Document:

Exhibit 4.6

 

EXECUTION VERSION

 

REGISTRATION RIGHTS
AGREEMENT

 

This REGISTRATION RIGHTS AGREEMENT is dated as of April 28,
2006 (the “Agreement”), by and among Compression Polymers Holding
Corporation, a Delaware corporation (the “Company”) Compression Polymers
Holding II Corporation, a Delaware corporation (“Holdings”), and each of
the subsidiary guarantors listed on Exhibit A attached hereto
(collectively with Holdings, the “Guarantors” and together with the
Company, the “Issuers”), on the one hand, and Wachovia Capital Markets,
LLC (the “Initial Purchaser”), on the other hand.

 

This Agreement is entered into in connection with
the Purchase Agreement by and between the Issuers and the Initial Purchaser,
dated as of April 25, 2006 (the “Purchase Agreement”) which
provides for, among other things, the sale by the Company to the Initial
Purchaser of $30.0 million aggregate principal amount of the Company’s Senior
Floating Rate Notes due 2012 (the “Notes”) which will be guaranteed on
an unsecured senior basis by each of the Guarantors (the “Guarantees”).
References herein to the “Securities” refer to the Notes and the
Guarantees collectively. In order to induce the Initial Purchaser to enter into
the Purchase Agreement, the Issuers have agreed to provide the registration
rights set forth in this Agreement for the benefit of the Initial Purchaser and
any subsequent holder or holders of the Securities. The execution and delivery
of this Agreement is a condition to the Initial Purchaser’s obligations under
the Purchase Agreement.

 

In consideration of the foregoing, the parties
hereto agree as follows:

 

1.                                       Definitions. As used in this Agreement, the following terms shall have the
following meanings:

 

“Business Day” shall mean any day that is not a
Saturday, Sunday or other day on which commercial banks in New York City are
authorized or required by law to remain closed.

 

“Closing Date” shall mean the Closing Date as
defined in the Purchase Agreement.

 

“Company” shall have the meaning set forth in the
preamble and shall also include the Company’s successors.

 

“Exchange Act” shall mean the Securities Exchange
Act of 1934, as amended from time to time.

 

“Exchange Dates” shall have the meaning set forth in
Section 2(a)(ii) hereof.

 

“Exchange Offer” shall mean an exchange offer by the
Company and the Guarantors of Exchange Securities for Registrable Securities
pursuant to Section 2(a) hereof.

 

“Exchange Offer Registration” shall mean a
registration under the Securities Act effected pursuant to Section 2(a) hereof.

 

 

“Exchange Offer Registration Statement” shall mean
an exchange offer registration statement on Form S-4 (or, if applicable,
on another appropriate form) and all amendments and supplements to such
registration statement, in each case including the Prospectus contained
therein, all exhibits thereto and any document incorporated by reference
therein.

 

“Exchange Securities” shall mean senior notes issued
by the Company and guaranteed by the Guarantors under the Indenture containing
terms identical to the Securities (except that the Exchange Securities will not
be subject to restrictions on transfer or to any increase in annual interest
rate for failure to comply with this Agreement) and to be offered to Holders of
Securities in exchange for Securities pursuant to an Exchange Offer.

 

“Guarantors” shall have the meaning set forth in the
preamble and shall also include any Guarantor’s successors.

 

“Holders” shall mean the Initial Purchaser, for so
long as it owns any Registrable Securities, and each of its successors, assigns
and direct and indirect transferees who become owners of Registrable Securities
under the Indenture; provided that for purposes of Sections 4 and 5 of
this Agreement, the term “Holders” shall include Participating Broker-Dealers.

 

“Initial Purchaser” shall have the meaning set forth
in the preamble.

 

“Indenture” shall mean the Indenture relating to the
Securities dated as of July 1, 2005 among the Issuers and Wells Fargo
Bank, N.A., as trustee, and as the same may be amended and supplemented
from time to time in accordance with the terms thereof.

 

“Inspector” shall have the meaning set forth in Section 3(m)
hereof.

 

“Majority Holders” shall mean the Holders of a
majority of the aggregate principal amount of outstanding Registrable
Securities; provided that whenever the consent or approval of Holders of
a specified percentage of Registrable Securities is required hereunder,
Registrable Securities owned directly or indirectly by the Company or any of
its subsidiaries shall not be counted in determining whether such consent or
approval was given by the Holders of such required percentage or amount; and provided,
further, that if the Company shall issue any additional Securities under
the Indenture prior to consummation of an Exchange Offer or, if applicable, the
effectiveness of any Shelf Registration Statement, such additional Securities
and the Registrable Securities to which this Agreement relates shall be treated
together as one class for purposes of determining whether the consent or
approval of Holders of a specified percentage of Registrable Securities has
been obtained.

 

“Market-Maker” shall have the meaning set forth in Section 2(c) hereof.

 

“Market-Maker’s Information” shall have the meaning
set forth in Section 2(c) hereof.

 

“Market-Making Registration” shall have the meaning
set forth in Section 2(c) hereof.

 

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“Market-Making Registration Statement” shall have
the meaning set forth in Section 2(c) hereof.

 

“Participating Broker-Dealers” shall have the
meaning set forth in Section 4(a) hereof.

 

“Person” shall mean an individual, partnership,
limited partnership, limited liability company, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.

 

“Prospectus” shall mean the prospectus included in a
Registration Statement, including any preliminary prospectus, and any such
prospectus as amended or supplemented by any prospectus supplement, including a
prospectus supplement with respect to the terms of the offering of any portion
of the Registrable Securities covered by a Shelf Registration Statement, and by
all other amendments and supplements to such prospectus, and in each case
including any document incorporated by reference therein.

 

“Purchase Agreement” shall have the meaning set
forth in the preamble.

 

“Registrable Securities” shall mean the Securities; provided
that the Securities shall cease to be Registrable Securities (i) when a
Registration Statement with respect to such Securities has been declared
effective under the Securities Act and such Securities have been exchanged or
disposed of pursuant to such Registration Statement, (ii) when such
Securities are eligible to be sold pursuant to Rule 144(k) (or any similar
provision then in force, but not Rule 144A) under the Securities Act or (iii) when
such Securities cease to be outstanding.

 

“Registration Expenses” shall mean any and all
expenses incident to performance of or compliance by the Issuers with this
Agreement, including, without limitation, (i) all SEC, stock exchange or
National Association of Securities Dealers, Inc. registration and filing
fees, (ii) all fees and expenses incurred in connection with compliance
with state securities or blue sky laws (including reasonable fees and disbursements
of counsel for any Underwriters or Holders in connection with blue sky
qualification of any Exchange Securities or Registrable Securities), (iii) all
expenses of any Persons in preparing or assisting in preparing, word
processing, printing and distributing any Registration Statement, any
Prospectus and any amendments or supplements thereto, any underwriting
agreements, securities sales agreements or other similar agreements and any
other documents relating to the performance of and compliance with this
Agreement, (iv) all rating agency fees, (v) all fees and
disbursements relating to the qualification of the Indenture under applicable
securities laws, (vi) the fees and disbursements of the Trustee and its
counsel, (vii) the fees and disbursements of counsel for the Issuers and,
in the case of a Shelf Registration Statement, the reasonable fees and
disbursements of one counsel for the Holders (which counsel shall be selected
by the Majority Holders and which counsel may also be counsel for the
Initial Purchaser) and (viii) the fees and disbursements of the
independent public accountants of the Issuers, including the expenses of any
special audits or “comfort” letters required by or incident to the performance
of and compliance with this Agreement, but excluding fees and expenses of
counsel to the Underwriters (other than fees and expenses set forth in clause (ii) above)
or the Holders and underwriting discounts and commissions and transfer taxes,
if any, relating to the sale or disposition of Registrable Securities by a
Holder.

 

3

 

“Registration Statement” shall mean any registration
statement of the Company and the Guarantors that covers any of the Exchange
Securities or Registrable Securities pursuant to the provisions of this
Agreement and all amendments and supplements to any such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and any document
incorporated by reference therein.

 

“SEC” shall mean the Securities and Exchange
Commission.

 

“Securities” shall have the meaning set forth in the
preamble.

 

“Securities Act” shall mean the Securities Act of
1933, as amended from time to time.

 

“Shelf Effectiveness Period” shall have the meaning
set forth in Section 2(b) hereof.

 

“Shelf Registration” shall mean a registration
effected pursuant to Section 2(b) hereof.

 

“Shelf Registration Statement” shall mean a “shelf”
registration statement of the Issuers that covers all the Registrable
Securities (but no other securities unless approved by the Majority Holders
whose Registrable Securities are to be covered by such Shelf Registration
Statement) on an appropriate form under Rule 415 under the Securities
Act, or any similar rule that may be adopted by the SEC, and all
amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and any document incorporated by reference
therein.

 

“Staff” shall mean the staff of the SEC.

 

“Trust Indenture Act” shall mean the Trust Indenture
Act of 1939, as amended from time to time.

 

“Trustee” shall mean the trustee with respect to the
Securities under the Indenture.

 

“Underwriter” shall have the meaning set forth in Section 3
hereof.

 

“Underwritten Offering” shall mean an offering in
which Registrable Securities are sold to an Underwriter for reoffering to the
public.

 

2.                                       Registration
Under the Securities Act. (a)  To the extent not prohibited by any
applicable law or applicable interpretations of the Staff, the Issuers shall
use their commercially reasonable efforts to (i) cause to be filed an
Exchange Offer Registration Statement covering an offer to the Holders to
exchange all the Registrable Securities for Exchange Securities, (ii) cause
the Exchange Offer Registration Statement to be declared effective under the
Securities Act, (iii) have such Exchange Offer Registration Statement
remain effective until the closing of the Exchange Offer and (iv) cause
the Exchange Offer to be consummated not later than 270 days following the
Closing Date.

 

4

 

The Issuers shall commence the Exchange Offer by
mailing the related Prospectus, appropriate letters of transmittal and other
accompanying documents to each Holder stating, in addition to such other
disclosures as are required by applicable law, substantially the following:

 

(i)            that the Exchange Offer is being made
pursuant to this Agreement and that all Registrable Securities validly tendered
and not properly withdrawn will be accepted for exchange;

 

(ii)           the dates of acceptance for exchange (which
shall be a period of at least 20 Business Days from the date such notice is
mailed) (the “Exchange Dates”);

 

(iii)          that any Registrable Security not tendered
will remain outstanding and continue to accrue interest but will not retain any
rights under this Agreement;

 

(iv)          that any Holder electing to have a
Registrable Security exchanged pursuant to the Exchange Offer will be required
to surrender such Registrable Security, together with the appropriate letters
of transmittal, to the institution and at the address (located in the Borough
of Manhattan, The City of New York) and in the manner specified in the notice,
prior to the close of business on the last Exchange Date; and

 

(v)           that any Holder will be entitled to withdraw
its election, not later than the close of business on the last Exchange Date,
by sending to the institution and at the address (located in the Borough of
Manhattan, The City of New York) specified in the notice, a telegram, telex,
facsimile transmission or letter setting forth the name of such Holder, the
principal amount of Registrable Securities delivered for exchange and a
statement that such Holder is withdrawing its election to have such Securities
exchanged.

 

As a condition to participating in the Exchange
Offer, a Holder will be required to represent to the Issuers that (i) any
Exchange Securities to be received by it will be acquired in the ordinary
course of its business, (ii) at the time of the commencement of the
Exchange Offer it has no arrangement or understanding with any Person to
participate in the distribution (within the meaning of the Securities Act) of
the Exchange Securities in violation of the provisions of the Securities Act, (iii) it
is not an “affiliate” (within the meaning of Rule 405 under Securities
Act) of any Issuer and (iv) if such Holder is a broker-dealer that will
receive Exchange Securities for its own account in exchange for Registrable
Securities that were acquired as a result of market-making or other trading
activities, then such Holder will deliver a Prospectus in connection with any
resale of such Exchange Securities.

 

As soon as reasonably practicable after the last
Exchange Date, the Issuers shall

 

(i)            accept for exchange Registrable Securities or
portions thereof validly tendered and not properly withdrawn pursuant to the
Exchange Offer; and

 

5

 

(ii)           deliver, or cause to be delivered, to the
Trustee for cancellation all Registrable Securities or portions thereof so
accepted for exchange by the Company and issue, and cause the Trustee to
promptly authenticate and deliver to each Holder, Exchange Securities equal in
principal amount to the principal amount of the Registrable Securities
surrendered by such Holder.

 

The Issuers shall use their commercially reasonable
efforts to complete the Exchange Offer as provided above and shall comply with
the applicable requirements of the Securities Act, the Exchange Act and other
applicable laws and regulations in connection with the Exchange Offer. The
Exchange Offer shall not be subject to any conditions, other than that
(x) the Exchange Offer does not violate any applicable law or applicable
interpretations of the Staff and (y) there is no action or proceeding
instituted or threatened in any court or by any governmental agency that in the
Company’s judgment would reasonably be expected to impair the Company’s ability
to proceed with the Exchange Offer. If the Company determines in its reasonable
judgment that either of the foregoing conditions is not satisfied, the Company may (a) refuse
to accept any Registrable Securities and return all tendered Registrable
Securities to the tendering Holders, (b) extend the Exchange Offer and
retain all Registrable Securities tendered before the expiration of the
Exchange Offer, subject, however, to the rights of holders to withdraw those
Registrable Securities, or (c) waive the unsatisfied conditions with
respect to the Exchange Offer and accept all properly tendered Registrable
Securities that have not been withdrawn.

