement.

Section 4.27           No
Unlawful Financial Assistance.  Notwithstanding
anything to the contrary contained in this Agreement or the Other Documents,
the parties hereto agree that nothing contained herein or in any of the Other
Documents shall be construed or interpreted such that either Vision-Ease Europe
or Vision-Ease Lens is obligated to assume, guarantee or provide, collateral,
indemnity or covenant, or have assumed, guaranteed or provided collateral,
indemnity or covenant, in respect of the indebtedness, liabilities or
obligations of Borrower or any other Loan Party (other than, with respect to
each, itself) or taken any other action, in each case if and to the extent the
same would be construed as rendering unlawful financial assistance under the
laws of the jurisdictions in which Vision-Ease Europe and Vision-Ease Lens are
organized.

ARTICLE 5

REPRESENTATIONS AND
WARRANTIES

Each Loan Party hereby
jointly and severally represents and warrants to Agent and Lenders as follows:

Section 5.1             Authority.  Each Loan Party has full power, authority and
legal right to enter into this Agreement and the Other Documents to which it is
a party and to perform all its respective Obligations hereunder and
thereunder.  This Agreement and the Other
Documents constitute the legal, valid and binding obligations of such Loan
Party which is party thereto, enforceable in accordance with their terms,
except as such enforceability may be limited by any applicable bankruptcy,
insolvency, moratorium or similar laws affecting creditors’ rights
generally.  The execution, delivery and
performance of this Agreement and of the Other Documents (a) are within such
Loan Party’s corporate or other entity powers, have been duly authorized, are
not in contravention of law or the terms of such Loan Party’s Organizational
Documents or of any material agreement or undertaking to which it is a party or
by which it is bound, and (b) will not conflict with or result in any breach in
any of the provisions of, or constitute a default under or result in the
creation of any Lien, except Permitted Encumbrances, upon any property or asset
of such Loan Party under the provisions of any agreement, Organizational
Document or other instrument to which it is a party or by which it or its
property or assets may be bound.

Section 5.2             Formation
and Qualification.

(a)           Each Loan Party is duly
incorporated or organized, as applicable, and in good standing under the laws
of the state listed on Schedule 5.2(a) and is qualified to do business
and is in good standing in the states listed on Schedule 5.2(a) which
constitute all states in which qualification and good standing are necessary
for such Loan Party to conduct its business and own its property and where the
failure to so qualify could reasonably be expected to have a Material Adverse
Effect.  Each Loan Party has delivered to
Agent true and complete copies of its Organizational Documents and will
promptly notify Agent of any amendment or changes thereto.

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(b)           As of the Closing Date,
the only Subsidiaries of Borrower are listed on Schedule 5.2(b).

Section 5.3             Survival
of Representations and Warranties. 
All representations and warranties of each Loan Party contained in this
Agreement and the Other Documents shall be true at the time of its execution of
this Agreement and the Other Documents, and shall survive the execution, delivery
and acceptance thereof by the parties thereto and the closing of the
transactions described therein or related thereto.

Section 5.4             Tax
Returns.  Each Loan Party’s federal
tax identification number is set forth on Schedule 5.4.  Each Loan Party has filed all federal, state
and local tax returns and other reports it is required by law to file and has
paid all taxes, assessments, fees and other governmental charges that are due
and payable.  The provision for taxes on
the books of each Loan Party is adequate in all material respects for all years
not closed by applicable statutes, and for its current fiscal year, and no Loan
Party has any Knowledge of any deficiency or additional assessment in
connection therewith not provided for on its books.

Section 5.5             Financial
Statements.

(a)           The pro forma balance
sheet of Borrower (the “Pro Forma Balance Sheet”) furnished to Agent on
or before the Closing Date reflects the consummation of the Transactions and is
based on historical information combined with projected information based on
management’s reasonable judgment and reasonable assumptions and fairly reflects
the financial condition of Borrower as of the Closing Date after giving effect
to the Transactions, and has been prepared in accordance with GAAP, consistently
applied.  The Pro Forma Balance Sheet has
been certified as based on historical information combined with projected
information based on management’s reasonable judgment and reasonable
assumptions in all material respects by the President and Chief Financial
Officer of Borrower.  All financial
statements referred to in this Section, including the related schedules and
notes thereto, have been prepared in accordance with GAAP, except as may be
otherwise disclosed therein.

(b)           The 12-month cash
flow projections and income statements of Borrower and its projected balance
sheets as of the Closing Date, copies of which are annexed hereto as Exhibit
5.5(b) (the “Projections”) were prepared by Borrower, are based on
underlying assumptions which Borrower believes provide a reasonable basis for
the projections contained therein and reflect Borrower’s judgment based on
present circumstances of the most likely set of conditions and course of action
determined by Borrower in good faith for the projected period.  The cash flow Projections together with the
Pro Forma Balance Sheet, are referred to as the “Pro Forma Financial
Statements”.

Section 5.6             Entity
Name.  No Loan Party has been known
by any other corporate or other entity name in the past five years and no Loan
Party sells Inventory under any other name except as set forth on Schedule
5.6.  No Loan Party has been a party
to a merger or consolidation or acquired all or substantially all of the assets
of any Person during the preceding five (5) years, except for Borrower’s
acquisition of substantially all assets of Seller pursuant to the Acquisition
Agreement and except as set forth on Schedule 5.6.

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

(a)           As of the Closing Date,
except as disclosed on Schedule 5.7, each Loan Party has duly complied
with, and its facilities, business, assets, property, leaseholds and Equipment
are in 

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compliance in all material respects with, the
applicable provisions of the Federal Occupational Safety and Health Act, RCRA
and all other applicable Environmental Laws; there are no unresolved citations,
notices or orders of non-compliance that have been issued to any Loan Party or
relating to its business, assets, property, leaseholds or Equipment under any
such laws, rules or regulations.

(b)           Each Loan Party has
received or been issued, or will cause to be filed with the appropriate
Governmental Bodies in accordance with applicable Environmental Laws, all
documentation required to be filed so that the appropriate Governmental Body
may issue to Borrower all federal, state and local licenses, certificates or
permits required by applicable Environmental Laws to operate the business of
Borrower and its Subsidiaries.

(c)           As of the Closing Date,
except as disclosed on Schedule 5.7, (i) there are no visible signs of
releases, spills, discharges, leaks or disposal (collectively referred to as “Releases”)
of Hazardous Substances at, upon, under or within any Real Property or any
premises leased by any Loan Party; (ii) there are no underground storage tanks
or polychlorinated biphenyls on the Real Property or any premises leased by any
Loan Party; (iii) neither the Real Property nor any premises leased by any Loan
Party has ever been used as a treatment, storage or disposal facility (as such
terms are defined under RCRA) of Hazardous Waste; and (iv) no Hazardous
Substances are present on the Real Property or any premises leased by any Loan
Party, excepting such quantities as are handled in accordance with all
applicable manufacturer’s instructions and governmental regulations and in
proper storage containers and as are necessary for the operation of the
commercial business of any Loan Party or of its tenants.

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

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

(b)           As of the Closing Date,
except as disclosed in Schedule 5.8(b), no Loan Party has any (i)
pending or threatened litigation, arbitration, actions or proceedings which
involve the possibility of having a Material Adverse Effect, (ii) liabilities
or indebtedness for borrowed money other than the Term Loans B and the
Obligations, or (iii) liabilities for the obligations of any Person by
assumption, endorsement or guarantee or any other contingent liabilities, indebtedness
or obligations other than liabilities or obligations consisting of the
Obligations and the “Obligations” as defined in the Term Loans B Credit
Agreement.

(c)           No Loan Party is in
violation of any applicable statute, regulation or ordinance in any respect
which could reasonably be expected to have a Material Adverse Effect, and no
Loan Party is in violation of any order of a material nature of any court,
governmental authority or arbitration board or tribunal.

(d)           Neither any Loan Party
nor any member of the Controlled Group maintains, sponsors or has any
obligation or liability to any Plan other than those listed on Schedule
5.8(d) hereto.  Except as set forth
in Schedule 5.8(d):

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(i)            no Plan has incurred
any “accumulated funding deficiency,” as defined in Section 302(a)(2) of ERISA
and Section 412(a) of the Code, whether or not waived, and each Loan Party and
each member of the Controlled Group has met all applicable minimum funding
requirements under Section 302 of ERISA in respect of each Plan;

(ii)           each Plan which is
intended to be a qualified plan under Section 401(a) of the Code as currently
in effect has received, or applied for, a determination letter from the
Internal Revenue Service as to such qualified status and the tax exempt status
of the trust related thereto or, with respect to any relevant provision of the
Code for which the Internal Revenue Service is not currently considering
determination letter requests, appropriate Plan amendments have been made, and,
to the Knowledge of the Loan Parties, nothing has occurred which would cause
the loss of such Plan’s qualification;

(iii)          neither any Loan Party
nor any member of the Controlled Group has incurred any liability to the PBGC
other than for the payment of premiums, and there are no premium payments which
have become due which are unpaid;

(iv)          no Plan subject to Title
IV of ERISA has been terminated by the plan administrator thereof nor by the
PBGC, and, to the Knowledge of the Loan Parties, there is no occurrence which
would cause the PBGC to institute proceedings under Title IV of ERISA to
terminate any Plan;

(v)           except as may be set
forth in Schedule 5.8(d), at this time, the current value of the assets
of each Plan exceeds the present value of the accrued benefits and other
liabilities of such Plan and neither any Loan Party nor any member of the
Controlled Group knows of any facts or circumstances which would materially
change the value of such assets and accrued benefits and other liabilities;

(vi)          neither any Loan Party
nor any member of the Controlled Group has breached any of the
responsibilities, obligations or duties of a material nature imposed on it by
ERISA with respect to any Plan, and each Plan is in compliance in all material
respects with the applicable provisions of the Code and relevant other federal
or state law;

(vii)         neither any Loan Party
nor any member of a Controlled Group has incurred any material liability for
any excise tax arising under Section 4972 or 4980B of the Code, and, to the
Knowledge of the Loan Parties, no fact exists which could reasonably be
expected to give rise to any such material liability;

(viii)        neither any Loan Party nor
any member of the Controlled Group nor any fiduciary of, nor any trustee to,
any Plan, has engaged in a “prohibited transaction” as described in Section 406
of the ERISA or Section 4975 of the Code nor taken any action which would
constitute or result in a Termination Event;

(ix)           each Loan Party and
each member of the Controlled Group have made all contributions due and payable
with respect to each Plan, and no application for a funding waiver or an
extension of any amortization period pursuant to Section 412 of the Code has
been made with respect to any Plan;

(x)            there exists no event
described in Section 4043(b) of ERISA for which the 30 day notice period
contained in 29 CFR § 2615.3 has not been waived;

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(xi)           neither any Loan Party
nor any member of the Controlled Group has any fiduciary responsibility for
investments with respect to any Plan existing for the benefit of persons other
than employees or former employees (or their beneficiaries) of any Loan Party
and any member of the Controlled Group;

(xii)          neither any Loan Party
nor any member of the Controlled Group has withdrawn, completely or partially,
from any Multiemployer Plan so as to incur liability under the Multiemployer
Pension Plan Amendments Act of 1980; and

(xiii)         there are no Foreign
Plans.

Section 5.9             Patents,
Trademarks, Copyrights and Licenses. 
All patents, patent applications, trademarks, trademark applications,
service marks, service mark applications, copyrights, copyright applications,
design rights, tradenames, assumed names, trade secrets and licenses owned or
utilized by any Loan Party are set forth on Schedule 5.9, are valid
(subject to any disclaimers duly filed by a Loan Party) and have been duly
registered or filed with all appropriate Governmental Bodies and constitute all
of the Intellectual Property rights of each Loan Party which are necessary for
the operation of its business.  No Loan
Party has Knowledge of any objection to or pending challenge to the validity of
any such patent, trademark, copyright, design right, tradename, trade secret or
license and no Loan Party is aware of any grounds for any such challenge,
except as may be set forth in Schedule 5.9 hereto.  Except as disclosed on Schedule 5.9(a),
each patent, patent application, patent license, trademark, trademark
application, trademark license, service mark, service mark application, service
mark license, design right, copyright, copyright application and copyright
license of a material nature owned or held by any Loan Party and all trade
secrets used by any Loan Party consist of original material or property
developed by such Loan Party or was lawfully acquired by such Loan Party from
the proper and lawful owner thereof. 
Each of such items has been maintained so as to, in all material
respects, preserve the value thereof from the date of creation or acquisition
thereof.  With respect to all software
used by any Loan Party, such Loan Party is in possession of all source and
object codes related to each piece of software or is the beneficiary of a
source code escrow agreement or similar agreement which ensures such Loan Party’s
practical ability to utilize such software, each such source code escrow
agreement or similar agreement being listed on Schedule 5.9 hereto.  As of the Closing Date, the estimated
aggregate book value of all Inventory of Borrower which is identified by,
associated with, intended to be sold under or otherwise subject to a trademark,
patent or other Intellectual Property, which Intellectual Property is (a) owned
by another Person and is licensed to Borrower and (b) not fully assignable to
both Borrower and Agent, does not exceed $1,000,000.

Section 5.10           Licenses
and Permits.  Except as otherwise
described in Section 5.7(b) and as set forth in Schedule 5.10,
each Loan Party (a) is in compliance with and (b) has procured and is now in
possession of, all material licenses or permits required by any applicable
federal, state or local law or regulation for the operation of its business in
each jurisdiction wherein it is now conducting or proposes to conduct business
and where the failure to procure such licenses or permits could reasonably be
expected to have a Material Adverse Effect.

Section 5.11           Default
of Indebtedness.  No Loan Party is in
default in the payment of the principal of or interest due in respect of any
Indebtedness in an aggregate principal amount in excess of $100,000 or under
any instrument or agreement under or subject to which any such Indebtedness has
been issued, and no event has occurred under the provisions of any such
instrument or agreement which, with or without the lapse of time or the giving
of notice, or both, constitutes or would constitute an event of default
thereunder.

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Section 5.12           No
Default.  No Loan Party is in default
in the payment or performance of any of its contractual obligations of a
material nature, and no default has occurred and is in continuance thereunder.

Section 5.13           No
Burdensome Restrictions.  Except as
may be disclosed on Schedule 5.13, no Loan Party is a party to any
contract or agreement the performance of which could reasonably be expected to
have a Material Adverse Affect.  No Loan
Party has agreed or consented to cause or permit in the future (upon the
happening of a contingency or otherwise) any of its property, whether now owned
or hereafter acquired, to be subject to a Lien which is not a Permitted
Encumbrance.

Section 5.14           No
Labor Disputes.  No Loan Party is
involved in any labor dispute of a material nature; there are no strikes or
walkouts or union organization of any Loan Party’s or any of its Subsidiaries’
employees threatened or in existence and no labor contract is scheduled to
expire during the Term other than as set forth on Schedule 5.14 hereto.

Section 5.15           Margin
Regulations.  No Loan Party is
engaged, nor will it engage, principally or as one of its important activities,
in the business of extending credit for the purpose of “purchasing” or “carrying”
any “margin stock” within the respective meanings of each of the quoted terms
under Regulation U of the Board of Governors of the Federal Reserve System as
now and from time to time hereafter in effect. 
No part of the proceeds of any Advance will be used for “purchasing” or “carrying”
“margin stock” as defined in Regulation U of such Board of Governors.

Section 5.16           Investment
Company Act.  No Loan Party is an “investment
company” registered or required to be registered under the Investment Company
Act of 1940, as amended, nor is it controlled by such a company.

Section 5.17           Disclosure.  No representation or warranty made by any
Loan Party in this Agreement, in the Acquisition Documents or in any financial
statement, report, certificate or any other document furnished in connection
herewith or therewith contains any untrue statement of material fact or omits
to state any material fact necessary to make the statements herein or therein
not misleading.  There is no fact of
which Borrower has Knowledge which Borrower has not disclosed to Agent in
writing with respect to the Transactions which could reasonably be expected to
have a Material Adverse Effect.

Section 5.18           Swaps.  No Loan Party is a party to, nor will it be a
party to, any swap agreement whereby it has agreed or will agree to swap
interest rates or currencies unless same provides that damages upon termination
following an event of default thereunder are payable on an unlimited “two-way
basis” without regard to fault on the part of either party.

Section 5.19           Conflicting
Agreements.  No provision of any
mortgage, indenture, contract, agreement, judgment, decree or order binding on
any Loan Party or affecting the Collateral conflicts with, or requires any
Consent which has not already been obtained to, or would in any way prevent the
execution, delivery or performance of, the terms of this Agreement or the Other
Documents.

Section 5.20           Application
of Certain Laws and Regulations.  No
Loan Party is subject to any statute, rule or regulation which regulates the
incurrence of any Indebtedness, including without limitation, statutes or
regulations relative to common or interstate carriers or to the sale of
electricity, gas, steam, water, telephone, telegraph or other public utility
services.

 67
 

 

Section 5.21           Business
and Property of Loan Parties.

(a)           Upon and after the
Existing Agreement Closing Date, Borrower does not propose to engage in any
business other than the businesses acquired pursuant to the Acquisition
Agreement and activities necessary to conduct the foregoing.  On the Closing Date, each of Borrower and its
Subsidiaries will own all the Property and possess all of the rights and
Required Consents necessary for the conduct of the business of Borrower and its
Subsidiaries.  Upon and after the
Existing Agreement Closing Date, General Partner does not propose to engage in
any business other than its ownership of Borrower and matters incidental
thereto.

(b)           As of the Closing Date,
(i) each of Asia LLC, Canada LLC and Canada LP is a holding company that
does not engage in any business activities of a material nature (other than
those relating to the ownership of its Subsidiaries), (ii) the business engaged
in by Vision-Ease Canada, Vision-Ease Europe and Vision-Ease Lens is solely
that of providing sales and marketing and related services, and distribution of
goods, for Borrower, (iii) the assets of each of Vision-Ease Canada,
individually, and Vision-Ease Europe and Vision-Ease Lens, collectively,
consist solely of a lease of real property whereat its office is located and related
office furniture and equipment and accounts receivable and inventory having an
aggregate book value of approximately $574,000 and $2,706,000, respectively,
and (iv) the assets of Vision-Ease Asia consist of certain rights in real
property whereat its office is located and related manufacturing equipment and
accounts receivable and inventory having an aggregate book value of
approximately $13,230,000.

Section 5.22           Delivery
of Certain Documents.  Borrower has
delivered to Agent a true and complete copy of the Acquisition Documents and
the Term Loans B Documents (including, in each case, all exhibits,
schedules and disclosure letters referred to therein or delivered pursuant
thereto, if any) and all amendments thereto, waivers relating thereto and other
side letters or agreements affecting the terms thereof.  None of such documents and agreements has
been amended or supplemented, nor have any of the provisions thereof been
waived, except pursuant to a written agreement or instrument which has
heretofore been delivered to Agent.

Section 5.23           Material
Contracts.  As of the Closing Date, Schedule
5.23 hereof contains a complete list of all Material Contracts.  As of the Closing Date, except as may be
disclosed on Schedule 5.23, each of the Material Contracts is in full
force and effect, none of the Loan Parties is in default under any Material
Contract, each of the Material Contracts is assignable to Agent without the
consent or approval of any party thereto and, to the Knowledge of each Loan
Party, no other Person that is a party thereto is in material default under any
of the Material Contracts.  To the
Knowledge of each Loan Party, none of the Material Contracts prohibits any of
the transactions contemplated by this Agreement or the Other Documents.  Except as may be disclosed on Schedule
5.23, each of the Material Contracts is in the name of Borrower or one of
its Subsidiaries or has been assigned to Borrower with the approval or consent
(to the extent such approval or consent is required) of all other parties
thereto.  Borrower has delivered to Agent
a true and correct copy of each Material Contract existing as of the Closing
Date and which is identified on Schedule 5.23 as being so delivered
(those Material Contracts which may not be delivered to Agent without the
breach of a confidentiality agreement currently existing are expressly
identified on Schedule 5.23 as not being delivered due to such
confidentiality agreement).  Except as
set forth in Section 5.7(b) or as disclosed on Schedule 5.10 or Schedule
5.23, all Required Consents have been obtained.  None of the Required Consents which has not
been obtained could, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.  To
the Knowledge of Borrower, such Required Consents which have not been obtained
are able to be obtained without undue difficulty or unreasonable delay.

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Section 5.24           Anti-Terrorism
Laws.

(a)           General.   Neither any Loan Party nor any Affiliate of
any Loan Party is in violation of any Anti-Terrorism Law or engages in or
conspires to engage in any transaction 
that evades or avoids, or has the purpose of evading or avoiding, or
attempts to violate, any of the prohibitions set forth in any Anti-Terrorism
Law.

(b)           Executive Order No.
13224.  Neither any Loan Party nor
any Affiliate of any Loan Party, nor any of their respective agents acting or
benefiting in any capacity in connection with the Loans, Letters of Credit or
other transactions hereunder, is any of the following (each a “Blocked
Person”):

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

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

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

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

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

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

Neither any Loan Party nor, to the Knowledge of any
Loan Party, any of its agents acting in any capacity in connection with the
Loans, Letters of Credit or other transactions hereunder (A) conducts any
business or engages in making or receiving any contribution of funds, goods or
services to or for the benefit of any Blocked Person, or (B) deals in, or
otherwise engages in any transaction relating to, any property or interests in
property blocked pursuant to Executive Order No. 13224.

ARTICLE
6

AFFIRMATIVE
COVENANTS

Each Loan Party covenants and agrees with Agent and
Lenders that such Loan Party shall, and shall cause each other Loan Party to,
until payment in full of the Obligations and termination of this Agreement:

Section 6.1             Payment of Fees.  Promptly pay to Agent on demand all usual and
customary fees and expenses which Agent incurs in connection with (a) the
forwarding of Advance proceeds and (b) the establishment and maintenance of any
Blocked Account as provided for in Section 4.15(h).  Agent may, without making demand, charge
Borrower’s Account for all such fees and expenses.

 69
 

 

 

Section 6.2             Conduct of Business and Maintenance of
Existence and Assets.  (a) Conduct
continuously and operate actively its business according to standard industry
practices and maintain all of its properties useful or necessary in its
business in good working order and condition (reasonable wear and tear excepted
and except as may be disposed of in accordance with the terms of this
Agreement) and maintain in effect all of its Material Contracts and other
contracts and rights relating thereto (or replace such Material Contracts or
other contracts or rights from time to time with other Material Contracts or
other contracts or rights comparable thereto) useful or necessary in the
conduct of its business as commonly conducted, including, without limitation,
all licenses, patents, copyrights, design rights, tradenames, trade secrets and
trademarks and take all actions necessary to enforce and protect the validity
of any Intellectual Property right or other right of a material nature included
in the Collateral; (b) keep in full force and effect its existence and comply
in all material respects with the laws and regulations governing the conduct of
its business where the failure to do so could reasonably be expected to have a
Material Adverse Effect; and (c) make all such reports and pay all such
franchise and other taxes and license fees and do all such other acts and
things as may be lawfully required to maintain its rights, licenses, leases,
powers and franchises under the laws of the U.S. or any political subdivision
thereof.

Section 6.3             Violations.  Promptly notify Agent in writing of any
violation of any law, statute, regulation or ordinance of any Governmental
Body, or of any agency thereof, applicable to any Loan Party or any Limited
Partner which could reasonably be expected to have a Material Adverse Effect.

Section 6.4             Government Receivables.  Take all steps necessary to protect Agent’s
interest in the Collateral under the Federal Assignment of Claims Act or other
applicable state or local statutes or ordinances and deliver to Agent,
appropriately endorsed, any instrument or chattel paper connected with any
Receivable arising out of contracts between any Loan Party and the U.S., any
state or any department, agency or instrumentality of any of them.

Section 6.5             Fixed Charge Coverage Ratio.  Commencing December 31, 2005, and continuing
as of the last day of each fiscal quarter ending thereafter, maintain a Fixed
Charge Coverage Ratio of no less than 1.20 to 1.00, such ratio to be tested as
of the last day of each fiscal quarter for the period of four (4) fiscal
quarters then ended; provided, however, that, for purposes of
determining the Fixed Charge Coverage Ratio for any period ending on or before
September 30, 2005, all components of the Fixed Charge Coverage Ratio shall be
determined for the period commencing on the Existing Agreement Closing Date and
continuing through and including the last day of the fiscal quarter (or lesser
period for the period ending December 31, 2004) then most recently ended.

Section 6.6             Tangible Net Worth.  On the last day of each fiscal quarter,
commencing with the fiscal quarter ending December 31, 2005, maintain Tangible
Net Worth in an amount equal to not less than the sum of (a) $-0- plus (b) for
each fiscal quarter ending after December 31, 2005 and on a cumulative basis for
all fiscal quarters thereafter, fifty percent (50%) of the positive net income
of Borrower and its consolidated Subsidiaries for the previously ended fiscal
quarter.

Section 6.7             Execution of Supplemental Instruments.  Promptly execute and deliver to Agent from
time to time, upon demand, such supplemental agreements, statements,
assignments and transfers, or instructions or documents relating to the
Collateral, and such other instruments as Agent may reasonably request, in
order that the full intent of this Agreement may be carried into effect.

Section 6.8             Payment of Indebtedness, etc.  Pay, discharge or otherwise satisfy at or
before maturity (subject, where applicable, to specified grace periods and, in
the case of the trade payables, to normal payment practices) all its
Indebtedness, obligations and liabilities of whatever nature (including,
without limitation, taxes, trade accounts payable), except when the failure to
do so could not reasonably be expected to have a Material Adverse Effect or
when the amount or validity thereof is currently being 

 70
 

 

contested in
good faith by appropriate proceedings and Borrower shall have established such
reserves as Agent may reasonably deem proper and necessary, subject at all
times to any applicable subordination arrangement in favor of Agent and/or
Lenders; provided, however, that neither Borrower nor any other
Loan Party shall pay the Term Loans B except as and to the extent
permitted by the Term Loans B Intercreditor Agreement.

Section 6.9             Standards
of Financial Statements.  Cause all
financial statements or reports referred to in Sections 9.7 through 9.12
as to which GAAP is applicable to be complete and correct in all material
respects (subject, in the case of interim financial statements, to normal
year-end audit adjustments and the absence of footnotes) and to be prepared in
reasonable detail and in accordance with GAAP applied consistently throughout
the periods reflected therein (except as concurred in by such reporting
accountants or officer, as the case may be, and disclosed therein).

Section 6.10           Exercise
of Rights.  Enforce all of its rights
of a material nature under the Acquisition Documents, including, but not
limited to, all indemnification rights, and pursue all remedies available to it
with reasonable diligence and in good faith in connection with the enforcement
of any such rights.

Section 6.11           Subsidiaries.  Except as provided in Section 4.21(b),
Borrower agrees that it shall cause each of its Subsidiaries existing as of the
Closing Date to guarantee the payment and performance of the Obligations and to
assign, pledge and grant to Agent for its benefit and for the ratable benefit
of each Lender a continuing security interest and Lien in and to all of its
property as security for the payment and performance of the Obligations.  Except as provided in Section 4.21(b),
contemporaneously with the creation or acquisition of any Subsidiary after the
Existing Agreement Closing Date, Borrower agrees that it shall cause such
Subsidiary to guarantee the payment and performance of the Obligations and
grant to Agent for its benefit and for the ratable benefit of each Lender a
continuing security interest and Lien in and to all of its property as security
for the payment and performance of the Obligations.  Borrower shall not permit any of its Domestic
Subsidiaries existing as of the Existing Agreement Closing Date, or permit any
Subsidiary created or acquired after the Existing Agreement Closing Date, to be
or become a Foreign Subsidiary without the prior written consent of Agent and
Required Lenders.

Section 6.12           Total
Leverage Ratio.  Commencing December
31, 2005, and continuing as of the last day of each fiscal quarter ending
thereafter, maintain a Total Leverage Ratio of no greater than the ratio set
forth below for the periods ending on the dates specified below:

	
  Fiscal Quarter

  Ending

  	
   

  	
  Maximum Total

  Leverage Ratio

  
	
  12/31/05

  	
   

  	
  4.50 to 1.00

  
	
  3/31/06

  	
   

  	
  4.50 to 1.00

  
	
  6/30/06

  	
   

  	
  4.50 to 1.00

  
	
  9/30/06

  	
   

  	
  4.25 to 1.00

  
	
  12/31/06 and thereafter

  	
   

  	
  4.00 to 1.00

  

 

Section 6.13           Unadjusted
EBITDA.  Commencing December 31,
2005, not permit Unadjusted EBITDA for the then most recently ended four fiscal
quarters ending as of each of the dates indicated below to be less than the
following amount for such date:

 71
 

 

 

	
  Fiscal Quarter

  Ending

  	
   

  	
  Unadjusted

  EBITDA

  	
   

  
	
  12/31/05

  	
   

  	
  $

  	
  14,750,000

  	
   

  
	
  3/31/06

  	
   

  	
  $

  	
  14,750,000

  	
   

  
	
  6/30/06

  	
   

  	
  $

  	
  15,250,000

  	
   

  
	
  9/30/06

  	
   

  	
  $

  	
  16,000,000

  	
   

  
	
  12/31/06

  	
   

  	
  $

  	
  16,250,000

  	
   

  

 

Section 6.14           Post
Closing IP Covenant.  Within 30 days
after the Closing Date, Borrower shall make any filings, and shall provide
Agent with a written copy of such filings, with the U.S. Patent & Trademark
Office (“PTO”) and any foreign patent or trademark office or agency
sufficient for the title records of the PTO or such office or agency to
identify Borrower as the owner of any Intellectual Property set forth on Schedule
5.9 (with the exception of the provisional patent applications) owned by
Borrower for which Borrower has not yet made a filing identifying Borrower as
owner as of the Closing Date.  Such
filings shall include, without limitation, filings of assignment documents
under which Borrower is assigned ownership of U.S. Patent Application No.
10/684,202 and U.S. Trademark Registration No. 2,587,760.

ARTICLE 7

NEGATIVE COVENANTS

Each of the Loan Parties covenants and agrees with
Agent and Lenders that such Loan Party shall not, and shall not permit any
other Loan Party to, until payment in full of the Obligations and termination
of this Agreement:

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

(a)           Consummate any merger,
consolidation or other reorganization with or into any other Person or acquire
all or a substantial portion of the property or assets or Capital Stock of any
Person or permit any other Person to consolidate with or merge with it; provided,
however, that any Subsidiary of Borrower may merge with and into
Borrower or a wholly-owned Subsidiary of Borrower if, in the case of a merger
to which Borrower is a party, Borrower is the entity surviving such merger and,
if such merger involves a Foreign Subsidiary and a Domestic Subsidiary, the
Domestic Subsidiary is the entity surviving such merger.

(b)           Sell, lease, transfer
or otherwise dispose of any of its properties or assets, except as may be
permitted by Section 4.3.

Section 7.2             Creation
of Liens.  Create or suffer to exist
any Lien upon or against any of its property or assets now owned or hereafter
acquired, except Permitted Encumbrances.

Section 7.3             Guarantees.  Become liable upon the obligations of any
Person by assumption, endorsement or guaranty thereof or otherwise (other than
to Lenders) except (a) the endorsement of checks in the ordinary course of
business and (b) Guarantees of Indebtedness of a Subsidiary of Borrower
permitted in accordance with Section 7.8 provided by Borrower or any
Subsidiary of Borrower in the ordinary course of its business.

 72
 

 

Section 7.4             Investments.  Purchase or acquire obligations or Capital
Stock of, or any other interest in, any Person, except (a) obligations issued
or guaranteed by the U.S. or any agency thereof, (b) commercial paper with
maturities of not more than 180 days and a published rating of not less than A-1
or P-1 (or the equivalent rating), (c) certificates of time deposit and
bankers’ acceptances having maturities of not more than 180 days and repurchase
agreements backed by U.S. government securities of a commercial bank if (i)
such bank has a combined capital and surplus of at least $500,000,000, or (ii)
its debt obligations, or those of a holding company of which it is a
Subsidiary, are rated not less than A (or the equivalent rating) by a
nationally recognized investment rating agency, (d) U.S. money market funds
that invest solely in obligations issued or guaranteed by the U.S. or an agency
thereof, and (e) investments by Borrower in the Capital Stock of a Subsidiary
of Borrower if the existence or creation of such a Subsidiary is permitted by Section
7.12, provided that (A) the aggregate amount of such investments made by
Borrower in all of its Subsidiaries shall not at any time exceed $1,200,000 and
(B) the aggregate amount of such investments made by Borrower in any Foreign
Subsidiary shall not at any time exceed $700,000 as to each such Foreign
Subsidiary.

Section 7.5             Loans.  Make advances, loans or extensions of credit
to any Person, including without limitation, any Parent, Subsidiary or
Affiliate, other than advances, loans or extensions of credit made to the
Foreign Subsidiaries in an aggregate amount not to exceed $1,000,000 during any
calendar year for the purpose of permitting such Subsidiaries to fund their
payroll and other operating expenses in the ordinary course of their
businesses.

Section 7.6             Capital
Expenditures.  Subject to clause (e)
of Section 7.8, contract for, purchase or make any expenditure or
commitments for Capital Expenditures in any fiscal year in an aggregate amount
in excess of $6,500,000.00 for Borrower and its Subsidiaries collectively; provided,
however, that the aggregate amount of such Capital Expenditures during
the period from the Closing Date through and including December 31, 2005 shall
not exceed $900,000.

Section 7.7             Management
Fees; Dividends; Distributions. 
Declare, pay or make any management fees or similar fees or any dividend
or distribution on any of the Capital Stock of Borrower or any Subsidiary of
Borrower (other than dividends or distributions payable in its Capital Stock of
the same issuer and the same class), or apply any of its funds, property or
assets to the purchase, redemption or other retirement of any such Capital
Stock or of any options or warrants to purchase or acquire any such Capital
Stock, except that:

(a)           Subsidiaries of
Borrower may pay or make to Borrower (but only to Borrower) any management fees
or similar fees or any dividend or distribution;

(b)           if (but only if) no
Default or Event of Default shall have occurred and be continuing and so long
as Borrower is a partnership for federal income tax purposes, then Borrower may
make distributions to General Partner and Limited Partners in each calendar
year in an aggregate amount equal to the federal and state taxes that Borrower
would have been required to pay were it a corporation for federal income tax
purposes filing a Form 1120 and equivalent state tax returns for such calendar
year (a “Permitted Tax Payment”), which amount shall be distributed to
General Partner and Limited Partners in accordance with the terms of the First
Amended and Restated Limited Partnership Agreement of Borrower dated effective
as of October 31, 2004, as the same may be amended, restated or otherwise
modified from time to time with the prior written consent of Agent, which
consent shall not be unreasonably withheld; provided, however,
that (i) immediately after giving effect to any such dividend or distribution,
there shall not then exist any Default or Event of Default; (ii) each such
distribution by Borrower shall be made substantially concurrently with the date
of the corresponding income tax payments required to be paid by General Partner
and Limited Partners based upon their ownership interests 

 73
 

 

in Borrower; and (iii) if Borrower would have
received or become entitled to receive any return, reimbursement and/or other
credit in respect of a Permitted Tax Payment were it a corporation, the amount
of which is not otherwise reflected in the calculation of the Permitted Tax
Payment for the current year, then the amount thereof, but not in excess of the
total Permitted Tax Payments made to General Partner and Limited Partners,
shall be promptly paid over and contributed to Borrower by General Partner and
Limited Partners in proportion to the related Permitted Tax Payment distributed
to or received by such Person;

(c)           if (but only if) (i) a
notice of termination with regard to this Agreement shall not be outstanding,
(ii) no Default or Event of Default shall have occurred and be continuing,
(iii) immediately prior to and after giving effect to the payment of such
management fees, dividends and/or distributions, the Undrawn Availability shall
exceed $1,000,000, (iv) with respect to any such payment (whether of dividends,
distributions or management fees), the purpose for such payment and the
compliance of such payment with the conditions set forth in this Section
7.7(c) shall be set forth in writing delivered by Borrower to Agent at
least ten (10) days prior to such payment and such payment shall in fact be
used for such purpose, and (v) with respect to clause (A) below so long
as the Total Leverage Ratio for the applicable period is less than 2.75 to
1.00, then Borrower shall be permitted to pay (A) to Rosewood, after the
initial anniversary of the Closing Date, dividends or distributions on the
Class A-1 Preferred Partnership Rights of Borrower owned by Rosewood
during any fiscal year in an aggregate amount not to exceed $300,000 during
such fiscal year and (B) management fees during any fiscal year in an aggregate
amount not to exceed $1,020,000 during such fiscal year; provided, however,
that (1) immediately after giving effect to any such payment referred to in
this clause (c), there shall not then exist any Default or Event of
Default, and (2) notwithstanding clause (B) preceding, the aggregate
amount of management fees paid pursuant to clause (B) preceding during
the period from the Closing Date through and including December 31, 2005, shall
not exceed $85,000.  The compensation
permitted to be paid to Borrower’s executives in accordance with Section
7.21 hereof shall not be subject to the limitations of this Section;

(d)           Borrower shall be
entitled to honor any “put” of the Warrants or the securities acquired upon
exercise of the Warrants by the holders thereof, in either case in accordance
with the terms of the Subordinated Credit Agreement; provided, however,
that Borrower shall not be entitled to (except as provided in the further
proviso below) pay for such “put” in cash, but shall be permitted to issue a
Put Subordinated Note in exchange therefor pursuant to the Subordinated Credit
Agreement and in accordance with the Subordination Agreement, provided, further,
however, that Borrower shall be entitled to pay for such “put” in cash
to the extent (but only to the extent) that, substantially concurrently with
Borrower’s payment for such “put” in cash, Borrower has received a new equity
contribution from its owners (other than General Partner) in the form of cash
in an amount equal to or greater than the amount of such cash payment of
Borrower; and

(e)           if (but only if) no
Default or Event of Default shall have occurred and be continuing, Borrower
may, on the Closing Date, (i) pay accrued dividends on the issued and
outstanding Class A-1 Preferred Partnership Rights of Borrower in an
aggregate amount not to exceed $600,821.92, and (ii) pay accrued dividends on
and redeem in full the issued and outstanding Class A-2 Preferred Rights
of Borrower in an aggregate amount not to exceed $2,000,000.00, with respect to
such dividends, and $12,500,000.00, with respect to such redemption.