 

(b)                                 In the event that (i) the Issuers
determine that the Exchange Offer Registration provided for in Section 2(a) above
is not available or may not be completed as soon as reasonably practicable
after the last Exchange Date because it would violate any applicable law or
applicable interpretations of the Staff or otherwise, (ii) the Exchange
Offer is not for any other reason completed by the 270th day
following the Closing Date or (iii) any Holder notifies the Issuers on or
prior to the 30th day following the consummation of the Exchange
Offer that (A) it is not permitted under law or SEC policy to participate
in the Exchange Offer, (B) it cannot publicly resell new Exchange
Securities that it acquires in the Exchange Offer without delivering a
Prospectus, and the Prospectus contained in the Exchange Offer Registration
Statement is not appropriate or available for resales by the Holder or (C) it
is a broker-dealer and holds Registrable Securities that it has not exchanged
and that it acquired directly from the Issuers or one of their affiliates, then
in addition to or in lieu of conducting the Exchange Offer, the Issuers shall
be required to file a Shelf Registration Statement with the SEC to cover
resales of the Registrable Securities or the Exchange Securities, as the case may be.
In that case, the Issuers will use their commercially reasonable efforts (a) to
file the Shelf Registration Statement by the 30th day after
they become obligated to make the filing, (b) to cause the Shelf
Registration Statement to become effective by the 120th day
after they become obligated to make the filing and (c) to maintain the
effectiveness of the Shelf Registration Statement during the Shelf
Effectiveness Period (defined below). In the event that the Issuers are
required to file a Shelf Registration Statement solely as a result of the
matters referred to in clause (ii) of this paragraph, but the Exchange
Offer is subsequently completed, upon consummation of the Exchange Offer the
Company will no longer be required to file, have declared effective or continue
the effectiveness of the Shelf Registration Statement pursuant to such clause (ii) (without
prejudice to its obligations under clause (i) or (iii) of this
paragraph). In the event that the Issuers are required to file a Shelf
Registration Statement solely as a result of the matters referred to in clause (iii) of
this paragraph, the Issuers 

 

6

 

shall
use their commercially reasonable efforts to file and have declared effective
by the SEC both an Exchange Offer Registration Statement pursuant to Section 2(a) with
respect to all Registrable Securities and a Shelf Registration Statement (which
may be a combined Registration Statement with the Exchange Offer
Registration Statement) with respect to offers and sales of Registrable
Securities held by any such Holder that has notified the Issuers pursuant to
such clause (iii) after completion of the Exchange Offer.

 

The Issuers agree to use their commercially
reasonable efforts to keep the Shelf Registration Statement continuously
effective until the earliest of (i) two years from the Closing Date, (ii) the
expiration of the period referred to in Rule 144(k) (or any similar rule then
in force, but not Rule 144A) under the Securities Act with respect to the
Registrable Securities (iii) or such shorter period that will terminate
when all the Registrable Securities covered by the Shelf Registration Statement
have been sold pursuant to the Shelf Registration Statement (the “Shelf
Effectiveness Period”). The Issuers further agree to supplement or amend
the Shelf Registration Statement and the related Prospectus if required by the
rules, regulations or instructions applicable to the registration form used
by the Company for such Shelf Registration Statement or by the Securities Act
or by any other rules and regulations thereunder for shelf registration or
if reasonably requested by a Holder of Registrable Securities with respect to
information relating to such Holder, and to use their commercially reasonable
efforts to cause any such amendment to become effective and such Shelf
Registration Statement and Prospectus to become usable as soon as thereafter
practicable. The Issuers agree to furnish to the Holders of Registrable
Securities copies of any such supplement or amendment promptly after its being
used or filed with the SEC.

 

(c)                                  (1)  For the sole benefit of the Initial
Purchaser (in such capacity, the “Market-Maker”) or any of its
affiliates (as defined in the rules and regulations of the SEC), so long
as (x) any of the Registrable Securities or Exchange Securities are
outstanding and (y) the Market-Maker (or any of its affiliates) is an affiliate
of the Issuers and proposes to make a market in the Registrable Securities or
Exchange Securities as part of its business in the ordinary course, the
following provisions shall apply for the sole benefit of the Market-Maker:

 

(i)            The Issuers shall file under the Securities
Act a registration statement (which may be the Exchange Offer Registration
Statement or the Shelf Registration Statement if permitted by the rules and
regulations of the SEC), in a form reasonably acceptable to the
Market-Maker (such filing, the “Market-Making Registration,” and such
registration statement, the “Market-Making Registration Statement”). The
Issuers agree to use their commercially reasonable efforts to cause the
Market-Making Registration Statement to be declared effective on or prior to (i) the
date the initial Exchange Offer is completed pursuant to Section 2(a) above
or (ii) the date the Shelf Registration becomes or is declared effective
pursuant to Section 2(b) above, and to keep such Market-Making
Registration Statement continuously effective for so long as the Market-Maker may be
required to deliver a Prospectus in connection with transactions in the
Securities or the Exchange Securities, as the case may be. In the event
that the Market-Maker holds Securities at the time an Exchange Offer is to be
conducted under Section 2(a) above, the Issuers agree that the
Market-Making Registration shall, if permitted by SEC rules 

 

7

 

and regulations, provide for the resale by the Market-Maker of such
Securities and shall be kept continuously effective for so long as the
Market-Maker may be required to deliver a Prospectus in connection with
the sale of such Securities. The Issuers further agree to supplement or make
amendments to the Market-Making Registration Statement, as and when required by
the rules, regulations or instructions applicable to the registration form used
by the Issuers for such Market-Making Registration Statement, and the Issuers
agree to furnish to the Market-Maker copies of any such supplement or amendment
(excluding any documents incorporated by reference therein) prior to its being
used or promptly following its filing with the SEC. The Market-Maker shall
promptly notify the Issuers if it is no longer required to deliver a Prospectus
in connection with transactions in the Securities or the Exchange Securities,
as the case may be.

 

(ii)           Notwithstanding the foregoing, the Company may suspend
the offering and sale under the Market-Making Registration Statement for such
period or periods that the Company reasonably determines to be advisable for
valid business reasons, but in any event not to exceed 120 days (plus any time
required in connection with updating the Market-Making Registration Statement
in accordance with Section 10(a)(3) of the Securities Act) (or as
otherwise acceptable to the Market-Maker) in each year during which the
Market-Making Registration Statement is required to be effective and usable
hereunder (measured from the effective time of the Market-Making Registration
Statement to successive anniversaries thereof) if (A) (i) the Company
determines in good faith that such action is in the best interests of the
Company or (ii) the Market Making Registration Statement, prospectus or
amendment or supplement thereto contains an untrue statement of a material fact
or omits to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and (B) the Company notifies the Market-Maker within five
business days after the Company makes the relevant determination set forth in
clause (A).

 

(iii)          The Company shall notify the Market-Maker (A) when
any post-effective amendment to the Market-Making Registration Statement or any
amendment or supplement to the related prospectus has been filed (excluding any
documents incorporated by reference therein), and, with respect to any
post-effective amendment, when the same has become effective; (B) of any
request by the SEC for any post-effective amendment to the Market-Making
Registration Statement, any supplement or amendment to the related prospectus
or for additional information; (C) the issuance by the SEC of any stop
order suspending the effectiveness of the Market-Making Registration Statement
or the initiation of any proceedings for that purpose; (D) of the receipt
by the Company of any notification with respect to the suspension of the
qualification of the Registrable Securities or Exchange Securities for sale in
any jurisdiction or the initiation or threatening of any proceedings for such
purpose; and (E) within five business days after the happening of any
event that results in the Market-Making Registration Statement, the related
prospectus or any amendment or supplement containing an untrue statement of a
material fact or omitting to state a material fact necessary in order to make
the 

 

8

 

statements therein, in light of the circumstances under which they were
made, not misleading.

 

(iv)          If any event contemplated by Section 2(c)(iii)(B) through
(E) occurs during the period for which the Issuers are required to
maintain an effective Market-Making Registration Statement, the Issuers shall
use commercially reasonable efforts to prepare and file with the SEC a
post-effective amendment to the Market-Making Registration Statement or a
supplement to the related prospectus or file any other required document, to
the extent information is available and public at the time, so that the
prospectus will not include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.

 

(v)           In the event of the issuance of any stop
order suspending the effectiveness of the Market-Making Registration Statement
or of any order suspending the qualification of the Registrable Securities or
Exchange Securities for sale in any jurisdiction, the Issuers shall promptly
use their commercially reasonable efforts to obtain its withdrawal.

 

(vi)          The Company shall furnish to the
Market-Maker, without charge, (i) at least one conformed copy of the
Market-Making Registration Statement and any post-effective amendment thereto;
and (ii) as many copies of the related prospectus and any amendment or
supplement thereto as the Market-Maker may reasonably request.

 

(vii)         The Issuers shall consent to the use of the
prospectus contained in the Market-Making Registration Statement or any
amendment or supplement thereto by the Market-Maker in connection with its
market-making activities.

 

(viii)        Notwithstanding the foregoing provisions of
this Section 2(c), the Issuers may for valid business reasons,
including without limitation, a potential acquisition, divestiture of assets or
other material corporate transaction or if required under the Securities Act or
the Exchange Act, issue a notice that the Market-Making Registration Statement
is no longer effective or the prospectus included therein is no longer usable
for offers and sales of Registrable Securities or Exchange Securities and may issue
any notice suspending use of the Market-Making Registration Statement required
under applicable securities laws to be issued for so long as valid business
reasons exist and the Company shall not be obligated to amend or supplement the
Market-Making Registration Statement or the prospectus included therein until
it reasonably deems appropriate. The Market-Maker agrees that upon receipt of
any notice from the Company pursuant to this Section 2(c)(viii), it will
discontinue use of the Market-Making Registration Statement until receipt of
copies of the supplemented or amended prospectus relating thereto and until
advised in writing by the Company that the use of the Market-Making
Registration Statement may be resumed.

 

9

 

(2)                                  In connection with the Market-Making
Registration, the Company shall (i) make reasonably available for
inspection by a representative of, and counsel acting for, the Market-Maker all
relevant financial and other records, pertinent corporate documents and
properties of the Issuers and (ii) use its commercially reasonable efforts
to have its officers, directors, employees, accountants and counsel supply all
relevant information reasonably requested by such representative or counsel or
the Market-Maker.

 

(3)                                  Prior to the effective date of the
Market-Making Registration Statement, the Issuers will use their commercially
reasonable efforts to register or qualify such Registrable Securities or
Exchange Securities for offer and sale under the securities or blue sky laws of
such jurisdictions as the Market-Maker reasonably requests in writing and do
any and all other acts or things necessary or advisable to enable the offer and
sale in such jurisdictions of the Registrable Securities or Exchange Securities
covered by the Market-Making Registration Statement; provided that
neither the Company nor any Guarantor shall be required to (i) qualify as
a foreign corporation or other entity or as a dealer in securities in any such
jurisdiction where it would not otherwise be required to so qualify, (ii) file
any general consent to service of process in any such jurisdiction, (iii) subject
itself to taxation in any such jurisdiction if it is not so subject or (iv) make
any change to its certificate of incorporation or by-laws or any agreement
between it and its stockholders.

 

(4)                                  The Company represents that the Market-Making
Registration Statement, any post-effective amendments thereto, any amendments
or supplements to the related prospectus and any documents filed by them under
the Exchange Act will, when they become effective or are filed with the SEC, as
the case may be, conform in all material respects to the requirements
of the Securities Act and the Exchange Act and the rules and regulations
of the SEC thereunder and will not, as of the effective date of such
Market-Making Registration Statement or post-effective amendments and as of the
filing date of amendments or supplements to such prospectus or filings under
the Exchange Act, contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; provided that no representation or warranty is made as
to information contained in or omitted from the Market-Making Registration
Statement or the related prospectus in reliance upon and in conformity with
written information furnished to the Company by the Market-Maker specifically
for inclusion therein, which information the parties hereto agree will be
limited to the statements concerning the market-making activities of the
Market-Maker to be set forth on the cover page and in the “Plan of
Distribution” section of the prospectus (the “Market-Maker’s
Information”).

 

(5)                                  At the time of effectiveness of the
Market-Making Registration Statement (unless it is the same as the time of
effectiveness of the Exchange Offer Registration Statement) and concurrently
with each time the Market-Making Registration Statement or the related
prospectus shall be amended or such prospectus shall be supplemented, the
Company shall notify the Market-Maker or its counsel that:

 

(i)            the Market-Making Registration Statement has
been declared effective;

 

(ii)           in the case of an amendment or supplement,
such amendment has become effective under the Securities Act; and

 

10

 

(iii)          as of the date of the Market Making
Registration Statement, amendment or supplement, as applicable, the Market
Making Registration Statement and the Prospectus, as amended or supplemented,
if applicable, did not include any untrue statement of a material fact and did
not omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading.

 

(6)                                  The Issuers, on the one hand, and the
Market-Maker, on the other hand, hereby agree to indemnify each other, and, if
applicable, contribute to the other, in accordance with Section 5 of this
Agreement.

 

(7)                                  The Company will comply with the provisions
of this Section 2(c) at its own expense and will reimburse the
Market-Maker for its expenses associated with this Section 2(c) (including
reasonable fees of counsel).

 

(8)                                  The agreements contained in this Section 2(c) and
the representations, warranties and agreements contained in this Agreement
shall survive all offers and sales of the Registrable Securities or Exchange
Securities and shall remain in full force and effect for so long as any of the
Registrable Securities or Exchange Securities are outstanding, regardless of
any termination or cancellation of this Agreement or any investigation made by
or on behalf of any indemnified party.

 

(d)                                 The Issuers shall pay all Registration
Expenses in connection with the registration pursuant to Section 2(a) and
Section 2(b) hereof. Each Holder shall pay all underwriting discounts
and commissions, brokerage commissions and transfer taxes, if any, relating to
the sale or disposition of such Holder’s Registrable Securities pursuant to the
Shelf Registration Statement.

 

(e)                                  An Exchange Offer Registration Statement
pursuant to Section 2(a) hereof or a Shelf Registration Statement pursuant
to Section 2(b) hereof will not be deemed to have become effective
unless it has been declared effective by the SEC.

 

In the event that (A) the Exchange Offer is not
consummated by the 270th day after the Closing Date, or (B) the
Issuers have chosen or are required to file a Shelf Registration Statement
pursuant to Section 2(b), and such Shelf Registration is not declared
effective by the dates specified in Section 2(b) (in the case of
clause (A) or (B), the “Target Registration Date”), the
interest rate on the Registrable Securities will be increased by (i) 0.25%
per annum for the first 90-day period immediately following the applicable
Target Registration Date and (ii) an additional 0.25% per annum with
respect to each subsequent 90-day period, in each case until the Exchange Offer
is completed or the Shelf Registration Statement, if required hereby, is
declared effective by the SEC or the Securities become freely tradable under
the Securities Act, at which time the interest rate on the Registrable Securities
will revert to the original interest rate borne by such Registrable Securities.
Notwithstanding the foregoing, a Holder of Registrable Securities who is not
entitled to the benefits of the Shelf Registration Statement shall not be
entitled to such additional interest with respect to clause (B) in the
preceding sentence.

 

If the Shelf Registration Statement, if required
hereby, has been declared effective and thereafter either ceases to be
effective or the Prospectus contained therein ceases to be usable 

 

11

 

at
any time during the Shelf Effectiveness Period, and such failure to remain
effective or usable exists for more than 60 days (whether or not consecutive)
(plus any time required in connection with updating the Shelf Registration
Statement in accordance with Section 10(a)(3) of the Securities Act)
in any 12-month period, then the interest rate on the Registrable Securities
will be increased by 0.25% per annum for the first 90-day period immediately
commencing on the 61st day (whether or not consecutive) in any 12-month period,
which rate shall be increased by an additional 0.25% per annum at the beginning
of each subsequent 90-day period, and continue thereafter, in each case until
the Shelf Registration Statement has again been declared effective or the
Prospectus again becomes usable, at which time the interest rate on the
Registrable Securities will revert to the original interest rate borne by such
Registrable Securities.

 

Notwithstanding the foregoing, the maximum aggregate
increase in the interest rate borne by the Registrable Securities pursuant to
this Section 2(e) shall in no event exceed 1.00% per annum.

 

(f)                                    Without limiting the remedies available to
the Initial Purchaser and the Holders, the Issuers acknowledge that any failure
by the Issuers to comply with their obligations under Section 2(a) and
Section 2(b) hereof may result in material irreparable injury to
the Initial Purchaser or the Holders for which there is no adequate remedy at law,
that it will not be possible to measure damages for such injuries precisely and
that, in the event of any such failure, the Initial Purchaser or any Holder may obtain
such relief as may be required to specifically enforce the Issuers’
obligations under Section 2(a) and Section 2(b) hereof.

 

3.                                       Registration Procedures. In connection with their obligations
pursuant to Section 2(a) and Section 2(b) hereof, the
Issuers shall as expeditiously as reasonably possible

 

(a)                                  prepare and file with the SEC a Registration
Statement on the appropriate form under the Securities Act, which form (x)
shall be selected by the Issuers, (y) shall, in the case of a Shelf
Registration, be available for the sale of the Registrable Securities by the
selling Holders thereof and (z) shall comply as to form in all material
respects with the requirements of the applicable form and include all
financial statements required by the SEC to be filed therewith; and use their
commercially reasonable efforts to cause such Registration Statement to become
effective and remain effective for the applicable period in accordance with Section 2
hereof;

 

(b)                                 prepare and file with the SEC such amendments
and post-effective amendments to each Registration Statement as may be
necessary to keep such Registration Statement effective for the applicable
period in accordance with Section 2 hereof and cause each Prospectus to be
supplemented by any required prospectus supplement and, as so supplemented, to
be filed pursuant to Rule 424 under the Securities Act; and keep each
Prospectus current during the period described in Section 4(3) of and
Rule 174 under the Securities Act that is applicable to transactions by
brokers or dealers with respect to the Registrable Securities or Exchange
Securities;

 

(c)                                  in the case of a Shelf Registration, furnish
to each Holder of Registrable Securities, to counsel for the Initial Purchaser,
to counsel for such Holders (which counsel shall be selected by Holders of a
majority in principal amount covered by the Shelf 

 

12

 

Registration) and to each Underwriter of an Underwritten Offering of
Registrable Securities, if any, without charge, as many copies of each
Prospectus, including each preliminary Prospectus, and any amendment or supplement
thereto, in order to facilitate the sale or other disposition of the
Registrable Securities thereunder; and the Issuers consent to the use of such
Prospectus and any amendment or supplement thereto in accordance with
applicable law by each of the selling Holders of Registrable Securities and any
such Underwriters in connection with the offering and sale of the Registrable
Securities covered by and in the manner described in such Prospectus or any
amendment or supplement thereto in accordance with applicable law;

 

(d)                                 use their commercially reasonable efforts to
register or qualify the Registrable Securities under all applicable state
securities or blue sky laws of such jurisdictions as any Holder of Registrable
Securities covered by a Registration Statement shall reasonably request in
writing by the time the applicable Registration Statement is declared effective
by the SEC; cooperate with the Holders in connection with any filings required
to be made with the National Association of Securities Dealers, Inc.; and
do any and all other acts and things that may be reasonably necessary or
advisable to enable each Holder to complete the disposition in each such
jurisdiction of the Registrable Securities owned by such Holder; provided
that neither the Company nor any Guarantor shall be required to (i) qualify
as a foreign corporation or other entity or as a dealer in securities in any
such jurisdiction where it would not otherwise be required to so qualify, (ii) file
any general consent to service of process in any such jurisdiction, (iii) subject
itself to taxation in any such jurisdiction if it is not so subject or (iv) make
any change to its certificate of incorporation or by-laws or any agreement
between it and its stockholders;

 

(e)                                  in the case of a Shelf Registration, notify
each Holder of Registrable Securities, counsel for Holders of Registrable
Securities (which counsel shall be selected by Holders of a majority in
principal amount covered by the Shelf Registration) and counsel for the Initial
Purchaser promptly and, if requested by any such Holder or counsel, confirm
such advice in writing (i) when a Registration Statement has become
effective and when any post-effective amendment thereto has been filed and
becomes effective, (ii) of any request by the SEC or any state securities
authority for amendments and supplements to a Registration Statement and
Prospectus or for additional information after the Registration Statement has
become effective, (iii) of the issuance by the SEC or any state securities
authority of any stop order suspending the effectiveness of a Registration
Statement or the initiation of any proceedings for that purpose, (iv) if,
between the effective date of a Registration Statement and the closing of any
sale of Registrable Securities covered thereby, the representations and
warranties of any Issuer contained in any underwriting agreement, securities
sales agreement or other similar agreement, if any, relating to an offering of
such Registrable Securities cease to be true and correct in all material
respects or if any Issuer receives any notification with respect to the
suspension of the qualification of the Registrable Securities for sale in any
jurisdiction or the initiation of any proceeding for such purpose, (v) of
the happening of any event during the period a Shelf Registration Statement is
effective that makes any statement made in such Registration Statement or the
related Prospectus untrue in any material respect or that requires the making
of any changes in such Registration Statement or Prospectus in order to make
the 

 

13

 

statements therein not misleading and (vi) of any determination by
any Issuer that a post-effective amendment to a Registration Statement would be
appropriate;

 

(f)                                    use their commercially reasonable efforts to
obtain the withdrawal of any order suspending the effectiveness of a
Registration Statement at the earliest possible moment and provide immediate
notice to each Holder of the withdrawal of any such order;

 

(g)                                 in the case of a Shelf Registration, furnish
to each Holder of Registrable Securities, without charge, at least one
conformed copy of each Registration Statement and any post-effective amendment
thereto (without any documents incorporated therein by reference or exhibits
thereto, unless requested);

 

(h)                                 in the case of a Shelf Registration,
cooperate with the selling Holders of Registrable Securities to facilitate the
timely preparation and delivery of certificates representing Registrable
Securities to be sold and not bearing any restrictive legends and enable such
Registrable Securities to be issued in such denominations and registered in
such names (consistent with the provisions of the Indenture) as the selling
Holders may reasonably request at least one Business Day prior to the
closing of any sale of Registrable Securities;

 

(i)                                     in the case of a Shelf Registration, upon the
occurrence of any event contemplated by Section 3(e)(v) hereof, use
their commercially reasonable efforts to prepare and file with the SEC a
supplement or post-effective amendment to a Registration Statement or the
related Prospectus or any document incorporated therein by reference or file
any other required document so that, as thereafter delivered to purchasers of
the Registrable Securities, such Prospectus will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading; and the Issuers shall notify the Holders of Registrable
Securities to suspend use of the Prospectus as promptly as practicable after
the occurrence of such an event, and such Holders hereby agree to suspend use
of the Prospectus until the Issuers have amended or supplemented the Prospectus
to correct such misstatement or omission;

 

(j)                                     a reasonable time prior to the filing of any
Registration Statement, any Prospectus, any amendment to a Registration
Statement or amendment or supplement to a Prospectus (excluding any document
that is to be incorporated by reference into a Registration Statement or a
Prospectus after initial filing of a Registration Statement), provide copies of
such document to the Initial Purchaser and its counsel (and, in the case of a
Shelf Registration Statement, to the Majority Holders of Registrable Securities
and their counsel) and make such of the representatives of the Issuers as shall
be reasonably requested by the Initial Purchaser or its counsel (and, in the
case of a Shelf Registration Statement, the Majority Holders of Registrable
Securities or their counsel) available for discussion of such document; and the
Issuers shall not, at any time after initial filing of a Registration
Statement, file any Prospectus, any amendment of or supplement to a
Registration Statement or a Prospectus, (excluding any document that is to be
incorporated by reference into a Registration Statement or a Prospectus), of
which the Initial Purchaser 

 

14

 

and its counsel (and, in the case of a Shelf Registration Statement,
the Majority Holders of Registrable Securities and their counsel) shall not
have previously been advised and furnished a copy and shall give good faith
consideration to their comments thereon;

 

(k)                                  obtain a CUSIP number for all Exchange
Securities or Registrable Securities, as the case may be, not later than
the effective date of a Registration Statement;

 

(l)                                     cause the Indenture to be qualified under the
Trust Indenture Act in connection with the registration of the Exchange
Securities or Registrable Securities, as the case may be; cooperate with
the Trustee and the Holders to effect such changes to the Indenture as may be
required for the Indenture to be so qualified in accordance with the terms of
the Trust Indenture Act; and execute, and use their commercially reasonable
efforts to cause the Trustee to execute, all documents as may be required
to effect such changes and all other forms and documents required to be filed
with the SEC to enable the Indenture to be so qualified in a timely manner;

 

(m)                               in the case of an Underwritten Offering off
of a Shelf Registration, make available for inspection by a representative of
the Holders of the Registrable Securities (an “Inspector”), any
Underwriter participating in any disposition pursuant to such Shelf
Registration Statement, and one firm of attorneys and one firm of accountants
designated by the Inspector, at reasonable times and in a reasonable manner,
all pertinent financial and other records, documents and properties of the
Issuers, and cause the respective officers, directors and employees of the
Issuers to supply all information reasonably requested by any such Inspector,
Underwriter, attorney or accountant in connection with an Underwritten Offering
off of a Shelf Registration Statement; provided that if any such
information is identified by the Issuers as being confidential or proprietary,
each Person receiving such information shall take such actions as are
reasonably necessary to protect the confidentiality of such information to the
extent such action is otherwise not inconsistent with, an impairment of or in
derogation of the rights and interests of any Inspector, Holder or Underwriter
and shall sign customary confidentiality agreements reasonably requested by the
Issuers prior to the receipt of such information;

 

(n)                                 in the case of a Shelf Registration, use
their commercially reasonable efforts to cause all Registrable Securities to be
listed on any securities exchange or any automated quotation system on which
similar securities issued or guaranteed by the Issuers are then listed if
requested by the Majority Holders, to the extent such Registrable Securities
satisfy applicable listing requirements;

 

(o)                                 if reasonably requested by any Holder of
Registrable Securities covered by a Registration Statement, promptly
incorporate in a Prospectus supplement or post-effective amendment such
information with respect to such Holder as such Holder reasonably requests to
be included therein and make all required filings of such Prospectus supplement
or such post-effective amendment as soon as the Company has received
notification of the matters to be incorporated in such filing; and

 

(p)                                 in the case of an Underwritten Offering off
of a Shelf Registration, enter into such customary agreements and take all such
other actions in connection therewith 

 

15

 

(including those requested by the Holders of a majority in principal
amount of the Registrable Securities being sold) in order to expedite or
facilitate the disposition of such Registrable Securities including, but not
limited to, an Underwritten Offering and in such connection, (i) to the
extent possible, make such representations and warranties to the Holders and
any Underwriters of such Registrable Securities with respect to the business of
the Company and its subsidiaries, the Registration Statement, Prospectus and
documents incorporated by reference or deemed incorporated by reference, if
any, in each case, in form, substance and scope as are customarily made by
issuers to underwriters in underwritten offerings and confirm the same if and
when requested, (ii) obtain opinions of counsel to the Issuers (which
counsel and opinions, in form, scope and substance, shall be reasonably
satisfactory to the Holders and such Underwriters and their respective counsel)
addressed to each selling Holder and Underwriter of Registrable Securities,
covering the matters customarily covered in opinions requested in underwritten
offerings, (iii) use commercially reasonable efforts to obtain “comfort”
letters from the independent certified public accountants of the Issuers (and,
if necessary, any other certified public accountant of any subsidiary of the
Company or any Guarantor, or of any business acquired by the Company or any
Guarantor for which financial statements and financial data are or are required
to be included in the Registration Statement) addressed to each selling Holder
and Underwriter of Registrable Securities, such letters to be in customary form and
covering matters of the type customarily covered in “comfort” letters in
connection with underwritten offerings and (iv) deliver such documents and
certificates as may be reasonably requested by the Holders of a majority
in principal amount of the Registrable Securities being sold or the
Underwriters, and which are customarily delivered in underwritten offerings, to
evidence the continued validity of the representations and warranties of the
Issuers made pursuant to clause (i) above and to evidence compliance with
any customary conditions contained in an underwriting agreement; provided,
however, that in the event of an Underwritten Offering off of a Shelf
Registration for the benefit of the Initial Purchaser, the Initial Purchaser shall
be limited to one opinion of counsel to the Issuers and one “comfort letter,”
each at the Initial Purchaser’s reasonable expense.

 

In the case of a Shelf Registration Statement, the
Company may require each Holder of Registrable Securities to furnish to
the Company such information regarding such Holder (including, without
limitation, a customary selling Holder questionnaire) and the proposed
disposition by such Holder of such Registrable Securities as the Issuers may from
time to time reasonably request in writing.

 

In the case of a Shelf Registration Statement, each
Holder of Registrable Securities agrees that, upon receipt of any notice from
the Issuers of the happening of any event of the kind described in Section 3(e)(iii) or
3(e)(v) hereof, such Holder will forthwith discontinue disposition of
Registrable Securities pursuant to a Registration Statement until such Holder’s
receipt of the copies of the supplemented or amended Prospectus contemplated by
Section 3(i) hereof and, if so directed by the Issuers, such Holder
will deliver to the Issuers all copies in its possession, other than permanent
file copies then in such Holder’s possession, of the Prospectus covering such
Registrable Securities that is current at the time of receipt of such notice.