 74
 

 

Section 7.8             Indebtedness.  Create, incur, assume or suffer to exist any
Indebtedness (exclusive of trade debt and accrued payroll and accrued taxes
arising in the ordinary course of business) except in respect of:

(a)           Indebtedness of the
Loan Parties to Lenders under this Agreement and the Other Documents;

(b)           Indebtedness of
Borrower consisting of (i) the Term Loans B in an aggregate principal
amount not to exceed, at any time outstanding, the remainder of $31,500,000
minus the aggregate amount of principal payments made with respect to the Term
Loans B or (ii) the aggregate principal amount (if any) owed under the Put
Subordinated Notes then outstanding, and Borrower further agrees that it shall
not, until satisfaction in full of the Obligations and termination of this
Agreement, (A) issue Put Subordinated Notes except in accordance with the terms
of the Subordinated Credit Documents and the Subordination Agreement, (B) amend
or otherwise modify the terms of the indebtedness permitted pursuant to this clause (b)
except as permitted by the Term Loans B Intercreditor Agreement (with
respect to the Term Loans B) or as permitted by the Subordination
Agreement (with respect to the Put Subordinated Notes), (C) amend or otherwise
modify the terms of the Term Loans B Credit Agreement or any other Term
Loans B Credit Documents, except as permitted by the Term Loans B
Intercreditor Agreement, without the prior written consent of Agent, or (D)
amend or otherwise modify the terms of the Warrants, the Warrant Securities (as
defined in the Subordinated Credit Agreement), the Put Subordinated Notes or the
Subordination Agreement, except as permitted by the Subordination Agreement,
without the prior written consent of Agent; provided, however,
that Borrower may not reborrow any indebtedness permitted pursuant to this clause (b)
which has been previously repaid;

(c)           endorsements of
negotiable instruments in the ordinary course of business;

(d)           subject to clause (e)
of this Section 7.8, Indebtedness incurred for Capital Expenditures
permitted under Section 7.6;

(e)           Capitalized Lease
Obligations and purchase money Indebtedness of Borrower incurred to purchase
Equipment and other fixed assets, provided that (i) the Liens securing
such Capitalized Lease Obligations and purchase money Indebtedness shall attach
only to the Equipment or fixed assets acquired by the incurrence thereof, (ii)
the aggregate amount of such Capitalized Lease Obligations and purchase money
Indebtedness outstanding at any time shall not exceed $4,000,000 and (iii) the
aggregate amount of such Capitalized Lease Obligations and purchase money Indebtedness
incurred during any fiscal year and Capital Expenditures made during such
fiscal year shall not exceed $4,000,000;

(f)            unsecured Indebtedness
of Borrower and/or its Subsidiaries incurred in the ordinary course of business
of Borrower or such Subsidiary not to exceed $5,000,000 in the aggregate (as to
all such entities) at any time outstanding; and

(g)           unsecured Indebtedness
of Borrower and/or its Subsidiaries owed to the Original Owners incurred in
connection with the ordinary working capital needs of Borrower not to exceed
$5,000,000.00 in the aggregate (as to all Original Owners) at any time
outstanding; provided, however, that the payment of such
Indebtedness shall be fully subordinated to the payment in full of any and all
Obligations on terms and conditions satisfactory to Agent and (i) no principal
payments may be made on such subordinated Indebtedness and (ii) any accrued
interest on such 

 75
 

 

subordinated Indebtedness shall only be
payable in kind, in each case, until all Obligations have been paid in full and
the termination of this Agreement.

Section 7.9             Nature
of Business.  Substantially change
the nature of the business in which it is presently engaged, nor except as
specifically permitted hereby purchase or invest, directly or indirectly, in any
assets or property other than in the ordinary course of business for assets or
property which are useful in, necessary for and are to be used in its business
as presently conducted.  Without limiting
the generality of the foregoing, none of the Foreign Subsidiaries shall (a)
engage in any business other than the business in which it is engaged as of the
Closing Date as represented and warranted in Section 5.21(b) hereof or
(b) at any time after the Existing Agreement Closing Date acquire property
having an aggregate fair market value exceeding, (i) as to Vision-Ease Asia,
$1,000,000.00 per fiscal year, exclusive of the fair market value of Equipment
transferred to such Foreign Subsidiary in accordance with Section 4.23,
(ii) as to Vision-Ease Canada, $100,000.00 per fiscal year, and (iii) as to
each of Vision-Ease Europe and Vision-Ease Lens, $100,000.00 per fiscal year,
in each case without the prior written consent of Agent and Required Lenders.

Section 7.10           Transactions
with Affiliates.  Directly or indirectly,
purchase, acquire or lease any property from, or sell, transfer or lease any
property to, or otherwise deal with, any Affiliate, except (a) transactions in
the ordinary course of business and on an arm’s-length basis on terms no less
favorable than terms which would have been obtainable from a Person other than
an Affiliate and (b) dispositions or transfers of Equipment to Foreign
Subsidiaries of Borrower which are permitted in accordance with Section 4.3.

Section 7.11           Leases.  Enter as lessee into any lease arrangement
for real or personal property (unless capitalized and permitted under Section
7.6 hereof) if, after giving effect thereto, the aggregate amount of all
rental payments during any fiscal year for all leased property would exceed
$3,000,000 for Borrower and its Subsidiaries collectively.

Section 7.12           Subsidiaries.

(a)           Form or acquire any
Subsidiary without the prior written consent of Agent and Required
Lenders.  In connection with the
formation or acquisition of any Subsidiary so consented to, Borrower shall
promptly (i) cause such Subsidiary to execute and deliver to Agent a Guaranty
and a Guarantor Security Agreement and (ii) deliver to Agent all documents,
including legal opinions, as Agent may reasonably require in connection therewith.

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

Section 7.13           Fiscal
Year and Accounting Changes.  Change
its fiscal year end from December 31st or make any change (a) in accounting
treatment and reporting practices except as required by GAAP or (b) in tax
reporting treatment except as required by law.

Section 7.14           Pledge
of Credit.  Now or hereafter pledge
Agent’s or any Lender’s credit on any purchases or for any purpose whatsoever
or use any portion of any Advance in or for any business other than such Loan
Party’s business as conducted on the date of this Agreement after giving effect
to the consummation of the Acquisition Agreement.

Section 7.15           Amendment
of Organizational Documents.  Amend,
modify or waive any term or provision of its Organizational Documents unless
required by law or unless such amendment, modification or waiver could not
reasonably be expected to adversely affect any right or remedy of any 

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Loan Party,
Agent or any Lender, the validity or enforceability of any Lien or the value or
benefit of any Collateral or any Other Document to Agent or any Lender.

Section 7.16           Compliance
with ERISA.

(a)           (i) Maintain, or permit
any member of the Controlled Group to maintain, any Plan other than those Plans
existing on the Closing Date which are disclosed on Schedule 5.8(d);
(ii) become obligated to contribute, or permit any member of the Controlled
Group to become obligated to contribute, to any Plan that could reasonably be
expected to materially increase the contribution obligations of any Loan Party,
other than those Plans in existence on the Closing Date which are disclosed on Schedule
5.8(d); or (iii) materially expand the coverage of, or the benefits under,
any Plan as compared with that existing on the Closing Date;

(b)           engage, or permit any
member of the Controlled Group to engage, in any non-exempt “prohibited
transaction”, as that term is defined in Section 406 of ERISA and Section 4975
of the Code;

(c)           incur, or permit any
member of the Controlled Group to incur, any “accumulated funding deficiency”,
as that term is defined in Section 302 of ERISA or Section 412 of the Code;

(d)           terminate, or permit
any member of the Controlled Group to terminate, any Plan where such event
could result in any liability of Borrower or any member of the Controlled
Group, other than liability for the payment of benefits under the Plan which
are already funded, or the imposition of a Lien on any property of Borrower or
any member of the Controlled Group pursuant to Section 4068 of ERISA;

(e)           assume, or permit any
member of the Controlled Group to assume, any obligation to contribute to any
Multiemployer Plan not disclosed on Schedule 5.8(d);

(f)            incur, or permit any
member of the Controlled Group to incur, any withdrawal liability to any Multiemployer
Plan;

(g)           fail promptly to notify
Agent of the occurrence of any Termination Event;

(h)           fail to comply, or
permit a member of the Controlled Group to fail to comply, in all material
respects with the requirements of ERISA or the Code or other Applicable Laws in
respect of any Plan;

(i)            fail to meet, or
permit any member of the Controlled Group to fail to meet, all minimum funding
requirements under ERISA or the Code or postpone or delay, or allow any member
of the Controlled Group to postpone or delay, beyond the time permitted by
Applicable Law, any funding requirement with respect of any Plan;

(j)            fail to maintain, or
permit any member of the Controlled Group to fail to maintain, the
qualification under Section 401(a) of the Code of any Plan which is qualified
under that Section;

(k)           fail to make, or permit
any member of the Controlled Group to fail to make, all required contributions
to any Plan in accordance with the Plan’s terms;

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(l)            engage in a
transaction, or permit any member of the Controlled Group to engage in a
transaction, that could be subject to Sections 4069 or 4212(c) of ERISA; or

(m)          sponsor, establish or
maintain, or permit any Loan Party or member of the Controlled Group to
sponsor, establish or maintain, any obligation or liability with respect to a
Foreign Plan.

Section 7.17           Prepayment
of Indebtedness.  At any time,
directly or indirectly, prepay any Indebtedness for borrowed money (other than
to Lenders), or repurchase, redeem, retire or otherwise acquire any such
Indebtedness; provided, however, the foregoing shall not prohibit
Borrower from (a) prepaying any of the Term Loans B if and to the extent
such prepayment is expressly permitted by the Term Loans B Intercreditor
Agreement or (b) honoring the “put” of the Warrants or the securities acquired
upon exercise of the Warrants as permitted by Section 7.7(d).

Section 7.18           Subordinated
Loans.  At any time, directly or
indirectly, (a) pay, prepay, repurchase, redeem, retire or otherwise acquire,
or make any payment on account of any principal of, interest on or premium
payable in connection with the repayment or redemption of any of the Put
Subordinated Notes, or (b) amend or modify any of the Subordinated Credit
Documents, in each case except as expressly permitted by the Subordination
Agreement.

Section 7.19           Other
Agreements.  Enter into any material
amendment, waiver or modification of any of the Acquisition Documents without
the prior written consent of Agent and Required Lenders.

Section 7.20           Transfer
of Funds.  Unless otherwise approved
in writing by Agent, make any loan or advance to, make any investment in or
otherwise transfer any funds to, any Affiliate, except that Borrower may (a)
make investments in Subsidiaries if and to the extent permitted by Section
7.4 and Section 7.12, (b) pay management fees and make dividends and
distributions if and to the extent permitted by Section 7.7, (c) pay
salaries or other compensation if and to the extent permitted by Section
7.21, and (d) engage in transactions to the extent permitted by Section
7.10.

Section 7.21           Compensation.  Pay to (a) any Limited Partner or General
Partner, (b) any Affiliate of any Limited Partner or General Partner, or (c)
any individual who is an officer, director, manager, partner, shareholder or
other owner or representative of any Limited Partner or General Partner or any
Affiliate (other than Borrower or any Subsidiary of Borrower) thereof, any
amount of compensation in any form (other than dividends, distributions and
management fees permitted to be paid in accordance with Section 7.7(c)).

Section 7.22           Anti-Terrorism
Laws.  (a) Conduct, or permit any of
its Affiliates or agents to conduct, any business or engage in any transaction
or dealing with any Blocked Person, including the making or receiving of any contribution
of funds, goods or services to or for the benefit of any Blocked Person; (b)
deal in, or otherwise engage in any transaction relating to, any property or
interests in property blocked pursuant to Executive Order No. 13224, or permit
any of its Affiliates or agents to so deal or engage in; or (c) engage in or
conspire to engage in, or permit any of its Affiliates or agents to engage in
or conspire to engage in, any transaction that evades or avoids, or has the
purpose of evading or avoiding, or attempts to violate, any of the prohibitions
set forth in Executive Order No. 13224, the USA Patriot Act or any other
Anti-Terrorism Law.  Borrower shall
deliver to Agent and Lenders any certification or other evidence requested from
time to time by Agent or any Lender, in its sole discretion, confirming
compliance with this Section 7.22.

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Section 7.23           Other
Senior Debt.  At any time, amend or
modify the Term Loans B Credit Agreement or any of the other Term
Loans B Credit Documents, in each case, except as expressly permitted by
the Term Loans B Intercreditor Agreement.

ARTICLE 8

CONDITIONS PRECEDENT

Section 8.1             Conditions
to Initial Advances.  The agreement
of Lenders to make the initial Advances requested to be made on the Closing
Date is subject to the satisfaction, or waiver by Lenders, immediately prior to
or concurrently with the making of such Advances, of the following conditions
precedent (in addition to the conditions precedent set forth in Section 8.1 of
the Existing Agreement, which Borrower represents and warrants to Agent and
Lenders have been previously satisfied or waived by Lenders):

(a)           This Agreement and
Other Documents.  This Agreement
shall have been executed and delivered by each party hereto and all Other
Documents contemplated to be executed in connection with this Agreement on the
Closing Date shall have been executed and/or delivered by all parties thereto,
and the Loan Parties and the Limited Partners shall have performed and complied
with all  covenants, agreements and
conditions contained herein and in the Other Documents which are required to be
performed or complied with by any one or more of the Loan Parties or the
Limited Partners on or before the Closing Date;

(b)           Notes.  Agent shall have received the Revolving
Credit Notes and the Term Notes, each such note duly executed and delivered by
an authorized officer of Borrower;

(c)           Filings,
Registrations and Recordings, etc. 
Each document (including, without limitation, any UCC financing
statement and any landlord’s, bailees’ or mortgagees’ waivers, subordinations
and/or access agreement) required by this Agreement, any Other Document or
under law or reasonably requested by Agent to be executed, filed, registered or
recorded in order to create or ensure, in favor of Agent, a perfected, first
priority security interest in or Lien upon the Collateral (other than the
Collateral of the Foreign Subsidiaries) shall have been prepared in form
satisfactory to Agent and shall be in the possession of Agent to be filed,
registered or recorded in each jurisdiction in which the filing, registration
or recordation thereof is so required or requested;

(d)           UCC and Lien
Searches.  Agent shall have received
a complete search of the records of each filing office located in the U.S.
where a financing statement, judgment Lien, tax Lien or other Lien naming any
Loan Party, any Limited Partner or any Seller as debtor must be filed to
perfect Agent’s security interest or Lien, for the benefit of Lenders, in any
of the Collateral, which searches shall be satisfactory to Agent;

(e)           Corporate
Proceedings.  Agent shall have
received a copy of the resolutions, in form and substance reasonably
satisfactory to Agent, of the partners, managers, members, board of directors
or other similar governing body, as applicable, of each Loan Party and Limited
Partner executing this Agreement or any Other Document, in each case
authorizing (i) the execution, delivery and performance of this Agreement and
the Other Documents (as applicable), and (ii) with respect to each Loan Party and
Limited Partner, the granting by such Person of the security interests in and
Liens upon the Collateral, in each case certified by the general partner,
secretary or an assistant secretary (or similar officer) of each such Person as
of the Closing Date; 

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and, such certificate shall state that the
resolutions thereby certified have not been amended, modified, revoked or
rescinded as of the date of such certificate;

(f)            Incumbency
Certificates of Loan Parties.  Agent
shall have received a certificate of the general partner, secretary or an
assistant secretary (or similar officer) of each Loan Party and Limited
Partner, in each case dated the Closing Date, as to the incumbency and
signature of the officers of such Person executing this Agreement, the Other Documents
or any certificate or other documents (as applicable) to be delivered by it
pursuant hereto, together with evidence of the incumbency of such general
partner, secretary or assistant secretary;

(g)           Certificates.  Agent shall have received a copy of the
Organizational Documents of each Loan Party and Limited Partner, and all
amendments thereto, certified (where possible) by the Secretary of State or
other appropriate official of such Person of its jurisdiction of incorporation
or organization as of a recent date, together with copies of all agreements of
each such Person’s partners, shareholders or owners certified as accurate and
complete by the general partner, secretary or assistant secretary (or similar
officer) of each such Person;

(h)           Good Standing
Certificates.  If and to the extent
requested by Agent, Agent shall have received good standing certificates for
each Loan Party and Limited Partner (except Vision-Ease Asia and Vision-Ease
Europe), dated not more than 30 days prior to the Closing Date, issued by the
Secretary of State or other appropriate official of such Person’s jurisdiction
of incorporation or organization and each jurisdiction where the conduct of
such Person’s business activities or the ownership of its properties
necessitates qualification;

(i)            Legal Opinions.  Agent shall have received the executed legal
opinions of Hunton & Williams LLP and/or other counsel of each Loan Party
and Limited Partner, in each case in form and substance satisfactory to Agent,
which shall cover such matters incident to the transactions contemplated by
this Agreement, the Other Documents and related agreements as Agent may
reasonably require, and each Loan Party hereby authorizes and directs such
counsel to deliver such opinions to Agent and Lenders;

(j)            No Litigation.  (i) No litigation, investigation or
proceeding before or by any arbitrator or Governmental Body shall be continuing
or threatened against any Loan Party or Limited Partner or against the
officers, directors, members or managers of any Loan Party or Limited Partner
(A) in connection with this Agreement, the Other Documents, the Acquisition
Documents, the Term Loan B Documents or any of the transactions contemplated
hereby or thereby and which, in the reasonable opinion of Agent, is deemed material
or (B) which could, in the reasonable opinion of Agent, have a Material Adverse
Effect; and (ii) no injunction, writ, restraining order or other order of any
nature materially adverse to any Loan Party or the conduct of its business or
inconsistent with the due consummation of the Transactions shall have been
issued by any Governmental Body;

(k)           Financial Condition
Certificates.  Agent shall have
received an executed Financial Condition Certificate in the form of Exhibit
8.1(k), and the information contained therein shall be accurate and complete in
all material respects and there shall not exist any material contingent
obligations of Borrower or any other Loan Party except as may be expressly
identified therein;

(l)            Fees and Expenses.  Agent shall have received all fees and
expense reimbursements payable to Agent and Lenders on or prior to the Closing
Date hereunder, including, without limitation, pursuant to Article 3
and Section 15.9 hereof;