 

16

 

If the Issuers shall give any such notice to suspend
the disposition of Registrable Securities pursuant to a Registration Statement,
the Issuers shall extend the period during which the Registration Statement
shall be maintained effective pursuant to this Agreement by the number of days
during the period from and including the date of the giving of such notice to
and including the date when the Holders shall have received copies of the
supplemented or amended Prospectus necessary to resume such dispositions. The
Issuers may give any such notice only twice during any 365-day period and
any such suspensions shall not exceed 60 days (plus any time required in
connection with updating the Registration Statement in accordance with Section 10(a)(3) of
the Securities Act) per year for all extensions.

 

The Holders of Registrable Securities covered by a
Shelf Registration Statement who desire to do so may sell such Registrable
Securities in an Underwritten Offering. In any such Underwritten Offering, the
investment banker or investment bankers and manager or managers (the “Underwriters”)
that will administer the offering will be selected by the Majority Holders of
the Registrable Securities included in such offering with the Company’s
consent, not to be unreasonably withheld.

 

4.                                       Participation
of Broker-Dealers in Exchange Offer. (a)  The Staff has taken the
position that any broker-dealer that receives Exchange Securities for its own
account in the Exchange Offer in exchange for Securities that were acquired by
such broker-dealer as a result of market-making or other trading activities (a “Participating
Broker-Dealer”) may be deemed to be an “underwriter” within the meaning of
the Securities Act and must deliver a prospectus meeting the requirements of
the Securities Act in connection with any resale of such Exchange Securities.

 

The Issuers understand that it is the Staff’s
position that if the Prospectus contained in the Exchange Offer Registration
Statement includes a plan of distribution containing a statement to the above
effect and the means by which Participating Broker-Dealers may resell the
Exchange Securities, without naming the Participating Broker-Dealers or
specifying the amount of Exchange Securities owned by them, such Prospectus may be
delivered by Participating Broker-Dealers to satisfy their prospectus delivery
obligation under the Securities Act in connection with resales of Exchange
Securities for their own accounts, so long as the Prospectus otherwise meets
the requirements of the Securities Act.

 

(b)                                 In light of the above, and notwithstanding
the other provisions of this Agreement, the Issuers agree to amend or
supplement the Prospectus contained in the Exchange Offer Registration
Statement, as would otherwise be contemplated by Section 3(i), for a
period of up to 180 days after the last Exchange Date (as such period may be
extended pursuant to the penultimate paragraph of Section 3 of this
Agreement), if requested by the Initial Purchaser or by one or more
Participating Broker-Dealers, in order to expedite or facilitate the
disposition of any Exchange Securities by Participating Broker-Dealers
consistent with the positions of the Staff recited in Section 4(a) above.
The Issuers further agree that Participating Broker-Dealers shall be authorized
to deliver such Prospectus during such period in connection with the resales
contemplated by this Section 4.

 

(c)                                  The Initial Purchaser shall have no liability
to the Company, any Guarantor or any Holder with respect to any request that
they may make pursuant to Section 4(b) above.

 

17

 

5.                                       Indemnification
and Contribution. (a)  The Issuers, jointly and severally, agree to
indemnify and hold harmless the Initial Purchaser and each Holder, their
respective affiliates, directors and officers and each Person, if any, who
controls any Initial Purchaser or any Holder within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act, from and against any
and all out-of-pocket losses, claims, damages and liabilities (including,
without limitation, reasonable legal fees and other expenses incurred in
connection with any suit, action or proceeding or any claim asserted, as such
fees and expenses are incurred), joint or several, that arise out of, or are
based upon, any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement, Market-Making Registration Statement
or any Prospectus or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading or, in the case of the Market-Maker, any breach by the Issuers
of their representations, warranties and agreements contained in Section 2(c) hereof,
except insofar as such losses, claims, damages or liabilities arise out of, or
are based upon, any untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with any information relating
to the Initial Purchaser or any Holder furnished to the Company in writing
through Wachovia Capital Markets, LLC or any selling Holder expressly for use
therein. In connection with any Underwritten Offering permitted by Section 3,
the Issuers, jointly and severally, will also indemnify the Underwriters, if
any, selling brokers, dealers and similar securities industry professionals
participating in the distribution, their respective affiliates and each Person
who controls such Persons (within the meaning of the Securities Act and the
Exchange Act) to the same extent as provided above with respect to the
indemnification of the Holders, if requested in connection with any
Registration Statement. Notwithstanding the foregoing, with respect to any
untrue statement in or omission from any related preliminary Prospectus, the
indemnity agreement contained in this Section 5 shall not inure to the
benefit of any Holder from whom the person asserting any such loss, claim,
damage or liability received Securities or Exchange Securities to the extent
that such loss, claim, damage or liability of or with respect to such Holder
results from the fact that both (i) a copy of the final Prospectus was not
sent or given to such person at or prior to the written confirmation of the
sale of such Securities or Exchange Securities to such person and (ii) the
untrue statement in or omission from the related preliminary Prospectus was
corrected in the final Prospectus unless, in either case, such failure to
deliver the final Prospectus was the result of non-compliance by the Company
and the Guarantors with Section 2(b), 3(c) or 3(g) hereof.

 

(b)                                 Each Holder agrees, severally and not
jointly, to indemnify and hold harmless the Company, the Guarantors, the
Initial Purchaser and the other selling Holders, their respective affiliates,
the directors of the Issuers, each officer of the Issuers who signed the
Registration Statement and each Person, if any, who controls the Company, the
Guarantors, the Initial Purchaser and any other selling Holder within the
meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act to the same extent as the indemnity set forth in paragraph (a) above,
but only with respect to any losses, claims, damages or liabilities that arise
out of, or are based upon, any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with any
information relating to such Holder furnished to the Company in writing by such
Holder expressly for use in any Registration Statement, Market-Making
Registration Statement and any Prospectus.

 

18

 

(c)                                  If any suit, action, proceeding (including
any governmental or regulatory investigation), claim or demand shall be brought
or asserted against any Person in respect of which indemnification may be
sought pursuant to either paragraph (a) or (b) above, such Person
(the “Indemnified Person”) shall promptly notify the Person against whom
such indemnification may be sought (the “Indemnifying Person”) in writing;
provided that the failure to notify the Indemnifying Person shall not
relieve it from any liability that it may have under this Section 5
except to the extent that it has been materially prejudiced (through the
forfeiture of substantive rights or defenses) by such failure; and provided,
further, that the failure to notify the Indemnifying Person shall not
relieve it from any liability that it may have to an Indemnified Person
otherwise than under this Section 5. If any such proceeding shall be
brought or asserted against an Indemnified Person and it shall have notified
the Indemnifying Person thereof, the Indemnifying Person shall retain counsel
reasonably satisfactory to the Indemnified Person to represent the Indemnified
Person and any others entitled to indemnification pursuant to this Section 5
that the Indemnifying Person may designate in such proceeding and shall
pay the reasonable fees and expenses of such counsel related to such
proceeding, as incurred. In any such proceeding, any Indemnified Person shall
have the right to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Person unless (i) the Indemnifying
Person and the Indemnified Person shall have mutually agreed in writing to the
contrary; (ii) the Indemnifying Person has failed within a reasonable time
to retain counsel reasonably satisfactory to the Indemnified Person; (iii) the
Indemnified Person shall have reasonably concluded that there may be legal
defenses available to it that are different from or in addition to those
available to the Indemnifying Person; or (iv) the named parties in any
such proceeding (including any impleaded parties) include both the Indemnifying
Person and the Indemnified Person and representation of both parties by the
same counsel would be inappropriate due to actual or potential differing
interests between them. It is understood and agreed that the Indemnifying Person
shall not, in connection with any proceeding or related proceeding in the same
jurisdiction, be liable for the fees and expenses of more than one separate
firm (in addition to any local counsel) for all Indemnified Persons, and that
all such fees and expenses shall be reimbursed as they are incurred. Any such
separate firm (x) for the Initial Purchaser, its affiliates, directors and
officers and any control Persons of the Initial Purchaser shall be designated
in writing by Wachovia Capital Markets, LLC, (y) for any Holder, its
affiliates, directors and officers and any control Persons of such Holder shall
be designated in writing by the Majority Holders and (z) in all other cases
shall be designated in writing by the Company. The Indemnifying Person shall
not be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the Indemnifying Person agrees to indemnify each Indemnified
Person from and against any loss or liability by reason of such settlement or
judgment, as required by paragraphs (a) and (b) of this Section 5.
Notwithstanding the foregoing sentence, if at any time an Indemnified Person
shall have requested that an Indemnifying Person reimburse the Indemnified
Person for the reasonable fees and expenses of counsel as contemplated by this
paragraph, the Indemnifying Person shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by the Indemnifying Person of such
request, (ii) the Indemnifying Person shall not have reimbursed the
Indemnified Person in accordance with such request prior to the date of such
settlement and (iii) such Indemnified Person shall have given the
Indemnifying Person at least 30 days prior written notice of its intention to
settle. No Indemnifying Person shall, without the written consent of the
Indemnified Person, effect any settlement of any pending or threatened proceeding
in respect of 

 

19

 

which
any Indemnified Person is or could have been a party and indemnification could
have been sought hereunder by such Indemnified Person, unless such settlement
includes an unconditional release of such Indemnified Person, in form and
substance reasonably satisfactory to such Indemnified Person, from all
liability on claims that are the subject matter of such proceeding.

 

(d)                                 If the indemnification provided for in
paragraphs (a) and (b) above is unavailable to an Indemnified Person
or insufficient in respect of any losses, claims, damages or liabilities
referred to therein, then each Indemnifying Person under such paragraph, in
lieu of indemnifying such Indemnified Person thereunder, shall contribute to
the amount paid or payable by such Indemnified Person as a result of such
losses, claims, damages or liabilities (i) in such proportion as is
appropriate to reflect the relative benefits received by the Issuers from the
offering of the Securities and the Exchange Securities, on the one hand, and by
the Holders from receiving Securities or Exchange Securities registered under
the Securities Act, on the other hand, or (ii) if the allocation provided
by clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i) but
also the relative fault of the Issuers on the one hand and the Holders on the
other in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of the Issuers on the one hand and the
Holders on the other shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the Issuers or by the Holders and the parties’ relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.

 

(e)                                  The Issuers and the Holders agree that it
would not be just and equitable if contribution pursuant to this Section 5
were determined by pro  rata allocation (even if the Holders were
treated as one entity for such purpose) or by any other method of allocation
that does not take account of the equitable considerations referred to in
paragraph (d) above. The amount paid or payable by a party as a result of
the losses, claims, damages and liabilities referred to in paragraph (d) above
shall be deemed to include, subject to the limitations set forth above, any
legal or other expenses reasonably incurred by such party in connection with
any such action or claim. Notwithstanding the provisions of this Section 5,
in no event shall a Holder be required to contribute any amount in excess of
the amount by which the total price at which the Securities or Exchange
Securities sold by such Holder exceeds the amount of any damages that such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.

 

(f)                                    The remedies provided for in this Section 5
are not exclusive and shall not limit any rights or remedies that may otherwise
be available to any Indemnified Person at law or in equity.

 

(g)                                 The indemnity and contribution provisions
contained in this Section 5 shall remain operative and in full force and
effect regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of the Initial Purchaser or any Holder,
their 

 

20

 

respective
affiliates or any Person controlling the Initial Purchaser or any Holder, or by
or on behalf of the Issuers, their respective affiliates or the officers or
directors of or any Person controlling the Issuers, (iii) acceptance of
any of the Exchange Securities and (iv) any sale of Registrable Securities
pursuant to a Shelf Registration Statement.

 

6.                                       General.

 

(a)                                  No Inconsistent Agreements. The Issuers represent, warrant and agree
that (i) the rights granted to the Holders hereunder do not in any way
conflict with and are not inconsistent with the rights granted to the holders
of any other outstanding securities issued or guaranteed by the Company or any
Guarantor under any other agreement and (ii) neither the Company nor any
Guarantor has entered into, or on or after the date of this Agreement will
enter into, any agreement that is inconsistent with the rights granted to the
Holders of Registrable Securities in this Agreement or otherwise conflicts with
the provisions hereof.

 

(b)                                 Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof may not
be given unless the Issuers have obtained the written consent of Holders of at
least a majority in aggregate principal amount of the outstanding Registrable
Securities affected by such amendment, modification, supplement, waiver or consent;
provided that no amendment, modification, supplement, waiver or consent
to any departure from the provisions of Section 5 hereof shall be
effective as against any Holder of Registrable Securities unless consented to
in writing by such Holder. Any amendments, modifications, supplements, waivers
or consents pursuant to this Section 6(b) shall be by a writing
executed by each of the parties hereto. Any amendments, modifications,
supplements, waivers or consents pursuant to Section 2(c) or any
related sections shall require the written consent of the Market-Maker.

 

(c)                                  Notices. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, registered first-class mail,
telex, telecopier, or any courier guaranteeing overnight delivery (i) if
to a Holder or the Market-Maker, at the most current address given by such
Holder or the Market-Maker to the Company by means of a notice given in
accordance with the provisions of this Section 6(c), which address initially
is, with respect to the Initial Purchaser, the address set forth in the
Purchase Agreement; (ii) if to the Issuers, initially at the Company’s
address set forth in the Purchase Agreement and thereafter at such other
address, notice of which is given in accordance with the provisions of this Section 6(c);
and (iii) to such other persons at their respective addresses as provided
in the Purchase Agreement and thereafter at such other address, notice of which
is given in accordance with the provisions of this Section 6(c). All such
notices and communications shall be deemed to have been duly given at the time
delivered by hand, if personally delivered; five Business Days after being
deposited in the mail, postage prepaid, if mailed; when answered back, if telexed;
when receipt is acknowledged, if telecopied; and on the next Business Day if
timely delivered to an air courier guaranteeing overnight delivery. Copies of
all such notices, demands or other communications shall be concurrently
delivered by the Person giving the same to the Trustee, at the address
specified in the Indenture.

 

21

 

(d)                                 Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors, assigns and transferees of each of the
parties, including, without limitation and without the need for an express
assignment, subsequent Holders; provided that nothing herein shall be
deemed to permit any assignment, transfer or other disposition of Registrable
Securities in violation of the terms of the Purchase Agreement or the
Indenture. If any transferee of any Holder shall acquire Registrable Securities
in any manner, whether by operation of law or otherwise, such Registrable
Securities shall be held subject to all the terms of this Agreement, and by
taking and holding such Registrable Securities such Person shall be
conclusively deemed to have agreed to be bound by and to perform all of
the terms and provisions of this Agreement and such Person shall be entitled to
receive the benefits hereof. The Initial Purchaser (in its capacity as Initial
Purchaser) shall have no liability or obligation to the Company or the
Guarantors with respect to any failure by a Holder to comply with, or any
breach by any Holder of, any of the obligations of such Holder under this
Agreement.

 

(e)                                  Third Party Beneficiaries. Each Holder shall be a third party
beneficiary to the agreements made hereunder between the Issuers, on the one
hand, and the Initial Purchaser, on the other hand, and shall have the right to
enforce such agreements directly to the extent it deems such enforcement
necessary or advisable to protect its rights or the rights of other Holders
hereunder.

 

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

 

(g)                                 Headings. The headings in this Agreement are for convenience of reference only,
are not a part of this Agreement and shall not limit or otherwise affect
the meaning hereof.

 

(h)                                 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.

 

(i)                                     Miscellaneous. This Agreement contains the entire
agreement between the parties relating to the subject matter hereof and
supersedes all oral statements and prior writings with respect thereto. If any
term, provision, covenant or restriction contained in this Agreement is held by
a court of competent jurisdiction to be invalid, void or unenforceable or
against public policy, the remainder of the terms, provisions, covenants and
restrictions contained herein shall remain in full force and effect and shall
in no way be affected, impaired or invalidated. The Issuers and the Initial
Purchaser shall endeavor in good faith negotiations to replace the invalid,
void or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the invalid, void or unenforceable
provisions.

 

22

 

IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first written above.

 

	
   

  	
  COMPRESSION POLYMERS HOLDING

  CORPORATION

  
	
   

  	
  COMPRESSION POLYMERS HOLDING II

  CORPORATION

  
	
   

  	
  COMPRESSION POLYMERS CORP.

  
	
   

  	
  VYCOM CORP.

  
	
   

  	
  CPCAPITOL ACQUISITION CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ SCOTT HARRISON

  
	
   

  	
   

  	
  Name:

  	
  Scott Harrison

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President and
  Chief 

  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CPH SUB I CORPORATION

  
	
   

  	
  CPH SUB II CORPORATION

  
	
   

  	
  CPC SUB I CORPORATION

  
	
   

  	
  VC SUB I CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ SHIVANANDAN A. DALVIE

  
	
   

  	
   

  	
  Name:

  	
  Shivanandan A. Dalvie

  
	
   

  	
   

  	
  Title:

  	
  President, Assistant
  Secretary and

  Treasurer

  
					

 

23

 

Confirmed
and accepted as of the date first

above
written:

 

WACHOVIA
CAPITAL MARKETS, LLC

 

	
  By:

  	
  /s/ ROBERT H. JOHNSON, JR

  	
   

  
	
   

  	
  Name: Robert H. Johnson, Jr

  
	
   

  	
  Title: Managing Director

  

 

24

 

EXHIBIT A

 

SUBSIDIARIES

 

COMPRESSION
POLYMERS CORP.

VYCOM
CORP.

CPCAPITOL
ACQUISITION CORP.

CPH
SUB I CORPORATION

CPH
SUB II CORPORATION

CPC
SUB I CORPORATION

VC
SUB I CORPORATIONExhibit 10.1

 

 

$40,000,000

SECOND AMENDED AND RESTATED

CREDIT AGREEMENT

among

COMPRESSION POLYMERS HOLDING CORPORATION

as Borrower,

COMPRESSION POLYMERS HOLDING II CORPORATION

and

THE DOMESTIC SUBSIDIARIES OF THE BORROWER

FROM TIME TO TIME PARTIES HERETO,

as Guarantors,

THE LENDERS PARTIES HERETO,

WACHOVIA BANK, NATIONAL ASSOCIATION,

as Administrative Agent, Co-Lead Arranger and Co-Book Runner

 

and

GENERAL ELECTRIC CAPITAL CORPORATION,

as Syndication Agent, Co-Lead Arranger and Co-Book Runner

Dated as of May 10, 2005

 

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  
	
  ARTICLE I

  
	
   

  
	
  DEFINITIONS

  
	
   

  
	
  Section 1.1

  	
  Defined
  Terms

  	
  1

  
	
  Section 1.2

  	
  Other
  Definitional Provisions

  	
  24

  
	
  Section 1.3

  	
  Accounting
  Terms

  	
  24

  

 

ARTICLE II

 

THE LOANS; AMOUNT AND TERMS

 

	
  Section 2.1

  	
  Revolving
  Loans

  	
  24

  
	
  Section 2.2

  	
  Letter
  of Credit Subfacility

  	
  26

  
	
  Section 2.3

  	
  Swingline
  Loan Subfacility

  	
  28

  
	
  Section 2.4

  	
  Fees

  	
  29

  
	
  Section 2.5

  	
  Commitment
  Reductions

  	
  30

  
	
  Section 2.6

  	
  Prepayments

  	
  30

  
	
  Section 2.7

  	
  Minimum
  Borrowing Amounts and Principal Amount

  	
  31

  
	
  Section 2.8

  	
  Default
  Rate and Payment Dates

  	
  31

  
	
  Section 2.9

  	
  Conversion Options

  	
  31

  
	
  Section 2.10

  	
  Computation
  of Interest and Fees

  	
  31

  
	
  Section 2.11

  	
  Pro
  Rata Treatment and Payments

  	
  32

  
	
  Section 2.12

  	
  Non-Receipt
  of Funds by the Administrative Agent

  	
  34

  
	
  Section 2.13

  	
  Inability
  to Determine Interest Rate

  	
  34

  
	
  Section 2.14

  	
  Illegality

  	
  35

  
	
  Section 2.15

  	
  Requirements
  of Law

  	
  35

  
	
  Section 2.16

  	
  Indemnity

  	
  37

  
	
  Section 2.17

  	
  Taxes

  	
  37

  
	
  Section 2.18

  	
  Indemnification;
  Nature of Issuing Lender’s Duties

  	
  39

  

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES

 

	
  Section 3.1

  	
  Financial
  Condition

  	
  40

  
	
  Section 3.2

  	
  No
  Change

  	
  40

  
	
  Section 3.3

  	
  Corporate
  Existence; Compliance with Law

  	
  40

  
	
  Section 3.4

  	
  Corporate
  Power; Authorization; Enforceable Obligations

  	
  40

  
	
  Section 3.5

  	
  No
  Legal Bar; No Default

  	
  41

  
	
  Section 3.6

  	
  Permits

  	
  41

  
	
  Section 3.7

  	
  No
  Material Litigation

  	
  41

  
	
  Section 3.8

  	
  Investment
  Company Act

  	
  41

  
	
  Section 3.9

  	
  Margin
  Regulations

  	
  41

  
	
  Section 3.10

  	
  ERISA

  	
  42

  
	
  Section 3.11

  	
  Environmental
  Matters

  	
  42

  
	
  Section 3.12

  	
  Purpose
  of Loans

  	
  43

  
	
  Section 3.13

  	
  Subsidiaries

  	
  43

  
	
  Section 3.14

  	
  Ownership

  	
  43

  
	
  Section 3.15

  	
  Indebtedness

  	
  43

  

 

i

 

	
  Section 3.16

  	
  Taxes

  	
  43

  
	
  Section 3.17

  	
  Intellectual
  Property

  	
  44

  
	
  Section 3.18

  	
  Solvency

  	
  44

  
	
  Section 3.19

  	
  Investments

  	
  44

  
	
  Section 3.20

  	
  Location
  of Collateral

  	
  44

  
	
  Section 3.21

  	
  No
  Burdensome Restrictions

  	
  44

  
	
  Section 3.22

  	
  Brokers’
  Fees

  	
  44

  
	
  Section 3.23

  	
  Labor
  Matters

  	
  45

  
	
  Section 3.24

  	
  Security
  Documents

  	
  45

  
	
  Section 3.25

  	
  Accuracy
  and Completeness of Information

  	
  45

  
	
  Section 3.26

  	
  [Intentionally
  Omitted]

  	
  45

  
	
  Section 3.27

  	
  Material
  Contracts

  	
  45

  
	
  Section 3.28

  	
  Insurance

  	
  46

  
	
  Section 3.29

  	
  Tax
  Regulations

  	
  46

  
	
  Section 3.30

  	
  Capitalization
  of the Borrower

  	
  47

  
	
  Section 3.31

  	
  Location
  of Material Inventory

  	
  47

  
	
  Section 3.32

  	
  Anti-Terrorism
  Law

  	
  47

  
	
  Section 3.33

  	
  Accuracy
  of Borrowing Base

  	
  47

  
	
  Section 3.34

  	
  Liens Unimpaired

  	
  47

  

 

ARTICLE IV

 

CONDITIONS PRECEDENT

 

	
  Section 4.1

  	
  Conditions
  to Closing Date and Initial Revolving Loans

  	
  48

  
	
  Section 4.2

  	
  Conditions
  to All Extensions of Credit

  	
  52

  

 

ARTICLE V

 

AFFIRMATIVE COVENANTS

 

	
  Section 5.1

  	
  Financial
  Statements

  	
  53

  
	
  Section 5.2

  	
  Certificates;
  Other Information

  	
  54

  
	
  Section 5.3

  	
  Payment
  of Taxes

  	
  56

  
	
  Section 5.4

  	
  Conduct
  of Business and Maintenance of Existence

  	
  56

  
	
  Section 5.5

  	
  Maintenance
  of Property; Insurance

  	
  56

  
	
  Section 5.6

  	
  Inspection
  of Property; Books and Records; Discussions

  	
  56

  
	
  Section 5.7

  	
  Notices

  	
  57

  
	
  Section 5.8

  	
  Environmental
  Laws

  	
  57

  
	
  Section 5.9

  	
  Financial
  Covenant

  	
  58

  
	
  Section 5.10

  	
  Additional
  Subsidiary Guarantors

  	
  58

  
	
  Section 5.11

  	
  Compliance
  with Law

  	
  58

  
	
  Section 5.12

  	
  Pledged
  Assets

  	
  59

  
	
  Section 5.13

  	
  Security
  Interests; Further Assurances

  	
  59

  
	
  Section 5.14

  	
  Information
  Regarding Collateral

  	
  59

  
	
  Section 5.15

  	
  Use of
  Proceeds

  	
  59

  
	
  Section 5.16

  	
  Borrowing
  Base-Related Reports

  	
  60

  
	
  Section 5.17

  	
  Borrowing
  Base Verification

  	
  60

  
	
  Section 5.18

  	
  Post-Closing
  Collateral Matters

  	
  60

  

 

ii

 

ARTICLE VI

 

NEGATIVE COVENANTS

 

	
  Section 6.1

  	
  Indebtedness

  	
  60

  
	
  Section 6.2

  	
  Liens

  	
  62

  
	
  Section 6.3

  	
  Nature
  of Business

  	
  62

  
	
  Section 6.4

  	
  Consolidation,
  Merger, Sale or Purchase of Assets, Acquisitions, etc

  	
  62

  
	
  Section 6.5

  	
  Advances,
  Investments and Loans

  	
  63

  
	
  Section 6.6

  	
  Transactions
  with Affiliates

  	
  64

  
	
  Section 6.7

  	
  Ownership
  of Subsidiaries; Restrictions

  	
  65

  
	
  Section 6.8

  	
  Fiscal
  Year; Organizational Documents; Material Contracts

  	
  65

  
	
  Section 6.9

  	
  Limitation
  on Restricted Actions

  	
  65

  
	
  Section 6.10

  	
  Restricted
  Payments

  	
  67

  
	
  Section 6.11

  	
  No
  Further Negative Pledges

  	
  67

  
	
  Section 6.12

  	
  Parent
  Holding Company

  	
  67

  
	
  Section 6.13

  	
  Management
  Fees

  	
  68

  
	
  Section 6.14

  	
  Embargoed
  Person

  	
  68

  

 

ARTICLE VII

 

EVENTS OF DEFAULT

 

	
  Section 7.1

  	
  Events
  of Default

  	
  68

  
	
  Section 7.2

  	
  Acceleration;
  Remedies

  	
  70

  

 

ARTICLE VIII

 

THE AGENT

 

	
  Section 8.1

  	
  Appointment

  	
  70

  
	
  Section 8.2

  	
  Delegation
  of Duties

  	
  71

  
	
  Section 8.3

  	
  Exculpatory
  Provisions

  	
  71

  
	
  Section 8.4

  	
  Reliance
  by Administrative Agent

  	
  71

  
	
  Section 8.5

  	
  Notice
  of Default

  	
  71

  
	
  Section 8.6

  	
  Non-Reliance
  on Administrative Agent and Other Lenders

  	
  72

  
	
  Section 8.7

  	
  Indemnification

  	
  72

  
	
  Section 8.8

  	
  Administrative
  Agent in Its Individual Capacity

  	
  72

  
	
  Section 8.9

  	
  Successor
  Administrative Agent

  	
  73

  
	
  Section 8.10

  	
  Other Agents

  	
  73

  

 

ARTICLE IX

 

MISCELLANEOUS

 

	
  Section 9.1

  	
  Amendments,
  Waivers and Release of Collateral

  	
  73

  
	
  Section 9.2

  	
  Notices

  	
  75

  
	
  Section 9.3

  	
  No
  Waiver; Cumulative Remedies

  	
  76

  
	
  Section 9.4

  	
  Survival
  of Representations and Warranties

  	
  76

  
	
  Section 9.5

  	
  Payment
  of Expenses and Taxes

  	
  76

  
	
  Section 9.6

  	
  Successors
  and Assigns; Participations; Purchasing Lenders

  	
  76

  
	
  Section 9.7

  	
  Adjustments;
  Set-off

  	
  78

  
	
  Section 9.8

  	
  Table
  of Contents and Section Headings

  	
  79

  

 

iii

 

	
  Section 9.9

  	
  Counterparts

  	
  79

  
	
  Section 9.10

  	
  Effectiveness

  	
  79

  
	