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(m)          Pro Forma.  Agent shall have received a copy of Borrower’s
Pro Forma Financial Statements dated as of the Closing Date and such Pro Forma
Financial Statements shall be reasonably satisfactory to Agent in all respects;

(n)           Term Loans B
Credit Documents.  Agent shall have
received a true and correct copy of each of the Term Loans B Credit
Documents, the Term Loans B shall have been fully funded to or for the
benefit of Borrower in accordance with the Term Loans B Credit Documents
and Agent, the Term Loans B Agent, Borrower, General Partner and the
Subsidiaries of Borrower which are Guarantors shall have entered into the Term
Loans B Intercreditor Agreement which shall set forth, among other things,
the basis upon which the lenders with respect to the Term Loans B may
receive, and Borrower may make, payments under the Term Loans B and the
subordinated priority of the Liens securing the Term Loans B, all of which
shall be satisfactory in form and substance to Agent in its sole discretion;

(o)           Repayment of Subordinated
Loans, etc.  Agent shall have
received the Subordination Agreement as executed by all parties thereto and a
payoff letter executed by the holders of the Subordinated Loans and evidence
satisfactory to Agent that, concurrently with the making of the Advances on the
Closing Date, the Subordinated Loans (other than any indebtedness evidenced by
Put Subordinated Notes) shall have been paid in full, all obligations of the
Loan Parties under the Subordinated Credit Documents, other than the Warrants, the
Warrant Securities (as defined in the Subordinated Credit Agreement), the Put
Subordinated Notes, the Subordination Agreement and the Subordinated Credit
Agreement to the extent (but only to the extent) such agreement relates to the
foregoing Warrants, Warrant Securities, Put Subordinated Notes and
Subordination Agreement, shall have been released, all Subordinated Credit
Documents, other than the Warrants, the Warrant Securities (as defined in the
Subordinated Credit Agreement), the Put Subordinated Notes, the Subordination
Agreement and the Subordinated Credit Agreement (but only to the extent
specified above), shall have been terminated, all Liens securing the
Subordinated Loans or any portion thereof shall have been released and the
Class A-2 Preferred Partnership Rights of Borrower shall have been
redeemed and paid in full;

(p)           Insurance.  Agent shall have received, in form and
substance satisfactory to Agent, certificates of insurance concerning each Loan
Party’s casualty and liability policies naming Agent, with respect to casualty
insurance policies, as loss payee, and naming Agent, with respect to each Loan
Party’s liability insurance policies, as a co-insured;

(q)           Title Insurance.  Agent shall have received fully paid
mortgagee title insurance policies or, if acceptable to Agent, endorsements to
previously issued mortgagee title insurance policies (or binding commitments to
issue title insurance policies or endorsements, marked to Agent’s satisfaction
to evidence the form of such policies to be delivered with respect to each
Mortgage), in standard ALTA form, issued by a title insurance company
satisfactory to Agent, each in an amount equal to or not less than the fair
market value of the Real Property located in the U.S. and owned in fee by
Borrower subject to such Mortgage, insuring each Mortgage to create a valid
Lien on the fee Real Property covered thereby as security for the Obligations
(including the increased amount thereof) with no exceptions which Agent shall
not have approved in writing and no survey exceptions;

(r)            Environmental
Reports.  Agent shall have received
all environmental studies and reports requested by Agent prepared by
independent environmental engineering firms with respect to the Real Property;

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

(t)            Blocked Accounts,
etc.  Agent shall have received duly
executed agreements establishing the Blocked Accounts with respect to all of
the bank accounts of Borrower for the collection or servicing of the
Receivables and proceeds of the Collateral, all in form and substance
satisfactory to Agent in its sole discretion;

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

(v)           No Material Adverse
Effect.  (i) since December 31, 2004,
there shall not have occurred any event, condition or state of facts which
could reasonably be expected to have a Material Adverse Effect or have a
material adverse effect on the value or prospects of the properties or assets
of Borrower and its Subsidiaries taken as a whole, and (ii) no representations
made or information supplied to Agent or Lenders (including, without limitation,
information supplied to Borrower in the Term Loans B Credit Documents or
in connection with the transactions contemplated thereby) shall have been
proven to be inaccurate or misleading in any material respect;

(w)          Mortgage and other
Real Property Documents.  Agent shall
have received, in form and substance satisfactory to it, an executed amendment
or modification to the Mortgage covering the parcel of Real Property located in
or near Ramsey, Minnesota, which Mortgage as amended or modified shall evidence
a first priority Lien on such Real Property as security for the Obligations
(including the increased amount thereof) in favor of Agent;

(x)            Pledge Agreement
Ratifications.  Agent shall have
received, in form and substance satisfactory to it, the IEVP Pledge Agreement
Ratification executed by IEVP and the Rosewood Pledge Agreement Ratification
executed by Rosewood;

(y)           Closing Certificate.  Agent shall have received a closing
certificate signed by the chief executive officer of each Loan Party dated as of
the date hereof, stating that (i) all representations and warranties set forth
in this Agreement and the Other Documents are true and correct in all material
respects on and as of such date, (ii) each Loan Party is on such date in
compliance with all the terms and provisions set forth in this Agreement and
the Other Documents and (iii) on such date no Default or Event of Default has
occurred or is continuing;

(z)            Borrowing Base.  Agent shall have received a completed
Borrowing Base Certificate dated as of the Closing Date executed by Borrower in
compliance with this Agreement, which certificate shall evidence that the
aggregate amount of Eligible Receivables and Eligible Inventory is sufficient
in value and amount to support the aggregate amount of Advances outstanding on
the Closing Date and/or requested by Borrower on the Closing Date;

(aa)         Undrawn Availability.  After giving effect to the Advances
outstanding and/or made on the Closing Date and all other transactions to occur
on the Closing Date, the payment of all fees and expenses and subtracting, from
the Undrawn Availability, an aggregate amount equal to the value of all trade
accounts payable of Borrower 60 days or more past due, Borrower shall 

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have remaining Undrawn Availability of at
least $3,000,000.00, as evidenced by a Borrowing Base Certificate in form and
substance reasonably satisfactory to Agent;

(bb)         Customer Remittances.  Agent shall have received satisfactory
evidence that all of Borrower’s customers have been directed to make remittances
to the Blocked Accounts controlled by Agent;

(cc)         Collateral Examination.  Agent shall have completed Collateral
examinations and received updated appraisals, the results and form of which
shall be satisfactory in form and substance to Agent, of the machinery and
equipment of the Loan Parties and all books and records in connection
therewith, including, without limitation, an asset-based field audit performed
by examiners determined by Agent;

(dd)         Documentation
Information Questionnaire.  Agent
shall have received a duly completed, executed and delivered, or an updated,
Questionnaire relating to the Loan Parties;

(ee)         Miscellaneous Due
Diligence Review.  Agent and its
counsel shall have received and reviewed, with results satisfactory to Agent
and it counsel, any and all other assurances, certificates, documents, consents
and opinions as Agent or its counsel may require, including, without
limitation, information regarding the ownership of Borrower’s Inventory
proposed to constitute Eligible Inventory while in-transit;

(ff)           Landlord’s Waivers,
Etc.  [Intentionally omitted]; and

(gg)         Other Documents and
Legal Review.  All Other Documents
shall be in form and substance reasonably satisfactory to Agent and all legal
matters relating thereto shall be reasonably satisfactory to Agent and its
counsel.

Section 8.2             Conditions
to Each Advance.  The agreement of
Lenders to make any Advance requested to be made on any date (including,
without limitation, the initial Advance) is subject to the satisfaction of the
following conditions precedent as of the date such Advance is made:

(a)           Representations and
Warranties.  Each of the
representations and warranties made by any Loan Party or Limited Partner in or
pursuant to this Agreement or any Other Documents and any related agreements to
which it is a party, and each of the representations and warranties contained
in any certificate, document or financial or other statement furnished at any
time under or in connection with this Agreement or any Other Document or any
related agreement, shall be true and correct in all material respects on and as
of such date as if made on and as of such date (it being agreed and understood
that any representation or warranty which by its terms is made only as of a
specific date shall be required to be true and correct only as of such specific
date);

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

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

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

ARTICLE 9

INFORMATION AS TO LOAN
PARTIES

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

Section 9.1             Disclosure
of Material Matters.  Immediately
upon learning thereof, report to Agent all matters materially affecting the
value, enforceability or collectability of any portion of the Collateral,
including, without limitation, any Loan Party’s reclamation or repossession of,
or the return to any Loan Party of, a material amount of goods or claims or
disputes asserted by any Customer or other obligor.

Section 9.2             Schedules.  Deliver to Agent on or before the fifteenth
(15th) day of each month as and for the prior month (a) accounts receivable
agings, inclusive of reconciliations to the general ledger, (b) accounts
payable schedules inclusive of reconciliations to the general ledger, (c)
Inventory reports, and (d) a monthly Borrowing Base Certificate in form and
substance satisfactory to Agent (which shall set forth the Formula Amount
calculated as of the last day of the prior month and which shall not be binding
upon Agent or Lenders or restrictive of Agent’s or any Lender’s rights under
this Agreement).  In addition, Borrower
will deliver to Agent at such intervals as Agent may require:  (i) confirmatory assignment schedules, (ii)
copies of Customer’s invoices, (iii) evidence of shipment or delivery, and (iv)
such further schedules, documents and/or information regarding the Collateral
as Agent may require including, without limitation, trial balances and test
verifications.  Agent shall have the
right to confirm and verify all Receivables by any manner and through any
medium it considers advisable and do whatever it may deem reasonably necessary
to protect its interests hereunder.  The
items to be provided under this Section are to be in form satisfactory to Agent
and executed by Borrower and delivered to Agent from time to time solely for
Agent’s convenience in maintaining records of the Collateral, and Borrower’s
failure to deliver any of such items to Agent shall not affect, terminate,
modify or otherwise limit Agent’s Lien with respect to the Collateral.

Section 9.3             Environmental
Reports.  Furnish Agent, concurrently
with the delivery of the financial statements referred to in Sections 9.7
and 9.8, with a certificate signed by an executive officer of Borrower
stating, to the Knowledge of Borrower after reasonable investigation, that each
Loan Party is in compliance in all material respects with all applicable
Environmental Laws.  To the extent any Loan
Party is not in compliance with the foregoing laws, the certificate shall set
forth with specificity all areas of non-compliance and the proposed action such
Loan Party will implement in order to achieve full compliance.

Section 9.4             Litigation.  Promptly notify Agent in writing of any
litigation, suit or administrative proceeding affecting any Loan Party, whether
or not the claim is covered by insurance, and of any suit or administrative
proceeding, which in any such case could reasonably be expected to have a
Material Adverse Effect.

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Section 9.5             Material
Occurrences.  Promptly notify Agent
in writing upon the occurrence of (a) any Event of Default or Default; (b) any “Event
of Default” or “Default” (in each case, as defined in the Term Loans B
Credit Agreement), and promptly provide Agent with copies of any written
notices with respect thereto, including, without limitation, any notice of
acceleration of all or any portion of the “Obligations” as defined in the Term
Loans B Credit Agreement; (c) any event, development or circumstance
whereby any financial statements or other reports furnished to Agent fail in
any material respect to present fairly, in accordance with GAAP consistently
applied, the financial condition or operating results of any Loan Party as of
the date of such statements; (d) the receipt of any notice with respect to the
potential exercise of a “put” under the Subordinated Credit Agreement and
promptly provide to Agent a copy of any such notice; (e) any accumulated
retirement plan funding deficiency which, if such deficiency continued for two
plan years and was not corrected as provided in Section 4971 of the Code, could
subject any Loan Party to a tax imposed by Section 4971 of the Code; (f) each
and every default by any Loan Party which might result in the acceleration of
the maturity of any Indebtedness, including the names and addresses of the
holders of such Indebtedness with respect to which there is a default existing
or with respect to which the maturity has been or could be accelerated, and the
amount of such Indebtedness; and (g) any other development in the business or
affairs of any Loan Party which could reasonably be expected to have a Material
Adverse Effect; in each case describing the nature thereof and the action such
Loan Party proposes to take with respect thereto.

Section 9.6             Government
Receivables.  Notify Agent
immediately if any of its Receivables arise out of contracts between any Loan
Party and the U.S., any state or any department, agency or instrumentality of
any of them.

Section 9.7             Annual
Financial Statements.  Furnish Agent,
within 120 days after the end of each fiscal year of Borrower, consolidated
financial statements of Borrower and its consolidated Subsidiaries, together
with consolidating schedules, including, but not limited to, statements of
income and shareholders’ equity and cash flow from the beginning of the current
fiscal year to the end of such fiscal year and the balance sheet as at the end
of such fiscal year, all prepared in accordance with GAAP applied on a basis
consistent with prior practices, and in reasonable detail and audited and
reported upon without qualification by an independent certified public
accounting firm selected by Borrower and reasonably satisfactory to Agent (the “Accountants”).  The report of the Accountants shall be
accompanied by a statement of the Accountants certifying that (a) they have
caused this Agreement to be reviewed, (b) in making the examination upon which
such report was based, either no information came to their attention which to
their knowledge constituted a Default or an Event of Default under this
Agreement or any Other Document or any related agreement or, if such
information came to their attention, specifying any such Default or Event of
Default, its nature, when it occurred and whether it is continuing, and such
report shall contain or have appended thereto calculations which set forth the
Loan Parties’ compliance with the requirements or restrictions imposed by Sections
6.5, 6.6, 6.11, 7.6, 7.8 and 7.11 hereof.  In addition, the reports shall be accompanied
by a certificate of Borrower’s chief financial officer which shall state that,
based on an examination sufficient to permit him to make an informed statement
and, to such officer’s Knowledge after reasonable investigation, no Default or
Event of Default exists, or, if such is not the case, specifying such Default
or Event of Default, its nature, when it occurred, whether it is continuing and
the steps being taken by each Loan Party with respect to such event, and such
certificate shall have appended thereto calculations which set forth the Loan
Parties’ compliance with the requirements or restrictions imposed by Sections
6.5, 6.6, 6.11, 7.6, 7.8 and 7.11
hereof.

Section 9.8             Monthly
Financial Statements.  Furnish Agent,
within 30 days after the end of each month, an unaudited balance sheet of
Borrower and its consolidated Subsidiaries and unaudited statements of income
and shareholders’ equity and cash flow of Borrower and its consolidated
Subsidiaries reflecting results of operations from the beginning of the fiscal
year to the end of such month and for such month, in each case together with
consolidating schedules and prepared on a basis consistent 

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with prior
practices and complete and correct in all material respects, subject to normal
and recurring year end adjustments that individually and in the aggregate are
not material to any Loan Party’s business. 
Such reports shall be accompanied by a certificate of Borrower’s chief
executive officer or chief financial officer which shall state that such
reports have been prepared in accordance with GAAP and are based on an
examination sufficient to permit him to make an informed statement and, to such
officer’s Knowledge after reasonable investigation, no Default or Event of
Default exists, or, if such is not the case, specifying such Default or Event
of Default, its nature, when it occurred, whether it is continuing and the
steps being taken by each Loan Party with respect to such event, and such
certificate shall have appended thereto calculations which set forth the Loan
Parties’ compliance with the requirements or restrictions imposed by Sections
6.5, 6.6, 6.11, 7.6, 7.8 and 7.11 hereof
and, in addition to the foregoing, on a quarterly basis commencing with the fiscal
quarter ending March 31, 2006 and for each fiscal quarter thereafter,
concurrently with the delivery of the applicable financial information and
certificate described in this Section 9.8, furnish to Agent a management
report narrative and all exhibits thereto.

Section 9.9             Other
Collateral Reporting.  Furnish to
Agent, all in form and substance satisfactory to Agent in its discretion, (a)
on each Business Day on which an Advance has been requested by Borrower and/or
made by Agent but in any event not less than once a week, calculated as of the
end of business for the preceding Business Day (i) a report of trade accounts
receivable, including but not limited to sales, collections and credit memos,
(ii) a report of existing inventory by location, and (iii) a current Borrowing
Base Certificate (which shall set forth the Formula Amount calculated as of
such Business Day which shall not be binding upon Agent or Lenders or
restrictive of Agent’s or any Lender’s rights under this Agreement), (b) on or
before 60 days after the end of each calendar year, a desktop appraisal of the
Inventory owned by Borrower and its Subsidiaries as of the last day of the
calendar year then most recently ended, prepared by a professional independent
appraiser acceptable to Agent, and (c) on the 30th day of June of each year, a
complete Inventory appraisal of the Inventory owned by Borrower and its
Subsidiaries as of a date which is not more than 30 days prior to such delivery
date, prepared by a professional independent appraiser acceptable to Agent.

Section 9.10           Additional
Information.  Furnish Agent with such
additional information as Agent shall reasonably request in order to enable
Agent to determine whether the terms, covenants, provisions and conditions of
this Agreement and the Other Documents have been complied with by the Loan
Parties, including, without limitation and without the necessity of any request
by Agent, (a) copies of all environmental audits and reviews, (b) at least 30
days prior thereto, notice of any Loan Party’s opening of any new office or
place of business or any Loan Party’s closing of any existing office or place
of business, (c) at least 30 days prior thereto, notice of Borrower’s creation
or acquisition of any Subsidiary, and (d) promptly upon any Loan Party’s
learning thereof, notice of any labor dispute of a material nature to which any
Loan Party may become a party, any strikes or walkouts relating to any of its
plants or other facilities, and the expiration of any labor contract to which
any Loan Party is a party or by which it is bound.

Section 9.11           Projected
Operating Budget.  Furnish Agent, no
later than 30 days after the beginning of each of Borrower’s fiscal years
commencing with fiscal year ending December 31, 2004, a month by month
projected operating budget and cash flow of Borrower and its Subsidiaries for
such fiscal year (including an income statement and balance sheet for and at
the end of each month), such projections to be accompanied by a certificate
signed by the chief executive officer or chief financial officer of Borrower to
the effect that such projections have been prepared on the basis of sound
financial planning practices consistent with past budgets and financial
statements and that such officer believes that the material assumptions on
which such projections were prepared are reasonable.

Section 9.12           [Intentionally
omitted.]

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Section 9.13           Notice
of Suits, Adverse Events.  Furnish
Agent with prompt notice of (a) any lapse or other termination of any Consent
issued to any Loan Party by any Governmental Body or any other Person that is
material to the operation of any Loan Party’s business, (b) any refusal by any
Governmental Body or any other Person to renew or extend any such Consent, (c)
copies of any periodic or special reports filed by any Loan Party with any
Governmental Body or Person, if such reports indicate any material change in
the business, operations, affairs or condition of any Loan Party, or if copies
thereof are requested by Agent, and (d) copies of any material notices and
other communications from any Governmental Body or Person which specifically
relate to any Loan Party.

Section 9.14           ERISA
Notices and Requests.  Furnish Agent
with prompt written notice in the event that:

(a)           any Loan Party or any
member of the Controlled Group knows or has reason to know that a Termination
Event has occurred or will occur, together with a written statement describing
such Termination Event and the action, if any, which such Loan Party or any
member of the Controlled Group has taken, is taking or proposes to take with
respect thereto and, when known, any action taken or threatened by the Internal
Revenue Service, Department of Labor or PBGC with respect thereto;

(b)           any Loan Party or any
member of the Controlled Group knows or has reason to know that a non-exempt
prohibited transaction (as defined in Section 406 of ERISA and Section 4975 of
the Code) has occurred or will occur, together with a written statement
describing such transaction and the action which any Loan Party or any member
of the Controlled Group has taken, is taking or proposes to take with respect
thereto and, when known, any action taken or threatened by the Internal Revenue
Service, the Department of Labor or the PBGC with respect thereto;

(c)           a funding waiver
request has been filed with respect to any Plan together with a copy of such
request and all communications received by any Loan Party or any member of the
Controlled Group with respect to such request;

(d)           any change in the
benefits of any existing Plan which could materially increase any Loan Party’s
or a member of the Control Group’s costs with respect thereto or the
establishment of any new Plan or the commencement of contributions to any Plan
by any Loan Party or any member of the Controlled Group to which any Loan Party
or any member of the Controlled Group was not previously contributing shall
occur;

(e)           any Loan Party or any
member of the Controlled Group shall receive a notice of intention to terminate
a Plan or to have a trustee appointed to administer a Plan under Title IV of
ERISA, together with copies of each such notice;

(f)            any Loan Party or any
member of the Controlled Group shall receive any favorable, unfavorable or
adverse determination letter from the Internal Revenue Service regarding the
qualification of a Plan under Section 401(a) of the Code, together with copies
of each such letter;

(g)           any Loan Party or any
member of the Controlled Group shall receive a notice regarding the imposition
of liability regarding a Multiemployer Plan, together with copies of each such
notice;

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(h)           any Loan Party or any
member of the Controlled Group shall fail to make a required installment or any
other required payment under Section 412 of the Code or Section 302 of ERISA on
or before the due date for such installment or payment; and

(i)            any Loan Party or any
member of the Controlled Group knows that (i) a Multiemployer Plan has been or
will be terminated or become insolvent or involved in a reorganization, (ii)
the administrator or plan sponsor of a Multiemployer Plan intends to terminate
a Multiemployer Plan, or (iii) any Loan Party or any member of the Controlled
Group incurs any liability (other than for negotiated employer contributions)
with respect, or relating, to a Multiemployer Plan.

Upon request, or, in the event that such filing reflects a significant
change with respect to the matters covered thereby, furnish Agent with
immediate copies of (A) each relevant annual report (form 5500 series),
including Schedule B thereto, filed by any Loan Party or any member of the
Controlled Group with the PBGC, the Department of Labor or the Internal Revenue
Service with respect to each Plan, (B) a copy of each other relevant filing or
notice filed by any Loan Party or a member of the Controlled Group with the
PBGC, the Department of Labor or the Internal Revenue Service with respect to
each Plan, and (C) copies of each relevant actuarial report and annual report
for any Plan.

Section 9.15           Documentation
Information Questionnaire.  Furnish
Agent, concurrently with the delivery of the annual financial statements
referred to in Section 9.7, a duly completed, executed and delivered
Questionnaire relating to the Loan Parties and the Limited Partners.

Section 9.16           Additional
Documents.  Execute and deliver to
Agent, upon request, such documents and agreements as Agent may, from time to
time, reasonably request to carry out the purposes, terms or conditions of this
Agreement or the Other Documents.

ARTICLE 10

EVENTS OF DEFAULT

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

Section 10.1           (a)
any failure by Borrower to pay any principal or interest on the Loans or other
Obligations when due, whether at maturity or by reason of acceleration pursuant
to the terms of this Agreement, by notice of intention to prepay, by required
prepayment or otherwise, or (b) any failure by any Loan Party to pay any other
liabilities or make any other payment, fee or charge provided for herein or in
any Other Document within five (5) Business Days after when due;

Section 10.2           any
representation or warranty made or deemed made by any Loan Party or Limited
Partner in this Agreement or any Other Document or related agreement or in any
certificate, document or financial or other statement furnished at any time in
connection herewith or therewith shall prove to have been misleading in any
material respect on the date when made or deemed to have been made;

Section 10.3           any
failure by any Loan Party to (a) furnish financial information in accordance
with this Agreement within five (5) Business Days after when due or when
requested, or (b) permit the inspection of its books or records in accordance
with this Agreement;

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Section 10.4           any
issuance of a notice of Lien (other than a Permitted Encumbrance), levy,
assessment, injunction or attachment against a material portion of any Loan
Party’s property or assets which is not stayed or lifted within 30 days;

Section 10.5           except
as otherwise provided for in Sections 10.1 and 10.3, any failure
or neglect of any Loan Party or Limited Partner to perform, keep or observe any
term, provision, condition, covenant herein contained, or contained in any
other agreement or arrangement, now or hereafter entered into between any Loan
Party or Limited Partner and Agent or any Lender (including, without
limitation, any Other Document), except for a failure or neglect of any Loan
Party to perform, keep or observe any term, provision, condition or covenant
contained in Sections 4.6, 4.7, 4.9, 4.14, 4.15,
4.16, 4.17, 4.19, 6.1, 6.3, 6.4, 7.15,
9.1, 9.4, 9.6, 9.10, 9.13 and 9.14
hereof which is cured within 15 days from the initial occurrence of such
failure or neglect;

Section 10.6           any
judgment or judgments are rendered, or judgment liens are filed, against any
Loan Party for an amount in excess of $500,000, for any individual judgment or
lien, or $1,000,000, in the aggregate, after deducting any amounts received
from any available insurance proceeds and indemnification obligations, for all
such judgments and liens which (a) is/are not promptly contested in good faith
by appropriate proceedings diligently conducted and reserved for adequately in
amounts Agent reasonably deems proper and necessary or (b) notwithstanding clause (a),
within 40 days of such rendering or filing and continuing thereafter, is/are
neither satisfied, stayed or discharged of record;

Section 10.7           any
Loan Party shall (a) apply for, consent to or suffer the appointment of, or the
taking of possession by, a receiver, custodian, trustee, liquidator or similar
fiduciary of itself or of all or a substantial part of its property, (b) make a
general assignment for the benefit of creditors, (c) commence a voluntary case
under any state or federal bankruptcy laws (as now or hereafter in effect), (d)
be adjudicated a bankrupt or insolvent, (e) file a petition seeking to take
advantage of any other law providing for the relief of debtors, (f) acquiesce
to, or fail to have dismissed, within 60 days, any petition filed against it in
any involuntary case under such bankruptcy laws, or (g) take any action for the
purpose of effecting any of the foregoing;

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

Section 10.9           any
Affiliate or Subsidiary of any Loan Party shall (a) apply for, consent to or
suffer the appointment of, or the taking of possession by, a receiver,
custodian, trustee, liquidator or similar fiduciary of itself or of all or a
substantial part of its property, (b) admit in writing its inability, or be
generally unable, to pay its debts as they become due or cease operations of
its present business, (c) make a general assignment for the benefit of
creditors, (d) commence a voluntary case under any state or federal bankruptcy
laws (as now or hereafter in effect), (e) be adjudicated a bankrupt or
insolvent, (f) file a petition seeking to take advantage of any other law
providing for the relief of debtors, (g) acquiesce to, or fail to have
dismissed, within 60 days, any petition filed against it in any involuntary
case under such bankruptcy laws, or (h) take any action for the purpose of
effecting any of the foregoing;

Section 10.10         any
change in the condition or affairs (financial or otherwise) of any Loan Party which
in Agent’s opinion has a Material Adverse Effect and the expiration of at least
three Business Days after notice thereof has been given by Agent to Borrower;

Section 10.11         any
Lien created (or purported to be created) hereunder or provided (or purported
to be provided) for hereunder or under any Other Document or related agreement
for any reason ceases to be or is not a valid and perfected Lien having a first
priority interest;

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Section 10.12         an
event of default has occurred under or with respect to (a) any of the Term
Loans B Credit Documents (including, without limitation, the Term
Loans B Credit Agreement) or the Subordinated Credit Documents (including,
without limitation, the Warrants, the Put Subordinated Notes and the
Subordination Agreement) or (b) any other indebtedness of any Loan Party in an
aggregate principal amount in excess of $100,000, which default shall not have
been cured or waived within any applicable grace period, or any failure to
comply with, or breach of, the Term Loans B Intercreditor Agreement or the
Subordination Agreement; without limiting the generality of the foregoing, the
occurrence of any “Event of Default” under Article 10 of the Term
Loans B Credit Agreement shall constitute an Event of Default under this
Agreement;

Section 10.13         [Intentionally
omitted];

Section 10.14         a
default of the indebtedness, liabilities or obligations of any Loan Party under
any other agreement to which it is a party shall occur which results in a
Material Adverse Effect and which default is not cured within any applicable
grace period;

Section 10.15         termination
or breach of any Guaranty or Guaranty Security Agreement or Other Document
executed and delivered to Agent in connection with the Obligations of any Loan
Party, or if any Guarantor attempts to terminate, challenges the validity of,
or its liability under, any such Guaranty or Guaranty Security Agreement or
Other Document;

Section 10.16         any
Change of Control or Change of Ownership shall occur (other than as may occur
in connection with the sale or other disposition of Borrower Partnership
Interests approved by Agent);

Section 10.17         any
material provision of this Agreement or any Other Document shall, for any
reason, cease to be valid and binding on any Loan Party or Limited Partner, or
any Loan Party or Limited Partner shall so claim in writing to Agent;

Section 10.18         (a)
any Governmental Body shall (i) revoke, terminate, suspend or adversely modify
any license, permit, patent trademark or tradename of a material nature of any
Loan Party, or (ii) commence proceedings to suspend, revoke, terminate or
adversely modify any such license, permit, trademark, tradename or patent and
such proceedings shall not be dismissed or discharged within 60 days, or (iii)
schedule or conduct a hearing on the renewal of any license, permit, trademark,
tradename or patent necessary for the continuation of any Loan Party’s business
and the staff of such Governmental Body issues a report recommending the
termination, revocation, suspension or material, adverse modification of such
license, permit, trademark, tradename or patent, in each case where such action
could reasonably be expected to have a Material Adverse Effect; (b) any
agreement which is necessary or material to the operation of any Loan Party’s
business shall be revoked or terminated and not replaced by a substitute
acceptable to Agent within 30 days after the date of such revocation or
termination, and such revocation or termination and non-replacement could
reasonably be expected to have a Material Adverse Effect;

Section 10.19         any
portion of the Collateral shall be seized or taken by a Governmental Body, or
any Loan Party or the title or rights of any Loan Party or Limited Partner
which is the owner of any material portion of the Collateral shall have become
the subject matter of litigation which could reasonably be expected, upon final
determination, to result in impairment or loss of the security provided by this
Agreement or the Other Documents; or

Section 10.20         any
material portion of the operations of any of Borrower’s or any of its
Subsidiaries’ manufacturing facilities are interrupted at any time for more
than five (5) consecutive 

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Business Days
unless Borrower shall (a) be entitled to receive, for such period of
interruption, proceeds of business interruption insurance sufficient to assure
that its per diem cash needs during such period is at least equal to its
average per diem cash needs for the consecutive three month period immediately
preceding the initial date of interruption and (b) receive such proceeds in the
amount described in clause (a) preceding not later than 30 days
following the initial date of any such interruption; provided, however,
that notwithstanding the provisions of clauses (a) and (b) of
this section, an Event of Default shall be deemed to have occurred if Borrower
or any of its Subsidiaries shall be receiving the proceeds of business
interruption insurance for a period of 30 consecutive days; and

Section 10.21         an
event or condition specified in Sections 7.16 or 9.14 hereof
shall occur or exist with respect to any Plan and, as a result of such event or
condition, together with all other such events or conditions, any Loan Party or
any member of the Controlled Group shall incur, or be reasonably likely to
incur, a liability which, in the reasonable judgment of Agent, could reasonably
be expected to have a Material Adverse Effect.

ARTICLE 11

RIGHTS AND REMEDIES AFTER
DEFAULT

Section 11.1           Rights
and Remedies.  Upon the occurrence of
(a) an Event of Default pursuant to Section 10.7, all Obligations shall
be immediately due and payable and this Agreement and the obligation of Lenders
to make Advances shall be deemed terminated, (b) any of the other Events of
Default and at any time thereafter (such default not having previously been cured),
at the option of Agent or Required Lenders, all Obligations shall be
immediately due and payable and Lenders shall have the right to terminate this
Agreement and/or to terminate the obligation of Lenders to make Advances, and
(c) a filing of a petition against any Loan Party in any involuntary case under
any state or federal bankruptcy laws, the obligation of Lenders to make
Advances hereunder shall be terminated other than as may be required by an
appropriate order of the bankruptcy court having jurisdiction over such Loan
Party.  Upon the occurrence of any Event
of Default, Agent shall have the right to exercise any and all other rights and
remedies provided for herein, under the UCC and at law or equity generally,
including, without limitation, the right to foreclose the security interests
granted herein and to realize upon any Collateral by any available judicial
procedure and/or to take possession of and sell any or all of the Collateral
with or without judicial process.  Agent
may enter any of any Loan Party’s premises or other premises without legal
process and without incurring liability to any Loan Party therefor, and Agent
may thereupon, or at any time thereafter, in its discretion without notice or
demand, take the Collateral and remove the same to such place as Agent may deem
advisable and Agent may require any Loan Party to make the Collateral available
to Agent at a convenient place within the continental U.S.  With or without having the Collateral at the
time or place of sale, Agent may sell the Collateral, or any part thereof, at
public or private sale, at any time or place, in one or more sales, at such
price or prices, and upon such terms, either for cash, credit or future
delivery, as Agent may elect.  Except as
to that part of the Collateral which is perishable or threatens to decline
speedily in value or is of a type customarily sold on a recognized market,
Agent shall give the applicable Loan Party reasonable notification of such sale
or sales, it being agreed that in all events written notice sent to such Loan
Party at least five (5) days prior to such sale or sales is reasonable
notification.  At any public sale Agent
or any Lender may bid for and become the purchaser, and Agent, any Lender or
any other purchaser at any such sale thereafter shall hold the Collateral sold
absolutely free from any claim or right of whatsoever kind, including any
equity of redemption and such right and equity are hereby expressly waived and
released by each Loan Party.  In
connection with the exercise of the foregoing remedies, Agent is granted
permission to use all of each Loan Party’s (i) trademarks, trade styles, trade
names, patents, patent applications, licenses, franchises and other proprietary
rights which are used in connection with Inventory for the purpose of disposing
of such Inventory and (ii) Equipment for the purpose of completing the
manufacture of unfinished goods.  The
proceeds realized from the sale of 

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any Collateral
shall be applied in the order set forth in Section 11.5 hereof.  If any deficiency shall arise, each Loan
Party shall remain liable to Agent and Lenders therefor.

Section 11.2           Agent’s
Discretion.  Agent shall have the
right in its sole discretion to determine which rights, Liens, security
interests or remedies Agent may at any time pursue, relinquish, subordinate or
modify or to take any other action with respect thereto and such determination
will not in any way modify or affect any of Agent’s or Lenders’ rights
hereunder.

Section 11.3           Setoff.  In addition to any other rights which Agent
or any Lender may have under Applicable Law, upon the occurrence and during the
continuance of an Event of Default hereunder, Agent and such Lender shall have
a right to apply any Loan Party’s property held by Agent and such Lender to
reduce the Obligations.

Section 11.4           Rights
and Remedies not Exclusive.  The
enumeration of the foregoing rights and remedies is not intended to be
exhaustive and the exercise of any rights or remedies shall not preclude the
exercise of any other rights or remedies provided for herein or otherwise
provided by law, all of which shall be cumulative and not alternative.

Section 11.5           Allocation
of Payments After Event of Default. 
Notwithstanding any other provisions of this Agreement to the contrary,
after the occurrence and during the continuance of an Event of Default, all
amounts collected or received by Agent on account of the Obligations or any
other amounts outstanding under any of the Other Documents or in respect of the
Collateral may, at Agent’s discretion, be paid over or delivered as follows:

FIRST,
to the payment of all reasonable out-of-pocket costs and expenses (including
without limitation, reasonable attorneys’ fees) of Agent in connection with
enforcing its rights and the rights of Agent and/or Lenders under this
Agreement and the Other Documents and any protective advances made by Agent
with respect to the Collateral under or pursuant to the terms of this
Agreement;

SECOND,
to payment of any fees owed to Agent;

THIRD,
to the payment of all reasonable out-of-pocket costs and expenses (including
without limitation, reasonable attorneys’ fees) of each of the Lenders in
connection with enforcing its rights under this Agreement and the Other
Documents or otherwise with respect to the Obligations owing to such Lender;

FOURTH,  to the payment of all of the Obligations
consisting of accrued fees and interest;

FIFTH,
to the payment of the outstanding principal amount of the Obligations
(including the payment or cash collateralization of any outstanding Letters of
Credit);

SIXTH,
to all other Obligations and other obligations which shall have become due and
payable under the Other Documents or otherwise and not repaid pursuant to
clauses “FIRST” through “FIFTH” above; and

SEVENTH,
to the payment of the surplus, if any, to whoever may be lawfully entitled to
receive such surplus.

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In carrying out the foregoing, (a) amounts received
shall be applied in the numerical order provided until exhausted prior to
application to the next succeeding category; (b) each of the Lenders shall
receive (so long as it is not a Defaulting Lender) an amount equal to its pro
rata share (based on the proportion that the then outstanding Advances held by
such Lender bears to the aggregate then outstanding Advances) of amounts
available to be applied pursuant to clauses “THIRD”, “FOURTH”, “FIFTH” and “SIXTH”
above; and (c) to the extent that any amounts available for distribution
pursuant to clause “FIFTH” above are attributable to the issued but undrawn
amount of outstanding Letters of Credit, such amounts shall be held by Agent in
a cash collateral account and applied (i) first, to reimburse the Issuer from
time to time for any drawings under such Letters of Credit and (ii) then,
following the expiration of all Letters of Credit, to all other obligations of
the types described in clauses “FIFTH” and “SIXTH” above in the manner provided
in this Section 11.5.

ARTICLE 12

WAIVERS AND JUDICIAL
PROCEEDINGS

Section 12.1           Waiver
of Notice.  Each Loan Party hereby
waives notice of non-payment of any of the Receivables, demand, presentment,
notice of intent to accelerate and notice of acceleration, protest and notice
thereof with respect to any and all instruments, notice of acceptance hereof,
notice of loans or advances made, credit extended, Collateral received or
delivered, or any other action taken in reliance hereon, and all other demands
and notices of any description, except such as are expressly provided for
herein.

Section 12.2           Delay.  No delay or omission on Agent’s or any Lender’s
part in exercising any right, remedy or option shall operate as a waiver of
such or any other right, remedy or option or of any default.