  Section 9.11

  	
  Severability

  	
  80

  
	
  Section 9.12

  	
  Integration

  	
  80

  
	
  Section 9.13

  	
  Governing
  Law

  	
  80

  
	
  Section 9.14

  	
  Consent
  to Jurisdiction and Service of Process

  	
  80

  
	
  Section 9.15

  	
  Confidentiality

  	
  81

  
	
  Section 9.16

  	
  Acknowledgments

  	
  81

  
	
  Section 9.17

  	
  Waivers
  of Jury Trial; Waiver of Consequential Damages

  	
  81

  
	
  Section 9.18

  	
  Patriot
  Act Notice

  	
  81

  
	
  Section 9.19

  	
  Acknowledgement

  	
  82

  

 

ARTICLE X

 

GUARANTY

 

	
  Section 10.1

  	
  The
  Guaranty

  	
  82

  
	
  Section 10.2

  	
  Bankruptcy

  	
  82

  
	
  Section 10.3

  	
  Nature
  of Liability

  	
  83

  
	
  Section 10.4

  	
  Independent
  Obligation

  	
  83

  
	
  Section 10.5

  	
  Authorization

  	
  83

  
	
  Section 10.6

  	
  Reliance

  	
  83

  
	
  Section 10.7

  	
  Waiver

  	
  83

  
	
  Section 10.8

  	
  Limitation
  on Enforcement

  	
  84

  
	
  Section 10.9

  	
  Confirmation
  of Payment

  	
  84

  

 

iv

 

	
  Schedules

  	
   

  	
   

  
	
  Schedule 1.1(a)

  	
  Form of
  Account Designation Letter

  	
   

  
	
  Schedule 1.1(b)

  	
  Form of
  Borrowing Base Certificate

  	
   

  
	
  Schedule 1.1(c)

  	
  Management
  Agreement

  	
   

  
	
  Schedule 1.1(d)

  	
  Perfection
  Certificate

  	
   

  
	
  Schedule 1.1(e)

  	
  Permitted
  Investments

  	
   

  
	
  Schedule 1.1(f)

  	
  Permitted Liens

  	
   

  
	
  Schedule 1.1(g)

  	
  Form of
  Subordinated Intercompany Note

  	
   

  
	
  Schedule 2.1(a)

  	
  Schedule of
  Lenders and Commitments

  	
   

  
	
  Schedule 2.1(b)(i)

  	
  Form of
  Notice of Borrowing

  	
   

  
	
  Schedule 2.1(e)

  	
  Form of
  Revolving Note

  	
   

  
	
  Schedule 2.3(d)

  	
  Form of
  Swingline Note

  	
   

  
	
  Schedule 2.9

  	
  Form of
  Notice of Conversion/Extension

  	
   

  
	
  Schedule 2.17(b)

  	
  Tax Exempt
  Certificate

  	
   

  
	
  Schedule 3.11

  	
  Environmental
  Matters

  	
   

  
	
  Schedule 3.13

  	
  Subsidiaries

  	
   

  
	
  Schedule 3.17

  	
  Intellectual
  Property

  	
   

  
	
  Schedule 3.20(a)

  	
  Location of Real
  Property

  	
   

  
	
  Schedule 3.20(b)

  	
  Location of
  Collateral

  	
   

  
	
  Schedule 3.20(c)

  	
  Chief Executive
  Offices

  	
   

  
	
  Schedule 3.22

  	
  Broker’s Fees

  	
   

  
	
  Schedule 3.23

  	
  Labor Matters

  	
   

  
	
  Schedule 3.27

  	
  Material
  Contracts

  	
   

  
	
  Schedule 3.28

  	
  Insurance

  	
   

  
	
  Schedule 3.31

  	
  Location of
  Material Inventory

  	
   

  
	
  Schedule 4.1(b)

  	
  Form of
  Secretary’s Certificate

  	
   

  
	
  Schedule 4.1(e)(i)(A)

  	
  Form of
  Mortgage Amendment

  	
   

  
	
  Schedule 4.1(e)(i)(B)

  	
  Form of
  Leasehold Mortgage

  	
   

  
	
  Schedule 4.1(h)

  	
  Form of
  Solvency Certificate

  	
   

  
	
  Schedule 4.1(i) and
  (q)

  	
  Form of
  Officer’s Certificate

  	
   

  
	
  Schedule 4.1(j)

  	
  Form of
  Patriot Act Certificate

  	
   

  
	
  Schedule 4.1(v)

  	
  EBITDA
  Adjustments

  	
   

  
	
  Schedule 5.2(b)

  	
  Form of
  Compliance Certificate

  	
   

  
	
  Schedule 5.10

  	
  Form of
  Joinder Agreement

  	
   

  
	
  Schedule 6.1(b)

  	
  Indebtedness

  	
   

  
	
  Schedule 6.6

  	
  Transactions
  with Affiliates

  	
   

  
	
  Schedule 9.2

  	
  Schedule of
  Lenders’ Lending Offices

  	
   

  
	
  Schedule 9.6(c)

  	
  Form of
  Commitment Transfer Supplement

  	
   

  

 

v

 

This SECOND AMENDED AND RESTATED CREDIT AGREEMENT,
dated as of May 10, 2005, is by and among COMPRESSION POLYMERS HOLDING
CORPORATION., a Delaware corporation (the “Borrower”), COMPRESSION
POLYMERS HOLDING II CORPORATION, a Delaware corporation (the “Parent”),
the Guarantors (as defined below), the several banks, other financial
institutions and Related Funds as may from time to time become parties to
this Agreement (collectively, the “Lenders”, and individually, a “Lender”),
and WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association, as
administrative agent for the Lenders hereunder (in such capacity, and any
successor in such capacity, the “Administrative Agent”).

 

W I T N E S S E T H:

 

WHEREAS, Compression Polymers Corp., a Delaware
corporation, and Vycom Corp., a Delaware corporation (collectively, the “Original
Borrowers”), the guarantors party thereto, the lenders party thereto and
the Administrative Agent entered into that certain Amended and Restated Credit
Agreement, dated as of March 12, 2004 (as amended, modified or
supplemented prior to the date hereof, the “Existing Credit Agreement”);

 

WHEREAS, on or prior to the Closing Date, Compression
Polymers Holding I LP, a Delaware limited partnership, has formed Parent, which
in turn has formed, on or prior to the Closing, the Borrower to acquire from
the current shareholders of the Original Borrowers (which may include the
retention of equity interests (including rollover options) by certain members
of management of the Original Borrowers) all of the outstanding equity interests
of the Original Borrowers (the “Acquisition”);

 

WHEREAS, immediately after consummation of the
Acquisition, the Purchasers (as defined below) will merge with and into the
Original Borrowers (the “Mergers” and, together with the Acquisition,
the “Transactions”);

 

WHEREAS, to effect the Transactions, (i) the
Borrower will form two wholly owned subsidiaries, CPH Holding I
Corporation and CPH Holding II Corporation (together, the “Purchasers”),
which will purchase all equity interests in the Original Borrowers, and (ii) the
AEA Group and other investors (either directly or indirectly) will contribute
equity to the Parent in the form of cash capital contributions in amount
not less than $165.0 million (minus cash in an amount of rollover equity from
management of the Original Borrowers to be agreed) (the “Equity Contribution”);

 

WHEREAS, in connection with Acquisition, the Original
Borrowers are refinancing the entire outstanding amount of the Existing Credit
Agreement, and, in connection with such refinancing and to make such other amendments
as are evidenced hereby, the Administrative Agent, the Lenders, the Borrower,
the Parent and the Guarantors have agreed to amend and restate the Existing
Credit Agreement by entering into this Agreement on the terms and conditions contained
herein;

 

NOW, THEREFORE, in consideration of the premises and
the mutual covenants contained herein, the parties hereto hereby agree as
follows:

 

ARTICLE I

 

DEFINITIONS

 

Section 1.1               Defined
Terms.

 

As used in this Agreement, terms defined in the
preamble to this Agreement have the meanings therein indicated, and the
following terms have the following meanings:

 

“Account Debtor” shall mean any Person who may become
obligated to any Borrowing Base Party under, with respect to, or on account of,
an Account.

 

“Account Designation Letter” shall mean the
Notice of Account Designation Letter dated the Closing Date from the Borrower
to the Administrative Agent substantially in the form attached hereto as Schedule 1.1(a).

 

 

“Accounts” shall mean all “accounts”, as such
term is defined in the UCC as in effect from time to time in the State of New
York, now owned or hereafter acquired by any Borrowing Base Party.

 

“Acquired Indebtedness” means Indebtedness of a
Person or any of its Subsidiaries existing at the time such Person becomes a
Subsidiary of the Borrower or at the time it merges or consolidates with the
Borrower or any of its Subsidiaries or assumed in connection with the
acquisition of assets from such Person and in each case not incurred by such
Person in connection with, or in anticipation or contemplation of, such Person
becoming a Subsidiary of the Borrower or such acquisition, merger or
consolidation; provided
that any Indebtedness of such Person that is extinguished, redeemed, defeased
(other than through covenant defeasance), retired or otherwise repaid at the
time of or immediately upon consummation of the transaction pursuant to which
such Person becomes a Subsidiary of the Borrower will not be Acquired Indebtedness.

 

“Additional Credit Party” shall mean each
Person that becomes a Guarantor by execution of a Joinder Agreement in
accordance with Section 5.10.

 

“Advance Rate” shall mean (a) with respect
to Eligible Accounts, 85%, and (b) with respect to Eligible Inventory,
60%.

 

“AEA Group” shall mean a collective reference
to AEA Investors LLC, AEA Management (Cayman) Ltd., AEA Investors LP and their
Affiliates.

 

“Affiliate” shall mean, as to any Person, any
other Person (excluding any Subsidiary) which, directly or indirectly, is in
control of, is controlled by, or is under common control with, such Person. For
purposes of this definition, a Person shall be deemed to be “controlled by” a
Person if such Person possesses, directly or indirectly, power either (a) to
vote 10% or more of the securities having ordinary voting power for the
election of directors of such Person or (b) to direct or cause the
direction of the management and policies of such Person whether by contract or
otherwise. Notwithstanding the foregoing, none of Wachovia Capital Partners
2005, LLC, the Administrative Agent or any Lender shall be deemed an Affiliate
of Borrower solely by reason of the relationship created by the Credit
Documents. Furthermore, for purposes of Article III and Article VI,
neither the limited partners participating in the AEA Group’s investment
programs nor any mezzanine investment fund managed by the AEA Group shall
constitute an Affiliate of the Borrower.

 

“Agreement” shall mean this Second Amended and
Restated Credit Agreement, as amended, modified, restated, supplemented,
extended, renewed or replaced from time to time in accordance with its terms.

 

“Alternate Base Rate” shall mean, for any day,
a rate per annum equal to the greater of (a) the Prime Rate in effect on
such day and (b) the Federal Funds Effective Rate in effect on such day plus
1/2 of 1%. For purposes hereof, “Prime Rate” shall mean, at any time,
the prime commercial lending rate of interest per annum publicly announced from
time to time by Administrative Agent at its principal office as its prime rate.
Each change in the Prime Rate shall be effective as of the opening of business
on the day such change in the Prime Rate occurs. The parties hereto acknowledge
that the rate announced publicly by Administrative Agent as its Prime Rate is
an index or base rate and shall not necessarily be its lowest or best rate
charged to its customers or other banks; and “Federal Funds Effective 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 on the next succeeding Business Day by the
Federal Reserve Bank of New York, or, if such rate is not so published on the
next succeeding Business Day, the average of the quotations for the day of such
transactions received by the Administrative Agent from three federal funds
brokers of recognized standing selected by it. If for any reason the
Administrative Agent shall have determined (which determination shall be
conclusive in the absence of manifest error) that it is unable to ascertain the
Federal Funds Effective Rate, for any reason, including the inability or
failure of the Administrative Agent to obtain sufficient quotations in
accordance with the terms thereof, the Alternate Base Rate shall be determined
without regard to clause (b) of the first sentence of this definition, as
appropriate, until the circumstances giving rise to such inability no longer
exist. Any change in the Alternate Base Rate due to a change in the Prime Rate
or the Federal Funds Effective Rate shall be effective on the opening of
business on the date of such change.

 

“Alternate Base Rate Loans” shall mean Loans
that bear interest at an interest rate based on the Alternate Base Rate.

 

2

 

“Amended Mortgage Policy” shall have the
meaning set forth in Section 4.1(e)(ii).

 

“Anti-Terrorism Laws” shall have the meaning
set forth in Section 3.32.

 

“Applicable Percentage” shall mean, for any
day, the rate per annum set forth below opposite the applicable level then in
effect, it being understood that the Applicable Percentage for (i) Revolving
Loans which are Alternate Base Rate Loans shall be the percentage set forth
under the column “Alternate Base Rate Margin for Revolving Loans”, (ii) Revolving
Loans which are LIBOR Rate Loans shall be the percentage set forth under the
column “LIBOR Rate Margin for Revolving Loans and Letter of Credit Fee”, (iii) the
Letter of Credit Fee shall be the percentage set forth under the column “LIBOR
Rate Margin for Revolving Loans and Letter of Credit Fee”, and (iv) the
Commitment Fee shall be the percentage set forth under the column “Commitment
Fee”:

 

	
  Level

  	
   

  	
  Total Leverage

  Ratio

  	
   

  	
  Alternate Base Rate Margin

  for Revolving Loans

  	
   

  	
  LIBOR Rate Margin for Revolving

  Loans and Letter of Credit Fee

  	
   

  	
  Commitment

  Fee

  	
   

  
	
  I

  	
   

  	
  < 5.0 to 1.0

  	
   

  	
  1.25

  	
  %

  	
  2.25

  	
  %

  	
  0.50

  	
  %

  
	
  II

  	
   

  	
  > 5.0 to 1.0

  but < 6.25 to 1.0

  	
   

  	
  1.50

  	
  %

  	
  2.50

  	
  %

  	
  0.50

  	
  %

  
	
  III

  	
   

  	
  > 6.25 to 1.0

  	
   

  	
  1.75

  	
  %

  	
  2.75

  	
  %

  	
  0.50

  	
  %

  

 

The Applicable Percentage shall, in each case, be
determined and adjusted quarterly on the date three (3) Business Days
after the date on which the Administrative Agent has received from the Borrower
the quarterly financial information in the case of the first three fiscal
quarters, and annual financial information in the case of the fourth quarter,
and certifications required to be delivered to the Administrative Agent and the
Lenders in accordance with the provisions of Sections 5.1(a), 5.1(b) and
5.2(b) pursuant to which the Borrower notifies the Administrative Agent of
a change in the applicable pricing level based on the financial information
contained therein (each, an “Interest Determination Date”). Such
Applicable Percentage shall be effective from such Interest Determination Date
until the next such Interest Determination Date. Notwithstanding the foregoing,
the initial Applicable Percentages shall be no lower than those set forth in
Level I until the first Interest Determination Date occurring immediately after
June 30, 2005. After the Closing Date, if the Borrower shall fail to
provide the quarterly financial information and certifications in accordance
with the provisions of Sections 5.1(b) and 5.2(b), the Applicable
Percentage from such Interest Determination Date shall, on the date three (3) Business
Days after the date by which the Borrower were so required to provide such
financial information and certifications to the Administrative Agent and the
Lenders, be based on Level I until such time as such information and
certifications are provided, whereupon the level shall be determined by the
then current Total Leverage Ratio.