Section 12.3           Jury
Waiver.  EACH PARTY TO THIS AGREEMENT
HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION
OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN
ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES
HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE
TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE, AND
EACH PARTY HEREBY CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO
THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH
ANY COURT AS WRITTEN EVIDENCE OF THE CONSENTS OF THE PARTIES HERETO TO THE
WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

ARTICLE 13

EFFECTIVE DATE AND
TERMINATION

Section 13.1           Term.  This Agreement, which shall inure to the
benefit of and shall be binding upon the respective successors and permitted
assigns of each Loan Party, Agent and each Lender, shall become effective on
the date hereof.  Lenders’ obligations to
make Advances in accordance with the terms and provisions of this Agreement
shall continue in full force and effect for the period (the “Term”) 

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commencing on
the effective date of this Agreement and ending on the earlier of (a) December
1, 2008 or (b) the date this Agreement is terminated as herein provided.  Borrower may terminate Lenders’ obligations
to make Advances in accordance with the terms and provisions of this Agreement
at any time upon at least 90 days’ prior written notice and upon payment in
full of the Obligations.

Section 13.2           Termination.  The termination of Lenders’ obligations to
make Advances under this Agreement shall not affect any Loan Party’s, Agent’s
or any Lender’s rights, or any of the Obligations, and the provisions hereof
shall continue to be fully operative until all transactions entered into,
rights or interests created or Obligations have been fully disposed of,
concluded or liquidated.  Without
limiting the generality of the foregoing, the security interests, Liens and
rights granted to Agent and Lenders hereunder and the financing statements
filed hereunder shall continue in full force and effect, notwithstanding the
termination of Lenders’ obligations to make Advances under this Agreement or
the fact that Borrower’s Account may from time to time be temporarily in a zero
or credit position, until all of the Obligations have been paid or performed in
full after the termination of this Agreement. 
Accordingly, each Loan Party waives any rights which it may have under
the UCC to demand the filing of termination statements with respect to the
Collateral, and Agent shall not be required to send such termination statements
to any Loan Party, or to file them with any filing office, unless and until
this Agreement shall have been terminated in accordance with its terms and all
Obligations indefeasibly paid in full in immediately available funds.  All representations, warranties, covenants,
waivers and agreements contained herein shall survive such termination hereof
until all Obligations are indefeasibly paid or performed in full.

ARTICLE 14

REGARDING AGENT

Section 14.1           Appointment.  Each Lender hereby designates PNC to act as
Agent for such Lender under this Agreement and the Other Documents.  Each Lender hereby irrevocably authorizes
Agent to take such action on its behalf under the provisions of this Agreement
and the Other Documents and to exercise such powers and to perform such duties
hereunder and thereunder as are specifically delegated to or required of Agent
by the terms hereof and thereof and such other powers as are reasonably
incidental thereto and Agent shall hold all Collateral, payments of principal
and interest, fees, charges and collections (without giving effect to any
collection days) received pursuant to this Agreement, for the ratable benefit
of Lenders.  Agent may perform any of its
duties hereunder by or through its agents or employees.  As to any matters not expressly provided for
by this Agreement (including without limitation, collection of the Notes) Agent
shall not be required to exercise any discretion or take any action, but shall
be required to act or to refrain from acting (and shall be fully protected in
so acting or refraining from acting) upon the instructions of the Required
Lenders, and such instructions shall be binding; provided, however,
that Agent shall not be required to take any action which exposes Agent to
liability or which is contrary to this Agreement or the Other Documents or
Applicable Law unless Agent is furnished with an indemnification reasonably
satisfactory to Agent with respect thereto.

Section 14.2           Nature
of Duties.  Agent shall have no
duties or responsibilities except those expressly set forth in this Agreement
and the Other Documents.  Neither Agent
nor any of its officers, directors, employees or agents shall be (a) liable for
any action taken or omitted by them as such hereunder or in connection
herewith, unless caused by their gross (not mere) negligence or willful
misconduct, or (b) responsible in any manner for any recitals, statements,
representations or warranties made by any Loan Party or Limited Partner or any
officer thereof contained in this Agreement, or in any of the Other Documents
or in any certificate, report, statement or other document referred to or
provided for in, or received by Agent under or in connection with, this
Agreement or any of the Other Documents or for the value, validity,
effectiveness, genuineness, due execution, enforceability or sufficiency of
this 

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Agreement, or
any of the Other Documents or for any failure of any Loan Party or Limited
Partner to perform its obligations hereunder or under any Other Document.  Agent shall not be under any obligation to
any Lender to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Agreement or any of
the Other Documents, or to inspect the properties, books or records of any Loan
Party or any Limited Partner.  The duties
of Agent as respects the Advances to Borrower shall be mechanical and
administrative in nature; Agent shall not have by reason of this Agreement a
fiduciary relationship with respect to any Lender; and nothing in this
Agreement, expressed or implied, is intended to or shall be so construed as to
impose upon Agent any obligations in respect of this Agreement except as
expressly set forth herein.

Section 14.3           Lack
of Reliance on Agent and Resignation. 
Independently and without reliance upon Agent or any other Lender, each
Lender has made and shall continue to make (a) its own independent
investigation of the financial condition and affairs of each Loan Party and
Limited Partner in connection with the making and the continuance of the
Advances hereunder and the taking or not taking of any action in connection
herewith, and (b) its own appraisal of the creditworthiness of each Loan Party
and Limited Partner.  Agent shall have no
duty or responsibility, either initially or on a continuing basis, to provide
any Lender with any credit or other information with respect thereto, whether
coming into its possession before making of the Advances or at any time or
times thereafter except as shall be provided by any Loan Party pursuant to the
terms hereof.  Agent shall not be
responsible to any Lender for any recitals, statements, information,
representations or warranties herein or in any agreement, document, certificate
or a statement delivered in connection with or for the execution,
effectiveness, genuineness, validity, enforceability, collectability or
sufficiency of this Agreement or any Other Document, or of the financial
condition of any Loan Party or Limited Partner, or be required to make any
inquiry concerning either the performance or observance of any of the terms,
provisions or conditions of this Agreement, the Notes, the Other Documents or
the financial condition of any Loan Party or Limited Partner, or the existence
of any Event of Default or any Default.

Agent may resign on 60 days’ written notice to each of
Lenders and Borrower and, upon such resignation, the Required Lenders will
promptly designate a successor Agent, which successor Agent shall be reasonably
satisfactory to Borrower if (but only if) no Default then exists.

Any such successor Agent shall succeed to the rights,
powers and duties of Agent, and the term “Agent” shall mean such successor
agent effective upon its appointment, and the former Agent’s rights, powers and
duties as Agent shall be terminated, without any other or further act or deed
on the part of such former Agent.  After
any Agent’s resignation as Agent, the provisions of this Article 14
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under this Agreement.

Section 14.4           Certain Rights of
Agent.  If Agent shall request
instructions from Lenders with respect to any act or action (including failure
to act) in connection with this Agreement or any Other Document, Agent shall be
entitled to refrain from such act or taking such action unless and until Agent
shall have received instructions from the Required Lenders; and Agent shall not
incur liability to any Person by reason of so refraining.  Without limiting the foregoing, Lenders shall
not have any right of action whatsoever against Agent as a result of its acting
or refraining from acting hereunder in accordance with the instructions of the
Required Lenders.

Section 14.5           Reliance.  Agent shall be entitled to rely, and shall be
fully protected in relying, upon any note, writing, resolution, notice,
statement, certificate, telex, teletype or telecopier message, cablegram, order
or other document or telephone message reasonably believed by it to be genuine
and correct and to have been signed, sent or made by the proper person or
entity, and, with respect to all legal matters pertaining to this Agreement and
the Other Documents and its duties hereunder, upon advice of 

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counsel selected by it.  Agent
may employ agents and attorneys-in-fact and shall not be liable for the default
or misconduct of any such agents or attorneys-in-fact selected by Agent with
reasonable care.

Section 14.6           Notice
of Default.  Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default hereunder or under the Other Documents, unless Agent has received
notice from a Lender or Borrower referring to this Agreement or the Other
Documents, describing such Default or Event of Default and stating that such
notice is a “notice of default”.  In the
event that Agent receives such a notice, Agent shall give notice thereof to
Lenders.  Agent shall take such action
with respect to such Default or Event of Default as shall be reasonably
directed by the Required Lenders; provided, however, that, unless
and until Agent shall have received such directions, Agent may (but shall not
be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable in the
best interests of Lenders.

Section 14.7           Indemnification.  To the extent Agent is not reimbursed and
indemnified by Borrower, each Lender will reimburse and indemnify Agent in
proportion to its respective portion of the Advances (or, if no Advances are
outstanding, according to its Commitment Percentage), from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by or asserted against Agent in performing its
duties hereunder, or in any way relating to or arising out of this Agreement or
any Other Document; provided that, Lenders shall not be liable for any portion
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from Agent’s gross
(not mere) negligence or willful misconduct.

Section 14.8           Agent
in its Individual Capacity.  With
respect to the obligation of Agent to lend under this Agreement, the Advances
made by it shall have the same rights and powers hereunder as any other Lender
and as if it were not performing the duties as Agent specified herein; and the
term “Lender” or any similar term shall, unless the context clearly otherwise
indicates, include Agent in its individual capacity as a Lender.  Agent may engage in business with any Loan
Party or Limited Partner as if it were not performing the duties specified
herein, and may accept fees and other consideration from any Loan Party or
Limited Partner for services in connection with this Agreement or otherwise
without having to account for the same to Lenders.

Section 14.9           Delivery
of Documents.  To the extent Agent
receives financial statements required under Sections 9.7, 9.8, 9.11
or 9.12, and the monthly Borrowing Base Certificate, from Borrower
pursuant to the terms of this Agreement, Agent will promptly furnish such
documents and information to Lenders.

Section 14.10         Borrower’s
Undertaking to Agent.  Without
prejudice to its obligations to Lenders under the other provisions of this
Agreement, Borrower hereby undertakes with Agent to pay to Agent from time to
time on demand all amounts from time to time due and payable by Borrower for
the account of Agent or Lenders or any of them pursuant to this Agreement to
the extent not already paid.  Any payment
made pursuant to any such demand shall pro tanto satisfy Borrower’s obligations
to make payments for the account of Lenders or the relevant one or more of them
pursuant to this Agreement.

Section 14.11         No
Reliance on Agent’s Customer Identification Program.  Each Lender acknowledges and agrees that
neither such Lender, nor any of its Affiliates, participants or assignees, may
rely on the Agent to carry out such Lender’s or its Affiliate’s, participant’s
or assignee’s customer identification program, or other obligations required or
imposed under or pursuant to the USA Patriot Act or the regulations thereunder,
including the regulations contained in 31 CFR 103.121 (as hereafter amended or
replaced, the “CIP Regulations”), or any other Anti-Terrorism Law,
including any programs involving any of the following items relating to or in
connection with any of the Loan Parties, their 

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Affiliates or
their agents, the Loan Documents or the transactions hereunder or contemplated
hereby:  (a) any identity verification
procedures, (b) any recordkeeping, (c) comparisons with government lists, (d)
customer notices or (e) other procedures required under the CIP Regulations or
such other laws.

Section 14.12         Certifications
from Banks and Participants regarding USA Patriot Act.  Each Lender or assignee or participant of a
Lender that is not incorporated under the laws of the U.S. or a state thereof
(and is not excepted from the certification requirement contained in Section
313 of the USA Patriot Act and the applicable regulations because it is both
(a) an affiliate of a depository institution or foreign bank that maintains a
physical presence in the U.S. or foreign county, and (b) subject to supervision
by a banking authority regulating such affiliated depository institution or
foreign bank) shall deliver to Agent the certification, or, if applicable,
recertification, certifying that such Lender is not a “shell” and certifying to
other matters as required by Section 313 of the USA Patriot Act and the
applicable regulations:  (i) within 10
days after the Closing Date, and (ii) at such other times as are required under
the USA Patriot Act.

ARTICLE 15

MISCELLANEOUS

Section 15.1           Governing
Law.  This Agreement shall be
governed by and construed in accordance with the laws of the State of Texas
applied to contracts to be performed wholly within the State of Texas.  Any judicial proceeding brought by or against
Borrower or any other Loan Party with respect to any of the Obligations, this
Agreement, the Other Documents or any related agreement may be brought in any
court of competent jurisdiction referred to in the last sentence of this
Section below, and, by execution and delivery of this Agreement, each Loan
Party accepts for itself and in connection with its properties, generally and
unconditionally, the non-exclusive jurisdiction of such courts, and irrevocably
agrees to be bound by any judgment rendered thereby in connection with this
Agreement.  Each Loan Party hereby waives
personal service of any and all process upon it and consents that all such
service of process may be made by registered mail (return receipt requested)
directed to it at its address set forth in Section 15.6 and service so
made shall be deemed completed five (5) days after the same shall have been so
deposited in the mails of the U.S. 
Nothing herein shall affect the right to serve process in any manner
permitted by law.  Each of Loan Party,
Agent and Lenders waives any objection to jurisdiction and venue of any action
instituted hereunder in any court referred to in the last sentence of this
Section, and shall not assert any defense based on lack of jurisdiction or
venue or based upon forum non conveniens. 
Each Loan Party waives the right to remove any judicial proceeding
brought against it in any state court to any federal court.  Any judicial proceeding by any Loan Party
against Agent or any Lender, or by Agent or any Lender against any Loan Party,
involving, directly or indirectly, any matter or claim in any way arising out
of, related to or connected with this Agreement or any related agreement, shall
be brought only in the courts of (a) the State of Texas sitting in Dallas,
Texas, or the U.S. for the Northern District (Dallas Division) of the State of
Texas or (b) the State of New York sitting in New York, New York, or the U.S.
for the Southern District of the State of New York.

Section 15.2           Entire
Understanding.

(a)           This Agreement and the
Other Documents are intended by each Loan Party, Agent and Lenders to be the
final, complete and exclusive expression of the agreements between and/or among
them.  This Agreement and the Other
Documents supersede any and all prior oral or written agreements relating to
the subject matter hereof and thereof.

THIS WRITTEN AGREEMENT AND THE OTHER DOCUMENTS
REPRESENT THE FINAL AGREEMENT BETWEEN AND AMONG THE PARTIES AND 

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MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES.  THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN OR AMONG THE PARTIES.

Neither this Agreement nor any portion or provisions
hereof may be changed, modified, amended, waived, supplemented, discharged,
cancelled or terminated orally or by any course of dealing, or in any manner
other than by an agreement in writing, signed by the party to be charged.  Each Loan Party acknowledges that it has been
advised by counsel in connection with the execution of this Agreement and Other
Documents and is not relying upon oral representations or statements
inconsistent with the terms and provisions of this Agreement.

(b)           The Required Lenders,
Agent and Borrower may, subject to the provisions of this Section 15.2(b),
from time to time enter into written supplemental agreements to this Agreement
or the Other Documents for the purpose of adding or deleting any provisions or
otherwise changing, varying or waiving in any manner the rights of Lenders,
Agent, Borrower or any other Loan Party thereunder or the conditions,
provisions or terms thereof or waiving any Event of Default thereunder, but
only to the extent specified in such written agreements; provided, however,
that no such supplemental agreement shall, without the consent of all Lenders:

(i)            increase the
Commitment Percentage of any Lender, the maximum dollar commitment of any
Lender, the Maximum Revolving Advance Amount or the Term Loans Amount; or

(ii)           extend the maturity of
any Loan or Note or the due date for any amount payable hereunder, or decrease
the rate of interest or reduce any fee payable by Borrower to Lenders pursuant
to this Agreement; or

(iii)          alter the definition of
the term Required Lenders or alter, amend or modify this Section 15.2(b);
or

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

(v)           change the rights and
duties of Agent; or

(vi)          increase the Advance
Rates above the Advance Rates in effect on the Closing Date; or

(vii)         release any Guarantor.

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

In the event that Agent requests the consent of a
Lender pursuant to this Section 15.2 and such Lender shall not respond
or reply to Agent in writing within five (5) days of delivery of such request,
such Lender shall be deemed to have consented to the matter that was the
subject of the request.  In the event 

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that Agent requests the consent of a Lender pursuant
to this Section 15.2 and such consent is denied, then PNC may, at its
option, require such Lender to assign its interest in the Advances to PNC or to
another Lender or to any other Person designated by Agent (the “Designated
Lender”), for a price equal to the then outstanding principal amount
thereof plus accrued and unpaid interest and fees due such Lender, which
interest and fees shall be paid when collected from Borrower or any other Loan
Party.  In the event PNC elects to
require any Lender to assign its interest to PNC or to the Designated Lender,
PNC will so notify such Lender in writing within 45 days following such Lender’s
denial, and such Lender will assign its interest to PNC or the Designated
Lender no later than five (5) days following receipt of such notice pursuant to
a Commitment Transfer Supplement executed by such Lender, PNC or the Designated
Lender, as appropriate, and Agent.

Notwithstanding (a) the existence of a Default or an
Event of Default, (b) that any of the other applicable conditions precedent set
forth in Section 8.2 hereof have not been satisfied or (c) any other
provision of this Agreement, Agent may at its discretion and without the
consent of the Required Lenders, voluntarily permit the outstanding Revolving
Advances at any time to exceed the Formula Amount by up to five percent (5%) of
the Formula Amount for up to 30 consecutive Business Days (the “Out-of-Formula
Loans”).  If Agent is willing in its
sole and absolute discretion to make such Out-of-Formula Loans, then each
Lender shall (unless Agent expressly notifies Lenders that Agent shall not
require such Lenders’ participation therein) participate in the making of such
Out-of-Formula Loans as if the same were Revolving Advances made or to be made
in accordance with this Agreement and such Out-of-Formula Loans shall be payable
on demand and shall bear interest at the Default Rate for Revolving Advances
consisting of Domestic Rate Loans; provided that, if Lenders do make
Out-of-Formula Loans, neither Agent nor Lenders shall be deemed thereby to have
changed the limits of Section 2.1(a). 
For purposes of this paragraph, the discretion granted to Agent
hereunder shall not preclude involuntary overadvances that may result from time
to time due to the fact that the Formula Amount was unintentionally exceeded
for any reason, including, but not limited to, Collateral previously deemed to
be either “Eligible Receivables” or “Eligible Inventory”, as applicable,
becomes ineligible, collections of Receivables applied to reduce outstanding
Revolving Advances are thereafter returned for insufficient funds or
overadvances are made to protect or preserve the Collateral.  In the event Agent involuntarily permits the
outstanding Revolving Advances to exceed the Formula Amount by more than ten
percent (10%), Agent shall use its efforts to have Borrower decrease such
excess in as expeditious a manner as is practicable under the circumstances and
not inconsistent with the reason for such excess.  Revolving Advances made after Agent has
determined the existence of involuntary overadvances shall be deemed to be
involuntary overadvances and shall be decreased in accordance with the
preceding sentence.

In addition to (and not in substitution of) the
discretionary Revolving Advances permitted above in this Section 15.2,
Agent is hereby authorized by Loan Parties and Lenders, from time to time in
Agent’s sole discretion, (A) after the occurrence and during the continuation
of a Default or an Event of Default, or (B) at any time that any of the other
applicable conditions precedent set forth in Section 8.2 hereof have not
been satisfied, to make Revolving Advances to Borrower on behalf of Lenders
which Agent, in its reasonable business judgment, deems necessary or desirable
(1) to preserve or protect the Collateral, or any portion thereof, (2) to
enhance the likelihood of, or maximize the amount of, repayment of the Advances
and other Obligations, or (3) to pay any other amount chargeable to Borrower
pursuant to the terms of this Agreement; provided, that at any time after
giving effect to any such Revolving Advances the outstanding Revolving Advances
do not exceed one hundred and ten percent (110%) of the Formula Amount.

Section 15.3           Successors
and Assigns; Participations; New Lenders.

(a)           This Agreement shall be
binding upon and inure to the benefit of Borrower, Agent, each Lender, all
future holders of the Obligations and their respective successors and 

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assigns, except that neither Borrower nor any
other Loan Party may assign or transfer any of its rights or obligations under
this Agreement without the prior written consent of Agent and each Lender.

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

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

(d)           Agent shall maintain at
its address a copy of each Commitment Transfer Supplement delivered to it and a
register (the “Register”) for the recordation of the names and addresses
of each Lender and the outstanding principal, accrued and unpaid interest and
other fees due hereunder.  The entries in
the Register shall be conclusive, in the absence of manifest error, and each
Loan Party, Agent and Lenders may treat each Person whose name is recorded in
the Register as the owner of the Advance recorded therein for the purposes of
this Agreement.  

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The Register shall be available for
inspection by Borrower or any Lender at any reasonable time and from time to
time upon reasonable prior notice.  Agent
shall receive a fee in the amount of $3,500 payable by the applicable
Purchasing Lender upon the effective date of each transfer or assignment to
such Purchasing Lender.

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

Section 15.4           Application
of Payments.  Agent shall have the
continuing and exclusive right to apply or reverse and re-apply any
payment and any and all proceeds of Collateral to any portion of the
Obligations in accordance with the terms of this Agreement.  To the extent that any Loan Party or Limited
Partner makes a payment or Agent or any Lender receives any payment or proceeds
of the Collateral for any Loan Party’s or Limited Partner’s benefit, which are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, debtor in possession, receiver,
custodian or any other party under any bankruptcy law, common law or equitable
cause, then, to such extent, the Obligations or part thereof intended to be
satisfied shall be revived and continue as if such payment or proceeds had not
been received by Agent or such Lender.

Section 15.5           Indemnity.  Each Loan Party shall indemnify Agent, each
Lender and each of their respective officers, directors, Affiliates, attorneys,
employees and agents from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses and
disbursements of any kind or nature whatsoever (including, without limitation,
fees and disbursements of counsel) which may be imposed on, incurred by or
asserted against Agent or any Lender in any litigation, proceeding or
investigation instituted or conducted by any governmental agency or
instrumentality or any other Person with respect to any aspect of, or any
transaction contemplated by, or referred to in, or any matter related to, this
Agreement or the Other Documents, whether or not Agent or any Lender is a party
thereto, EXCEPT TO THE EXTENT THAT ANY OF THE FOREGOING ARISES OUT OF THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF THE PARTY BEING INDEMNIFIED.

Section 15.6           Notice.  Any notice or request hereunder may be given
to any Loan Party or to Agent or any Lender at their respective addresses set
forth below or at such other address as may hereafter be specified in a notice
designated as a notice of change of address under this Section.  Any notice, request, demand, direction or
other communication (for purposes of this Section 15.6 only, a “Notice”)
to be given to or made upon any party hereto under any provision of this
Agreement shall be given or made by telephone or in writing (which includes by
means of electronic transmission (i.e., “e-mail”) or facsimile transmission
or by setting forth such Notice on a site on the World Wide Web (a “Website
Posting”) if Notice of such Website Posting (including the information
necessary to access such site) has previously been delivered to the applicable
parties hereto by another means set forth in this Section 15.6) in
accordance with this Section 15.6. 
Any such Notice must be delivered to each applicable party hereto at the
addresses or numbers set forth under its name in this Section 15.6 or in
accordance with any subsequent unrevoked Notice from any such party that is
given in accordance with this Section 15.6.  Any Notice shall be effective:

(a)           In the case of
hand-delivery, when delivered;

(b)           If given by mail, four
(4) days after such Notice is deposited with the United States Postal Service,
with first-class postage prepaid, return receipt requested;

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(c)           In the case of a telephonic Notice,
when a party is contacted by telephone, if delivery of such telephonic Notice
is confirmed no later than the next Business Day by hand delivery, a facsimile
or electronic transmission, a Website Posting or an overnight courier delivery
of a confirmatory Notice (received at or before noon on such next Business
Day);

(d)           In the case of a facsimile
transmission, when sent to the applicable party’s facsimile machine’s telephone
number, if the party sending such Notice receives confirmation of the delivery
thereof from its own facsimile machine;

(e)           In the case of electronic
transmission, when actually received;

(f)            In the case of a Website Posting,
upon delivery of a Notice of such posting (including the information necessary
to access such site) by another means set forth in this Section 15.6;
and

(g)           If given by any other means
(including by overnight courier), when actually received.

Any Lender giving a Notice to any Loan Party shall
concurrently send a copy thereof to Agent, and Agent shall promptly notify the
other Lenders of its receipt of such Notice.

(i)            If to Agent or PNC:

PNC Bank, National
Association

Two Tower Center Blvd.,
8th Floor

East Brunswick, N.J.
08816

Attn:       Josephine Griffin

Telephone:       (732) 220-4388

Telecopier:        (732)
220-4548

Email:  josephine.griffin@pncbusinesscredit.com

and

PNC Bank, National
Association

2121 Ross Avenue, Suite
1850

Dallas, TX  75201

Attn:       John Wattinger

Telephone:       (214) 871-1247

Telecopier:        (214)
871-2015

Email:  john.wattinger@pncbusinesscredit.com

and

PNC Bank, National
Association

PNC Agency Services

PNC Firstside Center

500 First Avenue, 4th
Floor

Pittsburgh,
Pennsylvania  15219

Attn:       Lisa Pierce

Telephone:       (412) 762-6442

Telecopier:        (412)
762-8672

 102
 

 

with a copy to:

Jenkens & Gilchrist,
PC

1445 Ross Avenue, Suite
3700

Dallas, Texas 75202

Attn:       Ronald D. Rosener, Esq.

Telephone:       (214) 855-4332

Telecopier:        (214)
855-4300

Email:  rrosener@jenkens.com

(ii)           If to a Lender other than Agent, at
its address, etc., as specified on the signature pages hereof or in any
Commitment Transfer Supplement to which it is a party.

(iii)          If to Borrower or any other Loan
Party:

Insight Equity A.P. X, LP

(or, in the case of a
Loan Party other than Borrower, 

to such Loan Party c/o Insight Equity A.P. X, LP)

1400 Civic Place, Suite
250

Southlake, Texas 76092

Attn:       Theodore W. Beneski

Telephone:       817-488-7744

Facsimile:          817-488-7739

Email:  tbeneski@insightequity.com

with a copy to:      Insight
Equity A.P. X, LP

(or, in the case of a
Loan Party other than Borrower, 

to such Loan Party c/o Insight Equity A.P. X, LP)

7000 Sunwood Drive NW

Ramsey, Minnesota   55303

Attn:       Rich Faber

Telephone:       763-506-9027

Facsimile:          763-506-9222

Email:  rich.faber@vision-ease.com

with a copy to:      Hunton
& Williams LLP

Energy Plaza, 30th Floor

1601 Bryan Street

Dallas, Texas  75201-3402

Attn:       Robert J. Conner

Telephone:       214-979-3085

Facsimile:          214-880-0011

Email:  rconner@hunton.com

Section 15.7           Survival.  The obligations of Loan Parties under Sections
2.2(f), 3.7, 3.8, 3.9, 4.19(h), 14.7 and
15.5 shall survive termination of this Agreement and the Other Documents
and payment in full of the Obligations.

Section 15.8           Severability.  If any part of this Agreement is contrary to,
prohibited by or deemed invalid under Applicable Laws or applicable
regulations, such provision shall be inapplicable and 

 103
 

 

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

Section 15.9           Expenses.  All reasonable costs and expenses of Agent or
(subject to the limitations below) any Lender paid or incurred in any way in
connection with this Agreement or the Other Documents or any of the
transactions contemplated hereby or thereby, including, without limitation,
reasonable attorneys’ fees (including the allocated costs of in house counsel)
and disbursements incurred by Agent on its behalf or on behalf of Lenders or
incurred by other Lenders for one law firm retained by such other Lenders
(which law firm shall be appointed with the approval of the Required Lenders)
(a) in all efforts made to enforce payment of any Obligation or effect
collection of any Collateral, or (b) in connection with the entering into, or
modification, amendment, administration and/or enforcement of, this Agreement
or any Other Document or any rights or remedies or consents or waivers
hereunder or thereunder and all related agreements, documents and instruments,
or (c) in instituting, maintaining, preserving, enforcing and foreclosing on
Agent’s security interest in or Lien on any of the Collateral, whether through
judicial proceedings or otherwise, or (d) in defending or prosecuting any
actions or proceedings arising out of or relating to Agent’s or any Lender’s
transactions with any Loan Party or Limited Partner, or (e) in connection with
any advice given to Agent or any Lender with respect to its rights, remedies,
duties or obligations under this Agreement and all related agreements, may be
charged to Borrower’s Account and shall be part of the Obligations and shall be
payable on demand by Agent.

Section 15.10         Injunctive
Relief.  Each Loan Party recognizes
that, in the event any Loan Party fails to perform, observe or discharge any of
its Indebtedness, obligations or liabilities under this Agreement or any Other
Document, any remedy at law may prove to be inadequate relief to Lenders;
therefore, Agent, if Agent so requests, shall be entitled to temporary and
permanent injunctive relief in any such case without the necessity of proving
that actual damages are not an adequate remedy.

Section 15.11         Consequential
Damages.  Neither Agent nor any
Lender, nor any agent or attorney for any of them, shall be liable to any Loan
Party or any Limited Partner for consequential, special, incidental or any
similar damages arising from any breach of contract, tort or other wrong
relating to the establishment, administration or collection of the Obligations.

Section 15.12         Captions.  The captions and headings at various places
in this Agreement are intended for convenience only and do not constitute and
shall not be interpreted as part of this Agreement.

Section 15.13         Counterparts;
Facsimile Signatures.  This Agreement
may be executed in any number of and by different parties hereto on separate
counterparts, all of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute one and the same agreement.  Any signature delivered by a party by
facsimile transmission shall be deemed to be an original signature hereto.

Section 15.14         Construction.  The parties acknowledge that each party and
its counsel have reviewed this Agreement and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement or
any amendments, schedules or exhibits thereto.

Section 15.15         Confidentiality;
Sharing Information.

(a)           Agent, each Lender and each
Transferee shall hold all non-public information obtained by Agent, such Lender
or such Transferee pursuant to the requirements of this Agreement in accordance
with Agent’s, such Lender’s and such Transferee’s customary procedures for
handling confidential information of this nature; provided, however,
Agent, each 

 104
 

 

Lender and each Transferee may disclose such
confidential information (i) to its examiners, affiliates, outside auditors,
counsel and other professional advisors, (ii) to Agent, any Lender or to any
prospective Transferees and Purchasing Lenders, and (iii) as required or requested
by any Governmental Body or representative thereof or pursuant to legal
process; provided, further, however, that (A) unless
specifically prohibited by Applicable Law or court order, Agent, each Lender
and each Transferee shall use its best efforts, prior to disclosure thereof, to
notify Borrower of the applicable request for disclosure of such non-public
information (1) by a Governmental Body or representative thereof (other than
any such request in connection with an examination of the financial condition
of a Lender or a Transferee by such Governmental Body) or (2) pursuant to legal
process and (B) in no event shall Agent, any Lender or any Transferee be
obligated to return any materials furnished by any Loan Party or Limited
Partner other than those documents and instruments in possession of Agent or
any Lender in order to perfect its Lien on the Collateral once the Obligations
have been paid in full and this Agreement has been terminated.

(b)           Each Loan Party acknowledges that
from time to time financial advisory, investment banking and other services may
be offered or provided to any Loan Party or one or more of its Affiliates (in
connection with this Agreement or otherwise) by any Lender or by one or more
Subsidiaries or Affiliates of such Lender, and each Loan Party hereby
authorizes each Lender to share any information delivered to such Lender by any
Loan Party or Limited Partner pursuant to this Agreement, or in connection with
the decision of such Lender to enter into this Agreement, to any such Subsidiary
or Affiliate of such Lender, it being understood that any such Subsidiary or
Affiliate of any Lender receiving such information shall be bound by the
provisions of this Section 15.15 as if it were a Lender hereunder.  Such authorization shall survive the
repayment of the other Obligations and the termination of the Loan Agreement.

Section 15.16         Publicity.  Each Loan Party and each Lender hereby
authorizes Agent to make appropriate announcements of the financial arrangement
entered into among Loan Parties, Agent and Lenders, including, without
limitation, announcements which are commonly known as tombstones, in such
publications and to such selected parties as Agent shall in its sole and
absolute discretion deem appropriate.

Section 15.17         Amendment
and Restatement.  Effective as of the
Closing Date and upon the effectiveness of this Agreement, this Agreement shall
constitute an amendment and restatement of, but not an extinguishment of the “Obligations”
or other indebtedness, liabilities and/or obligations of Borrower or any other
Loan Party under, the Existing Agreement; provided, however, that
the Waiver and Consent Agreement shall continue to be in effect in accordance
with its terms.

Section 15.18         Subordination
Agreement and Term Loans B Intercreditor Agreement.  Each of the Lenders hereby (a) consents to
Agent’s execution, delivery and performance of the Subordination Agreement and
the Term Loans B Intercreditor Agreement for and on behalf of Agent and
Lenders and (b) acknowledges and agrees that it is bound by all terms and
provisions of the Subordination Agreement and the Term Loans B
Intercreditor Agreement as if it were a signatory thereto and that each of the
Subordination Agreement and the Term Loans B Intercreditor Agreement
constitutes valid and enforceable obligations of such Lender enforceable
against it in accordance with the terms thereof (except as such enforceability
may be limited by any applicable bankruptcy, insolvency, moratorium or similar
laws affecting creditor’s rights generally).

[Remainder of page
intentionally left blank]

 105
 

 

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

 

	
   

  	
   

  	
  BORROWER:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  INSIGHT EQUITY A.P. X, LP

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:    Insight Equity A.P. X Company, LLC

  
	
   

  	
   

  	
  Title: General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
    /s/ Ted. W.
  Beneski

  	
   

  
	
   

  	
   

  	
  Name:  Ted W.
  Beneski

  
	
   

  	
   

  	
  Title:    Chairman of the Board

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  STATE OF TEXAS

  	
  )

  	
   

  	
   

  
	
   

  	
  )

  	
  ss.

  	
   

  	
   

  
	
  COUNTY OF DALLAS

  	
  )

  	
   

  	
   

  
									

 

On the 1st day of December, 2005, before me personally
came Ted W. Beneski, to me known, who being by me duly sworn, did depose and
say that he is the Chairman of the Board of Insight Equity A.P. X Company, LLC,
a limited liability company which is the general partner of Insight Equity A.P.
X, LP which is the limited partnership described in and which executed the
foregoing agreement, and that he signed his name thereto as the act and deed of
such limited liability company in its capacity as general partner, and for and
on behalf, of Insight Equity A.P. X, LP by order of the Managers of such
limited liability company.

 

	
   

  	
   

  	
  /s/ Linda G. McKie

  	
   

  
	
   

  	
   

  	
  Notary Public in
  and for the State of Texas

  
	
   

  	
   

  	
  Printed Name of
  Notary:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Commission
  Expires:

  	
   

  	
   

  
							

 

 106
 

 

 

	
   

  	
  SUBSIDIARIES:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INSIGHT EQUITY
  A.P. X ASIA, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Ted. W. Beneski

  	
   

  
	
   

  	
  Name:  Ted W.
  Beneski

  
	
   

  	
  Title:    Chairman of the Board

  
	
   

  	
   

  
	
   

  	
   

  
	
  STATE OF TEXAS

  	
  )

  	
   

  
	
   

  	
  )

  	
  ss.

  	
   

  
	
  COUNTY OF DALLAS

  	
  )

  	
   

  
								

 

On the 1st day of December, 2005, before me personally
came Ted W. Beneski, to me known, who being by me duly sworn, did depose and
say that he is the Chairman of the Board of INSIGHT EQUITY A.P. X ASIA, LLC,
the entity described in and which executed the foregoing agreement, and that he
signed his name thereto as the act and deed of such entity by order of the sole
Member of such entity.

	
  

  	
  /s/ Linda G. McKie

  	
   

  
	
   

  	
  Notary Public in
  and for the State of

  	
   

  	
   

  
	
   

  	
  Printed Name of
  Notary:

  	
   

  	
   

  
	
   

  	
  Commission
  Expires:

  	
   

  	
   

  
						

 

 107
 

 

 

	
  

  	
   

  	
  PT. VISION-EASE ASIA

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
    /s/ Ted W. Beneski

  	
   

  
	
   

  	
   

  	
  Name:  Ted W. Beneski

  
	
   

  	
   

  	
  Title:    President
  Commissioner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  STATE OF TEXAS

  	
  )

  	
   

  	
   

  
	
   

  	
  ) 

  	
  ss.

  	
   

  	
   

  
	
  COUNTY OF DALLAS

  	
  )

  	
   

  	
   

  
							

 

On the 1st day of December, 2005, before me personally
came Ted W. Beneski to me known, who being by me duly sworn, did depose and say
that he is the President Commissioner of P.T. VISION-EASE ASIA, the entity
described in and which executed the foregoing agreement, and that he signed his
name thereto as the act and deed of such entity by order of the President
Commissioner of such entity.

	
   

  	
  /s/ Linda G. McKie

  	
   

  
	
   

  	
  Notary Public in
  and for the State of

  	
   

  	
   

  
	
   

  	
  Printed Name of
  Notary:

  	
   

  	
   

  
	
   

  	
  Commission
  Expires:

  	
   

  	
   

  
						

 

 108
 

 

 

	
  

  	
  INSIGHT EQUITY A.P. X CANADA, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
    /s/ Ted. W
  Beneski

  	
   

  	 

	
   

  	
  Name: Ted W.
  Beneski

  
	
   

  	
  Title:   Chairman of the Board

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  STATE OF TEXAS

  	
  )

  	
   

  	
   

  
	
   

  	
  )

  	
  ss.

  	
   

  	
   

  
	
  COUNTY OF DALLAS

  	
  )

  	
   

  	
   

  
								

 

On the 1st day of December, 2005, before me personally
came Ted W. Beneski , to me known, who being by me duly sworn, did depose and
say that he is the Chairman of the Board of INSIGHT EQUITY A.P. X CANADA, LLC,
the entity described in and which executed the foregoing agreement, and that he
signed his name thereto as the act and deed of such entity by order of the sole
Member of such entity.