 

“Bailee Letter” shall have the meaning assigned
thereto in the Security Agreement.

 

“Bankruptcy Code” shall mean the Bankruptcy
Code in Title 11 of the United States Code, as amended, modified, succeeded or
replaced from time to time.

 

“Bankruptcy Event” shall mean any of the events
described in Section 7.1(e).

 

“Borrowing Base” shall mean at any time an
amount equal to the sum of, without duplication:

 

(a)           the book value of
Eligible Accounts multiplied by the applicable Advance Rate, plus

 

(b)           Eligible Inventory
multiplied by the applicable Advance Rate.

 

The Borrowing Base at any time shall be determined by
reference to the most recent Borrowing Base Certificate theretofore delivered
to the Administrative Agent, with such adjustments as the Administrative Agent
deems appropriate in its reasonable good faith credit judgment to assure that
the Borrowing Base is calculated in accordance with the terms of this
Agreement.

 

3

 

“Borrowing Base Certificate” shall mean an
officers’ certificate from the Borrower, substantially in the form of, and
containing the information prescribed by, Schedule 1.1(b),
delivered to the Administrative Agent.

 

“Borrowing Base Party” shall mean the Borrower
and any of its Subsidiaries that is a Guarantor and a Domestic Subsidiary and
whose designation as a “Borrowing Base Party” has been approved by the Administrative
Agent.

 

“Borrowing Date” shall mean, in respect of any
Loan, the date such Loan is made.

 

“Business” shall have the meaning set forth in Section 3.11(b).

 

“Business Day” shall mean a day other than a
Saturday, Sunday or other day on which commercial banks in Charlotte, North
Carolina or New York, New York are authorized or required by law to close; provided,
however, that, when used in connection with a rate determination,
borrowing or payment in respect of a LIBOR Rate Loan, the term “Business Day”
shall also exclude any day on which banks in London, England are not open for
dealings in Dollar deposits in the London interbank market.

 

“Capital Lease” shall mean any lease of
property, real or personal, the obligations with respect to which are required
to be capitalized on a balance sheet of the lessee in accordance with GAAP.

 

“Capital Lease Obligations” shall mean the
capitalized lease obligations determined in accordance with GAAP.

 

“Capital Stock” shall mean (i) in the case
of a corporation, capital stock, (ii) in the case of an association or
business entity, any and all shares, interests, participations, rights or other
equivalents (however designated) of capital stock, (iii) in the case of a
partnership, partnership interests (whether general or limited), (iv) in
the case of a limited liability company, membership interests and (v) any
other interest or participation that confers on a Person the right to receive a
share of the profits and losses of, or distributions of assets of, the issuing
Person.

 

“Cash Equivalents” means: (i) marketable
direct obligations issued by, or unconditionally guaranteed by, the United
States government or issued by any agency thereof and backed by the full faith
and credit of the United States, in each case maturing within two years from
the date of acquisition thereof; (ii) marketable direct obligations issued
by any state, commonwealth or territory of the United States of America or any
political subdivision of any such state, commonwealth or territory or any
public instrumentality thereof maturing within two years from the date of
acquisition thereof and, at the time of acquisition, having an investment grade
rating from either S&P or Moody’s; (iii) commercial paper or other
indebtedness maturing no more than one year from the date of creation thereof
and, at the time of acquisition, having a rating of at least A-1 from S&P
or at least P-1 from Moody’s (or, if at any time neither S&P nor Moody’s
shall be rating such obligations, then an equivalent rating from another
nationally recognized rating service); (iv) certificates of deposit, time
deposits and eurodollar time deposits or bankers’ acceptances maturing within
two years from the date of acquisition thereof and overnight bank deposits
issued by any bank organized under the laws of the United States of America or
any state thereof or the District of Columbia or any U.S. branch of a foreign
bank having at the date of acquisition thereof combined capital and surplus of
not less than $250.0 million in the case of domestic banks and $100.0 million
(or the dollar equivalent thereof) in the case of foreign banks; (v) repurchase
obligations for underlying securities of the types described in clauses (i), (ii) and
(iv) above entered into with any bank meeting the qualifications specified
in clause (iv) above or securities dealers of recognized national
standing; (vi) United States dollars, euros, pounds sterling and local
currencies held by Foreign Subsidiaries from time to time in the ordinary
course of business; (vii) in the case of any investment by a Foreign
Subsidiary or investments made in a country outside the United States of
America, “Cash Equivalents” will also include: 
(x) direct obligations of the sovereign nation (or any agency thereof)
in which such Foreign Subsidiary is organized and is conducting business or in
obligations fully and unconditionally guaranteed by such sovereign nation (or
agency thereof) and (y) other customarily utilized high-quality investments in
the country where such Subsidiary is located or in which such investment is
made; and (viii) investments in money market funds or shares of investment
companies that are registered under the Investment Company Act of 1940 that
invest substantially all their assets in securities of the types described in
clauses (i) through (viii) above. Notwithstanding the foregoing, Cash
Equivalents shall include amounts denominated in currencies other than those
set forth in clauses (i), (ii) and

 

4

 

(vi) above, provided that such amounts are
converted into any currency listed in clauses (i), (ii) and (vi) above,
as promptly as practicable and in any event within ten business days following
the receipt of such amounts.

 

“Change of Control” shall mean the occurrence
of any of the following events: (a) any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of all
or substantially all of the Parent’s assets (determined on a consolidated basis
for the Parent and its Subsidiaries) to any Person or group of related Persons
for purposes of Section 13(d) of the Exchange Act (a “Group”),
together with any Affiliates thereof (whether or not otherwise in compliance
with the provisions of this Agreement), other than to the AEA Group and the
Management Group; (b) the approval by the holders of Capital Stock of the
Parent or the Borrower of any plan or proposal for the liquidation or
dissolution of the Parent or the Borrower, respectively (whether or not
otherwise in compliance with the provisions of this Agreement); (c) any
Person or Group, other than the AEA Group and the Management Group, shall
become the owner, directly or indirectly, beneficially or of record, of shares
representing more than 50% of the aggregate ordinary voting power represented
by the issued and outstanding Capital Stock of the Parent; (d) the replacement
of a majority of the board of directors of the Parent over a two-year period
from the directors who constituted the board of directors of the Parent at the
beginning of such period, and such replacement shall not have been approved by
a vote of at least a majority of the board of directors of the Borrower then
still in office who either were members of any such board of directors at the
beginning of such period or whose election as a member of any such board of directors
was previously so approved; or (e) Parent at any time ceases to own 100%
of the Capital Stock of Borrower.

 

“Chattel Paper” shall mean all “chattel paper”,
as such term is defined in the UCC as in effect on the date hereof in the State
of New York, now owned or hereafter acquired by any Borrowing Base Party.

 

“Closing Date” shall mean the date of this
Agreement.

 

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

 

“Collateral” shall mean a collective reference
to the property and assets which are identified in, and at any time will be
covered by, the Security Documents and any other property and assets that may,
from time to time, secure or purport to secure the Credit Party Obligations.

 

“Commitment” shall mean the Revolving
Commitment, the LOC Commitment and the Swingline Commitment, individually or
collectively, as appropriate.

 

“Commitment Fee” shall have the meaning set
forth in Section 2.4(a).

 

“Commitment Period” shall mean the period from
and including the Closing Date to but not including the Revolving Commitment
Termination Date.

 

“Commitment Transfer Supplement” shall mean a
Commitment Transfer Supplement, substantially in the form of Schedule 9.6(c).

 

“Commonly Controlled Entity” shall mean an
entity, whether or not incorporated, which is under common control with the
Borrower within the meaning of Section 4001 of ERISA or is part of a
group which includes the Borrower and which is treated as a single employer
under Section 414 of the Code. Any former Commonly Controlled Entity of
any Credit Party or any of its Subsidiaries shall continue to be considered a
Commonly Controlled Entity of such Credit Party or such Subsidiary within the
meaning of this definition with respect to the period such entity was a
Commonly Controlled Entity of such Credit Party or such Subsidiary and with
respect to liabilities arising after such period for which such Credit Party or
such Subsidiary could be liable under the Code or ERISA.

 

“Consolidated EBITDA” means, for any period,
the sum (without duplication) of: (1) Consolidated Net Income for such
period; and (2) to the extent Consolidated Net Income has been reduced
thereby, (a) all income taxes of the Borrower and its Subsidiaries paid or
accrued in accordance with GAAP for such period, (b) Consolidated Interest
Expense for such period, (c) Consolidated Non-cash Charges for such period
less any non-cash items increasing Consolidated Net Income for such period, all
as determined on a consolidated basis for the Borrower and its 

 

5

 

Subsidiaries in accordance with GAAP, (d) income
or loss attributable to discontinued operations (including, without limitation,
operations disposed of during such period whether or not such operations were
classified as discontinued), (e) amounts payable to the AEA Group in
connection with the Transactions not to exceed $7,000,000 and (f)  (i) up
to $1,500,000 per year payable to the AEA Group pursuant to the first paragraph
of Section 2 of the Management Agreement (as in effect on the Closing
Date) and (ii) up to $1,500,000 per year otherwise payable to the AEA
Group pursuant to such Management Agreement.

 

“Consolidated Indebtedness” shall mean, as at
any date of determination, the aggregate amount of all Indebtedness and all LOC
Commitments of the Borrower and its Subsidiaries on a consolidated basis
(excluding Indebtedness incurred under clauses (j) and (k) of the definition of
Indebtedness), as determined in accordance with GAAP.

 

“Consolidated Interest Expense” shall mean, for
any period, all interest expense of the Borrower and its Subsidiaries
(including, without limitation, the interest component under Capital Leases),
as determined in accordance with GAAP.

 

“Consolidated Net Income” means, with respect
to the Borrower for any period, the aggregate net income (or loss) of the
Borrower and its Subsidiaries for such period on a consolidated basis,
determined in accordance with GAAP; provided that there shall be
excluded therefrom: (i) after-tax gains or losses from asset sales
(without regard to the $3.0 million limitation set forth in the definition
thereof) or abandonment or reserves relating thereto; (ii) after-tax extraordinary
or nonrecurring gains or losses and any unusual or non-recurring charges
(including severance, relocation costs and one-time compensation charges and
including restructuring charges or reserves including costs related to closure
of facilities), including any expenses, charges, gains or losses incurred in
connection with any issuance of debt or equity; (iii) the cumulative
effect of a change in accounting principles; (iv) the net income of any
Person, other than the Borrower or a Subsidiary, except to the extent of cash
dividends or distributions paid to the Borrower or to a Subsidiary by such
Person; (v) in the case of a successor to the Borrower by consolidation or
merger or as a transferee of the Borrower’s assets, any net income of the
successor corporation prior to such consolidation, merger or transfer of
assets; (vi) the amortization of any premiums, fees or expenses incurred
in connection with the acquisition or any other acquisition by the Borrower or
any of its Subsidiaries of assets or Capital Stock or any amounts required or
permitted by Accounting Principles Board Opinions Nos. 16 (including non-cash
write-ups and non-cash charges relating to inventory and fixed assets, in each
case arising in connection with such acquisition) and 17 (including non-cash
charges relating to intangibles and goodwill) to be recorded on the Borrower’s
consolidated balance sheet, in each case in connection with the Acquisition or
such other acquisitions; (vii) any non-cash compensation charge arising
from the grant of or issuance of stock, stock options or other equity based
awards; (vii) unrealized gains and losses with respect to Hedging Agreements
or other derivative instruments pursuant to FASB 133, “Accounting for
Derivative Instruments and Hedging Activities”, or otherwise; (ix) any
non-cash impact attributable to the application of the purchase method of
accounting in accordance with GAAP, including, without limitation, the total
amount of depreciation and amortization, cost of sales or other non-cash
expense resulting from the write-up of assets for such period on a consolidated
basis in accordance with GAAP to the extent such non-cash expense results from
such purchase accounting adjustments; (x) fees, costs and expenses incurred by
the Borrower or any of its Subsidiaries during any period in connection with
any acquisition by the Borrower or any of its Subsidiaries (including the
Acquisition) and the Exchange Offers and related transactions (including,
without limitation, amortization of debt issuance costs, debt discount or
premium and other financing fees and expenses directly relating thereto and
write-offs of any debt issuance costs relating to Indebtedness being retired or
re-paid in connection with such acquisition, as well as bonus payments paid to
employees in connection with such acquisition); (xi) any net after-tax income
(loss) from the early extinguishment of Indebtedness or Hedging Agreements or
other derivative instruments or amortization or write-off of deferred financing
fees and any expenses of bridge or other financing fees; and (xii) any
impairment charge or asset write-off pursuant to Financial Accounting Standards
Board Statement No. 142 and No. 144 and the amortization of
intangibles arising pursuant to No. 141.

 

“Consolidated Non-cash Items” means, for any
period, the aggregate depreciation, amortization and all other non-cash
expenses of the Borrower (including, without limitation, charges related to the
impairment of intangibles) and its Subsidiaries reducing Consolidated Net
Income of the Borrower for such period, determined on a consolidated basis in
accordance with GAAP (including deferred rent but excluding any such charge
which requires an accrual of or a reserve for cash charges for any period)

 

6

 

“Contractual Obligation” shall mean, as to any
Person, any provision of any security issued by such Person or of any agreement,
instrument or undertaking to which such Person is a party or by which it or any
of its property is bound.