	
   

  	
  /s/ Linda G. McKie

  	
   

  
	
   

  	
  Notary Public in
  and for the State of

  	
   

  	
   

  
	
   

  	
  Printed Name of
  Notary:

  	
   

  	
   

  
	
   

  	
  Commission
  Expires:

  	
   

  	
   

  
						

 

 109
 

 

 

	
  

  	
  INSIGHT EQUITY A.P. X CANADA PARTNERS, LP

  
	
   

  	
   

  
	
   

  	
  By:    Insight
  Equity A.P. X Canada, LLC

  
	
   

  	
  Title: General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Ted. W. Beneski

  	
   

  
	
   

  	
  Name: Ted W.
  Beneski

  
	
   

  	
  Title:   Chairman of the Board

  
	
   

  	
   

  
	
   

  	
   

  
	
  STATE OF TEXAS

  	
  )

  	
   

  
	
   

  	
  )

  	
  ss.

  	
   

  
	
  COUNTY OF DALLAS

  	
  )

  	
   

  
						

 

On the 1st day of December, 2005, before me personally
came Ted W. Beneski, to me known, who being by me duly sworn, did depose and
say that he is the Chairman of the Board of the limited liability company which
is the general partner of INSIGHT EQUITY A.P. X CANADA PARTNERS, LP, the entity
described in and which executed the foregoing agreement, and that he signed his
name thereto as the act and deed of such limited liability company in its
capacity as general partner, and for and on behalf, of Insight Equity A.P. X
Canada Partners, LP by order of the sole Member of such limited liability
company.

	
   

  	
  /s/ Helen Stephen Huebert

  	
   

  
	
   

  	
  Notary Public in
  and for the State of

  	
   

  	
   

  
	
   

  	
  Printed Name of
  Notary:

  	
   

  	
   

  
	
   

  	
  Commission
  Expires:

  	
   

  	
   

  
						

 110
 

 

 

	
   

  	
  VISION-EASE CANADA CO.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Ted W. Beneski

  	
   

  
	
   

  	
  Name:  Ted W. Beneski

  
	
   

  	
  Title:    Chairman of the Board

  
	
   

  	
   

  
	
   

  	
   

  
	
  STATE OF TEXAS

  	
  )

  	
   

  
	
   

  	
  )

  	
  ss.

  	
   

  
	
  COUNTY OF DALLAS

  	
  )

  	
   

  
						

 

On the 1st day of December, 2005, before me personally
came Ted W. Beneski to me known, who being by me duly sworn, did depose and say
that he is the Chairman of the Board of VISION-EASE CANADA CO., the entity
described in and which executed the foregoing agreement, and that he signed his
name thereto as the act and deed of such entity by order of the Chairman of the
Board of such entity.

	
   

  	
  /s/ Helen Stephen Huebert

  	
   

  
	
   

  	
  Notary Public in
  and for the State of

  	
   

  	
   

  
	
   

  	
  Printed Name of
  Notary:

  	
   

  	
   

  
	
   

  	
  Commission
  Expires:

  	
   

  	
   

  
						

 

 111
 

 

 

	
  

  	
  VISION EASE LENS EUROPE LIMITED

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Rich
  Faber

  	
   

  
	
   

  	
  Name: Rich Faber

  
	
   

  	
  Title:   Director

  
	
   

  	
   

  
	
   

  	
   

  
	
  STATE OF
  MINNESOTA

  	
  )

  	
   

  
	
   

  	
  )

  	
  ss.

  	
   

  
	
  COUNTY OF ANOKA

  	
  )

  	
   

  
						

 

On the 1st day of December, 2005, before me personally
came Rich Faber, to me known, who being by me duly sworn, did depose and say
that he is the Director of VISION EASE LENS EUROPE LIMITED, the entity
described in and which executed the foregoing agreement, and that he signed his
name thereto as the act and deed of such entity by order of the Director of
such entity.

 

	
   

  	
  /s/ DiAnn D. Johnson

  	
   

  
	
   

  	
  Notary Public in
  and for the State of Minnesota

  
	
   

  	
  Printed Name of
  Notary: DiAnn D. Johson

  
	
   

  	
  Commission
  Expires: January 21, 2010

  

 

 112
 

 

 

	
  

  	
  VISION-EASE LENS LIMITED

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Rich
  Faber

  	
   

  
	
   

  	
  Name: Rich Faber

  
	
   

  	
  Title:   Director

  
	
   

  	
   

  
	
   

  	
   

  
	
  STATE OF
  MINNESOTA

  	
  )

  	
   

  
	
   

  	
  )

  	
  ss.

  	
   

  
	
  COUNTY OF ANOKA

  	
  )

  	
   

  
						

 

On the 1st day of December, 2005, before me personally
came Rich Faber, to me known, who being by me duly sworn, did depose and say
that he is the Director of VISION EASE LENS LIMITED, the entity described in
and which executed the foregoing agreement, and that he signed his name thereto
as the act and deed of such entity by order of the Director of such entity.

 

	
   

  	
  /s/ DiAnn D. Johnson

  	
   

  
	
   

  	
  Notary Public in
  and for the State of Minnesota

  
	
   

  	
  Printed Name of
  Notary: DiAnn D. Johnson

  
	
   

  	
  Commission
  Expires: January 31, 2010

  

 

 113
 

 

 

	
  

  	
  GENERAL PARTNER:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INSIGHT EQUITY A.P. X
  COMPANY, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Ted W. Beneski

  	
   

  
	
   

  	
  Name:  Ted W.
  Beneski

  
	
   

  	
  Title:    Chairman
  of the Board

  
	
   

  	
   

  
	
   

  	
   

  
	
  STATE OF TEXAS

  	
  )

  	
   

  
	
   

  	
  )

  	
  ss.

  	
   

  
	
  COUNTY OF DALLAS

  	
  )

  	
   

  
								

 

On the 1st day of December, 2005, before me personally
came Ted W. Beneski, to me known, who being by me duly sworn, did depose and
say that he is the Chairman of the Board of Insight Equity A.P. X Company, LLC,
the limited liability company described in and which executed the foregoing
agreement, and that he signed his name thereto as the act and deed of such
limited liability company by order of the Managers of such limited liability
company.

 

	
   

  	
  /s/ Helen Stephen Huebert

  	
   

  
	
   

  	
  Notary Public in
  and for the State of Texas

  
	
   

  	
  Printed Name of
  Notary:

  	
   

  	
   

  
	
   

  	
  Commission
  Expires:

  	
   

  	
   

  
					

 

 114
 

 

 

	
  

  	
  AGENT AND A LENDER:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PNC BANK, NATIONAL
  ASSOCIATION,

  
	
   

  	
  as Lender and as Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ John Wattinger

  	
   

  
	
   

  	
  Name:  John
  Wattinger

  
	
   

  	
  Title:   Vice
  President

  
	
   

  	
   

  
	
   

  	
  Two Tower Center Boulevard

  
	
   

  	
  East Brunswick, New Jersey 08816

  
	
   

  	
   

  
	
   

  	
  Commitment Percentage: 100.00%

  
	
   

  	
   

  
	
   

  	
   

  
	
  STATE OF TEXAS

  	
  )

  	
   

  
	
   

  	
  )

  	
  ss.

  	
   

  
	
  COUNTY OF DALLAS

  	
  )

  	
   

  
								

 

On this 1st day of December, 2005, before me personally
came John Wattinger, to me known, who, being by me duly sworn, did depose and
say that he is the Vice President of PNC BANK, NATIONAL ASSOCIATION, and that
he was authorized to sign his name thereto.

 

	
   

  	
  /s/ Helen Stephen Huebert

  	
   

  
	
   

  	
  Notary Public in
  and for the State of Texas

  
	
   

  	
  Printed Name of
  Notary:

  	
   

  	
   

  
	
   

  	
  Commission
  Expires:

  	
   

  	
   

  
					

 

 

 115Exhibit 10.17

SECOND AMENDMENT TO

AMENDED AND RESTATED REVOLVING CREDIT,

TERM LOAN AND SECURITY AGREEMENT

This SECOND AMENDMENT TO AMENDED AND RESTATED REVOLVING
CREDIT, TERM LOAN AND SECURITY AGREEMENT (this “Amendment”) is made and
entered into effective for all purposes as of December 1, 2005 (the “Effective
Date”) among INSIGHT EQUITY A.P. X, LP, a Texas limited partnership (“Borrower”),
INSIGHT EQUITY A.P. X ASIA, LLC, a Delaware limited liability company (“Asia
LLC”), PT. VISION-EASE ASIA, an investment company organized under the laws
of the Republic of Indonesia (“Vision-Ease Asia”), INSIGHT EQUITY A.P. X
CANADA, LLC, a Delaware limited liability company (“Canada LLC”),
INSIGHT EQUITY A.P. X CANADA PARTNERS, LP, a Texas limited partnership (“Canada
LP”), VISION-EASE CANADA CO., an unlimited company organized under the laws
of the Province of Nova Scotia, Canada and successor in interest by
amalgamation to Vision-Ease Canada, Ltd. (“Vision-Ease Canada”), VISION
EASE LENS EUROPE LIMITED, a company limited by shares registered in England and
Wales (“Vision-Ease Europe”), VISION-EASE LENS LIMITED, a company
limited by shares registered in England and Wales (“Vision-Ease Lens”),
INSIGHT EQUITY A.P. X COMPANY, LLC, a Texas limited liability company and the general
partner of Borrower (“General Partner”), the financial institutions
which are now or which hereafter become a party hereto (collectively, “Lenders”
and individually a “Lender”) and PNC BANK, NATIONAL ASSOCIATION (“PNC”),
as agent for Lenders (PNC and its successors and assigns in such capacity, “Agent”).

R E C I T A L S:

A.            Pursuant
to that certain Amended and Restated Revolving Credit, Term Loan and Security
Agreement dated as of December 1, 2005, by and among Borrower, Asia LLC,
Vision-Ease Asia, Canada LLC, Canada LP, Vision-Ease Canada, Vision-Ease
Europe, Vision-Ease Lens, General Partner, Lenders and Agent (as amended by
that certain Waiver and First Amendment to Amended and Restated Revolving
Credit, Term Loan and Security Agreement dated as of December 1, 2005, the
“Agreement”), Lenders extended certain credit facilities to Borrower.

B.            Borrower
and the Loan Parties have requested that the Agreement be amended in certain
respects, and Agent and Lenders are willing to comply with such request subject
to the terms and provisions of this Amendment.

NOW, THEREFORE, in consideration of the mutual
covenants and agreements contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto hereby agree as follows:

ARTICLE 1

DEFINITIONS

Section
1.1  Terms Defined.  Unless otherwise defined in this Amendment,
each capitalized term used in this Amendment has the meaning given to such term
in the Agreement (as amended by this Amendment).

 1
 

 

 

ARTICLE 2

AMENDMENT

Section
2.1  Amendment to Agreement.  Clause (a) of Section 6.6
of the Agreement is hereby amended such that the amount “$-0-“
presently appearing in such clause is deleted and replaced by the following  phrase: 
“an amount equal to the actual Tangible Net Worth of Borrower and its
consolidated Subsidiaries as of December 31, 2005, as derived from the
audited financial statements”.

ARTICLE 3

MISCELLANEOUS

Section
3.1  Representations and Warranties.  Borrower and each Loan Party hereby jointly
and severally represent and warrant to Agent and Lenders that, as of the date
of and after giving effect to this Amendment, (a) the execution, delivery and
performance of this Amendment and any and all other Amendment Documents
executed and/or delivered in connection herewith have been authorized by all
requisite action on the part of Borrower or any Loan Party and will not violate
Borrower’s or any Loan Party’s  organizational documents, (b) the term “Other
Documents” as defined in the Agreement
and as used in the Agreement or any of the Other Documents includes, without
limitation, the Amendment Documents, (c) all representations and warranties set
forth in the Agreement and in the Other Documents are true and correct in all material respects as if made again
on and as of such date (except to the extent that such representations and
warranties were expressly made only in reference to a specific date), (d) no
Default has occurred and is continuing, and (e) the Agreement and the Other
Documents (as amended by this Amendment) are and remain legal, valid, binding
and enforceable obligations of Borrower and/or the Loan Parties, as applicable.

Section
3.2  Governing Law.  THIS AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS APPLIED TO
CONTRACTS TO BE PERFORMED WHOLLY WITHIN THE STATE OF TEXAS.

Section
3.3  Counterparts.  This Amendment may be executed in any number
of counterparts, all of which when taken together shall constitute one
agreement, and any of the parties hereto may execute this Amendment by signing
any such counterpart.  Any signature
delivered by a party by facsimile transmission shall be deemed to be an
original signature hereto.

Section
3.4  No Oral Agreements.  THIS AMENDMENT, TOGETHER WITH THE AGREEMENT
AND THE OTHER DOCUMENTS AS WRITTEN, REPRESENT THE FINAL AGREEMENTS BETWEEN AND
AMONG THE PARTIES HERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN OR AMONG (A) BORROWER, (B) ANY LOAN PARTY, (C) AGENT AND/OR (D) ANY
LENDER.

Section
3.5  Agreement Remains in Effect; No
Waiver.  Except as expressly provided
herein, all terms and provisions of Agreement and the Other Documents shall
remain unchanged and in full force and effect and are hereby ratified and
confirmed.  No waiver by Agent or any
Lender of any Default or Event of Default shall be deemed to be a waiver of any
other Default or Event of Default.  No
delay or omission by Agent or any Lender in exercising any power, right or
remedy shall impair such power, right or remedy or be construed as a waiver
thereof or an acquiescence therein, and no single or partial exercise of any
such power, right or remedy shall preclude other or further exercise thereof or
the exercise of any other power, right or remedy under the Agreement, the Other
Documents or otherwise.

 2
 

 

 

Section
3.6  Survival of Representations and
Warranties.  All representations and
warranties made in this Amendment or any Other Document shall survive the
execution and delivery of this Amendment and the Other Documents, and no
investigation by Agent or any Lender or any closing shall affect the
representations and warranties or the right of Agent or any Lender to rely upon
them.

Section
3.7  Reference to Agreement.  Each of the Agreement and the Other Documents
and any and all other agreements, documents or instruments now or hereafter
executed and/or delivered pursuant to the terms hereof or pursuant to the terms
of the Agreement as amended hereby, are hereby amended so that any reference in
such Agreement or Other Documents to the Agreement shall mean a reference to
the Agreement as amended hereby.

Section
3.8  Severability.  Any provision of this Amendment held by a court
of competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.

Section
3.9  Successors and Assigns.  This Amendment is binding upon and shall
inure to the benefit of Agent, Lenders, Borrower, the other Loan Parties and
their respective successors and assigns, except that neither Borrower nor any
other Loan Party may assign or transfer any of its rights or obligations
hereunder without the prior written consent of Agent and Lenders.

Section
3.10  Headings.  The headings, captions and arrangements used
in this Amendment are for convenience only and shall not affect the
interpretation of this Amendment.

Section
3.11  Consent.  Each Loan Party, as a Guarantor of the
Obligations, hereby consents to Borrower, Agent and Lenders entering into this
Amendment and agrees that (a) the Other Documents to which such Loan Party is a
party shall remain in full force and effect and shall continue to be the legal,
valid and binding obligations of such Loan Party enforceable against it in
accordance with their respective terms and are hereby ratified and confirmed in
all respects, and (b) the indebtedness, liabilities and obligations secured,
guaranteed and/or evidenced by the Other Documents to which such Loan Party is
a party include, without limitation, all “Obligations” as such term is defined
in the Agreement as amended by this Amendment and as such “Obligations” may be
increased or modified directly or indirectly as a result of or in connection
with this Amendment.

[Signature Page Follows]

 3
 

 

 

IN WITNESS WHEREOF, Borrower, the Loan Parties, Agent and Lenders have
caused this Amendment to be executed and delivered by their duly authorized
officers effective as of the date first above written.

	
   

  	
  BORROWER:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  INSIGHT EQUITY
  A.P. X, LP

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Insight Equity A.P. X Company, LLC

  
	
   

  	
  Title:

  	
  General Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ TED W. BENESKI

  
	
   

  	
   

  	
  Name:

  	
  Ted W. Beneski

  
	
   

  	
   

  	
  Title:

  	
  Chairman of the Board

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ADDITIONAL
  LOAN PARTIES:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  INSIGHT EQUITY
  A.P. X ASIA, LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ TED W. BENESKI

  
	
   

  	
  Name:

  	
  Ted W. Beneski

  
	
   

  	
  Title:

  	
  Chairman of the Board

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  PT. VISION-EASE ASIA

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ TED W. BENESKI

  
	
   

  	
  Name:

  	
  Ted W. Beneski

  
	
   

  	
  Title:

  	
  President Commissioner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  INSIGHT EQUITY A.P. X CANADA, LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ TED W. BENESKI

  
	
   

  	
  Name:

  	
  Ted W. Beneski

  
	
   

  	
  Title:

  	
  Chairman of the Board

  
					

 4
 

 

 

	
  

  	
   

  	
   

  	
   

  
	
   

  	
  INSIGHT EQUITY A.P. X CANADA PARTNERS, LP

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Insight Equity A.P. X Canada, LLC

  
	
   

  	
  Title:

  	
  General Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ TED W. BENESKI

  
	
   

  	
   

  	
  Name:

  	
  Ted W. Beneski

  
	
   

  	
   

  	
  Title:

  	
  Chairman of the Board

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  VISION-EASE CANADA CO.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ TED W. BENESKI

  
	
   

  	
  Name:

  	
  Ted W. Beneski

  
	
   

  	
  Title:

  	
  Chairman of the Board

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  VISION EASE LENS
  EUROPE LIMITED

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ /RICH FABER

  
	
   

  	
  Name:

  	
  Rich Faber

  
	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  VISION-EASE LENS LIMITED

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ RICH FABER

  
	
   

  	
  Name:

  	
  Rich Faber

  
	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  INSIGHT EQUITY A.P. X COMPANY, LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ TED W. BENESKI

  
	
   

  	
  Name:

  	
  Ted W. Beneski

  
	
   

  	
  Title:

  	
  Chairman of the Board

  

 5
 

 

 

	
  

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  AGENT
  AND A LENDER:

  
	
   

  	
   

  
	
   

  	
  PNC BANK,
  NATIONAL ASSOCIATION,

  
	
   

  	
  as Agent and a
  Lender

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ RONALD ECKHOFF

  
	
   

  	
  Name:

  	
  Ronald Eckhoff

  
	
   

  	
  Title:

  	
  Vice President

  

 6
 

 

 

	
  

  	
   

  	
   

  	
   

  
	
   

  	
  FIFTH THIRD
  BANK,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ WILLIAM R. HARROD

  
	
   

  	
  Name:

  	
  William R. Harrod

  
	
   

  	
  Title:

  	
  Vice President

  

 

 

 7

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