 

“Control Agreement” shall have the meaning
assigned to such term in the security agreement entered into in connection with
Existing Credit Agreement.

 

“Copyright Licenses” shall mean any written
agreement, naming any Credit Party as licensor, granting any right under any
Copyright including, without limitation, any thereof referred to in Schedule 3.17.

 

“Copyrights” shall mean (a) all registered
United States copyrights in all Works, now existing or hereafter created or
acquired, all registrations and recordings thereof, and all applications in
connection therewith, including, without limitation, registrations, recordings
and applications in the United States Copyright office including, without
limitation, any thereof referred to in Schedule 3.17, and (b) all
renewals thereof including, without limitation, any thereof referred to in Schedule 3.17.

 

“Credit Documents” shall mean this Agreement, each
of the Notes, any Borrowing Base Certificate, any Joinder Agreement, the
Letters of Credit, any Commitment Transfer Supplement, the LOC Documents and
the Security Documents and all other agreements, documents, certificates and
instruments delivered to the Administrative Agent or any Lender by any Credit
Party in connection therewith (excluding, however, any Hedging Agreement).

 

“Credit Party” or “Credit Parties” shall
mean the Borrower or any of the Guarantors, individually or collectively, as
appropriate.

 

“Credit Party Obligations” shall mean, without
duplication, (i) all of the obligations, indebtedness and liabilities of
the Credit Parties to the Lenders (including the Issuing Lender and the
Swingline Lender) and the Administrative Agent, whenever arising, under this
Agreement, the Notes or any of the other Credit Documents, including principal,
interest, fees, reimbursements and indemnification obligations and other
amounts (including, but not limited to, any interest accruing after the
occurrence of a filing of a petition of bankruptcy under the Bankruptcy Code
with respect to any Credit Party, regardless of whether such interest is an
allowed claim under the Bankruptcy Code) and (ii) all of the obligations,
indebtedness and liabilities, whenever arising, owing from any Credit Party or
any of its Subsidiaries to any Hedging Agreement Provider arising under any
Secured Hedging Agreement permitted pursuant to Section 6.1(f).

 

“Default” shall mean any of the events
specified in Section 7.1, whether or not any requirement for the giving of
notice or the lapse of time, or both, or any other condition, has been
satisfied.

 

“Defaulting Lender” shall mean, at any time,
any Lender that, at such time (a) has failed to make a Loan required
pursuant to the term of this Agreement, including the funding of a
Participation Interest in accordance with the terms hereof, (b) has failed
to pay to the Administrative Agent or any Lender an amount owed by such Lender
pursuant to the terms of this Agreement, or (c) has been deemed insolvent
or has become subject to a bankruptcy or insolvency proceeding or to a
receiver, trustee or similar official.

 

“Departing Lenders” shall mean those lenders
that are parties to the Existing Credit Agreement, but are not parties to this
Agreement as of the Closing Date.

 

“Dollars” and “$” shall mean dollars in
lawful currency of the United States of America.

 

“Domestic Lending Office” shall mean,
initially, the office of each Lender designated as such Lender’s Domestic
Lending Office shown on Schedule 9.2, and thereafter, such other
office of such Lender as such Lender may from time to time specify to the
Administrative Agent and the Borrower as the office of such Lender at which
Alternate Base Rate Loans of such Lender are to be made.

 

“Domestic Subsidiary” shall mean any Subsidiary
that is organized and existing under the laws of the United States or any state
or commonwealth thereof or under the laws of the District of Columbia.

 

7

 

“Eligible Accounts” shall mean (a) on the
Closing Date, the book value of the Accounts owned solely by the Borrowing Base
Parties determined in accordance with GAAP and (b) on the date of any
Borrowing Base Certificate delivered after the Closing Date, the book value of
the Accounts determined in accordance with GAAP as set forth in the Borrowing
Base Certificate.

 

“Eligible Inventory” shall mean (a) on the
Closing Date, the fair market value of the Inventory owned solely by the
Borrowing Base Parties determined in accordance with GAAP and (b) on the
date of any Borrowing Base Certificate delivered after the Closing Date, the
fair market value of the Inventory determined in accordance with GAAP as set
forth in the Borrowing Base Certificate.

 

“Embargoed Person” shall have the meaning set
forth in Section 6.14.

 

“Environmental Laws” shall mean any and all
applicable foreign, Federal, state, local or municipal laws, rules, orders,
regulations, statutes, ordinances, codes, decrees, requirements of any
Governmental Authority or other law (including common law) regulating, relating
to or imposing liability or standards of conduct concerning protection of human
health or the environment, including, without limitation, natural resources
such as wetlands, as now or may at any time be in effect during the term
of this Agreement.

 

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

 

“Eurodollar Reserve Percentage” shall mean for
any day, the percentage (expressed as a decimal and rounded upwards, if
necessary, to the next higher 1/100th of 1%) which is in effect for such day as
prescribed by the Federal Reserve Board (or any successor) for determining the
maximum reserve requirement (including, without limitation, any basic, supplemental
or emergency reserves) in respect of Eurocurrency liabilities, as defined in
Regulation D of such Board as in effect from time to time, or any similar
category of liabilities for a Lender which is a member bank of the Federal Reserve
System, in New York City.

 

“Event of Default” shall mean any of the events
specified in Section 7.1; provided, however, that any
requirement for the giving of notice or the lapse of time, or both, or any
other condition, has been satisfied.

 

“Excess Availability” shall mean (a) the
lesser of (i) the Revolving Commitments of all of the Lenders and (ii) the
Borrowing Base on the date of determination less (b) all
outstanding Loans and LOC Committed Amounts.

 

“Executive Order” shall have the meaning set
forth in Section 3.32.

 

“Existing Credit Documents” shall mean “Credit
Documents” as defined in the Existing Credit Agreement as of the Closing Date.

 

“Extension of Credit” shall mean, as to any
Lender, the making of a Loan by such Lender or the issuance of, or
participation in, a Letter of Credit by such Lender.

 

“Federal Funds Effective Rate” shall have the
meaning set forth in the definition of “Alternate Base Rate”.

 

“Fee Letter” shall mean the letter agreement
dated as of April 28, 2005 addressed to Compression Polymers Holding I LP,
Parent and Borrower from the Administrative Agent, Wachovia Investments
Holdings, LLC and Wachovia Capital Markets, LLC as amended, modified, restated,
supplemented, extended, renewed or replaced from time to time.

 

“FIRREA” shall mean the Federal Institutions
Reform, Recovery and Enforcement Act of 1989, as amended.

 

“First Priority” shall mean, with respect to
any Lien purported to be created in any Collateral pursuant to any Security
Document, that (a) such Lien has priority over any other Lien on such
Collateral other than any Permitted 

 

8

 

Liens having priority by operation of law over the
Liens purported to be created pursuant to the Security Documents or (b) such
Lien is the only Lien (other than Permitted Liens) to which such Collateral is
subject.

 

“Flood Hazard Property” shall have the meaning
set forth in Section 4.1(e)(iii).

 

“Foreign Subsidiary” shall mean any Subsidiary
that is not a Domestic Subsidiary.

 

“GAAP” shall mean generally accepted accounting
principles in effect in the United States of America applied on a consistent
basis, subject, however, in the case of determination of compliance with the
financial covenant set out in Section 5.9, to the provisions of Section 1.3.

 

“Government Acts” shall have the meaning set
forth in Section 2.18(a).

 

“Governmental Authority” shall mean any nation
or government, any state or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.

 

“Guarantor” shall mean the Parent, the Original
Borrowers and any of the Borrower’s other Domestic Subsidiaries identified as a
“Guarantor” on the signature pages hereto and any Additional Credit Party
which executes a Joinder Agreement, together with their successors and
permitted assigns.

 

“Guaranty” shall mean the guaranty of the
Guarantors set forth in Article X.

 

“Guaranty Obligations” shall mean, with respect
to any Person, without duplication, any obligations of such Person (other than
endorsements in the ordinary course of business of negotiable instruments for
deposit or collection) guaranteeing or intended to guarantee any Indebtedness
of any other Person in any manner, whether direct or indirect, and including,
without limitation, any obligation, whether or not contingent, (i) to
purchase any such Indebtedness or any property constituting security therefor, (ii) to
advance or provide funds or other support for the payment or purchase of any
such Indebtedness or to maintain working capital, solvency or other balance
sheet condition of such other Person (including, without limitation, keep-well
agreements, maintenance agreements, comfort letters or similar agreements or
arrangements) for the benefit of any holder of Indebtedness of such other Person,
(iii) to lease or purchase Property, securities or services primarily for
the purpose of assuring the holder of such Indebtedness, or (iv) to otherwise
assure or hold harmless the holder of such Indebtedness against loss in respect
thereof. The amount of any Guaranty Obligation hereunder shall (subject to any
limitations set forth therein) be deemed to be an amount equal to the outstanding
principal amount (or maximum principal amount, if larger) of the Indebtedness
in respect of which such Guaranty Obligation is made.

 

“Hedging Agreement Provider” shall mean any
Person that enters into a Secured Hedging Agreement with a Credit Party or any
of its Subsidiaries that is permitted by Section 6.1(f) to the extent
such Person is a Lender, an Affiliate of a Lender or any other Person that was
a Lender (or any Affiliate of a Lender) at the time it entered into the Secured
Hedging Agreement but has ceased to be a Lender (or whose Affiliate has ceased
to be a Lender) under this Agreement.

 

“Hedging Agreements” shall mean, with respect
to any Person, any agreement entered into to protect such Person against
fluctuations in interest rates, or currency or raw materials values, including,
without limitation, any interest rate swap, cap or collar agreement or similar
arrangement between such Person and one or more counterparties, any foreign
currency exchange agreement, currency protection agreements, commodity purchase
or option agreements or other interest or exchange rate or commodity price
hedging agreements.

 

“Indebtedness” shall mean, with respect to any
Person, without duplication, (a) all obligations of such Person for
borrowed money, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such
person upon which interest charges are customarily paid or accrued, (d) all
obligations of such Person under conditional sale or other title retention
agreements relating to property purchased by such Person (other than customary
reservations or retentions of title under agreements with suppliers entered
into in the ordinary course of business), (e) all obligations of such
Person issued or assumed as the deferred purchase price of 

 

9

 

property or services purchased by such Person which
are due six months or more from the date after such property is acquired or
such services are completed (other than trade debt and accrued expenses
incurred in the ordinary course of business on normal trade terms and not
overdue by more than 90 days) which would appear as liabilities on a balance
sheet of such Person in accordance with GAAP, (f) all obligations of such
Person under take-or-pay or similar arrangements or under commodities agreements,
(g) all Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien on, or payable out of the proceeds of production from property owned
or acquired by such Person, whether or not the obligations secured thereby have
been assumed, (h) all Guaranty Obligations of such Person with respect to
Indebtedness of another Person, (i) the principal portion of all
obligations of such Person under Capital Leases, (j) all obligations of such
Person under Hedging Agreements, (k) the maximum amount of all standby letters
of credit issued or bankers’ acceptances facilities created for the account of
such Person and, without duplication, all drafts drawn thereunder (to the
extent unreimbursed), (l) all preferred Capital Stock issued by such Person and
which by the terms thereof could be (at the request of the holders thereof or
otherwise) subject to mandatory sinking fund payments, redemption or other
acceleration prior to the date which is 91 days after the final maturity date
of the Loans, (m) the principal balance outstanding under any synthetic lease,
tax retention operating lease, off-balance sheet loan or similar off-balance
sheet financing product and (n) the Indebtedness of any partnership or
unincorporated joint venture in which such Person is a general partner or a
joint venturer, but only to the extent such Person is liable for such
Indebtedness.

 

“Insolvency” shall mean, with respect to any
Multiemployer Plan, the condition that such Plan is insolvent within the
meaning of such term as used in Section 4245 of ERISA.

 

“Insolvent” shall mean being in a condition of
Insolvency.

 

“Instruments” shall mean all “instruments”, as
such term is defined in the UCC as in effect on the date hereof in the State of
New York, now owned or hereafter acquired by any Borrowing Base Party.

 

“Intellectual Property” shall mean all
Copyrights, Copyright Licenses, Patents, Patent Licenses, Trademarks and
Trademark Licenses

 

“Interest Determination Date” shall have the
meaning assigned thereto in the definition of “Applicable Percentage”.

 

“Interest Payment Date” shall mean (a) as
to any Alternate Base Rate Loan or Swingline Loan, the last day of each March,
June, September and December and on the Revolving Commitment
Termination Date, (b) as to any LIBOR Rate Loan having an Interest Period
of three months or less, the last day of such Interest Period, and (c) as
to any LIBOR Rate Loan having an Interest Period longer than three months, each
day which is three months after the first day of such Interest Period and the
last day of such Interest Period.

 

“Interest Period” shall mean, with respect to
any LIBOR Rate Loan,

 

(i)            initially,
the period commencing on the Borrowing Date or conversion date, as the case may be,
with respect to such LIBOR Rate Loan and ending one, two, three or six months
(or, if each affected Lender so agrees, nine or twelve months) thereafter, as
selected by the Borrower in the notice of borrowing or notice of conversion
given with respect thereto and

 

(ii)           thereafter,
each period commencing on the last day of the immediately preceding Interest
Period applicable to such LIBOR Rate Loan and ending one, two, three or six
months (or, if each affected Lender so agrees, nine or twelve months)
thereafter, as selected by the Borrower by irrevocable notice to the
Administrative Agent not less than three Business Days prior to the last day of
the then current Interest Period with respect thereto;

 

provided that the foregoing provisions
are subject to the following:

 

(A)          if any
Interest Period pertaining to a LIBOR Rate Loan would otherwise end on a day
that is not a Business Day, such Interest Period shall be extended to the next
succeeding Business Day 

 

10

 

unless the result of such
extension would be to carry such Interest Period into another calendar month,
in which event such Interest Period shall end on the immediately preceding
Business Day;

 

(B)           any
Interest Period pertaining to a LIBOR Rate Loan that begins on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall end on the last Business Day of the relevant calendar month;

 

(C)           if the
Borrower shall fail to give notice as provided above, the Borrower shall be
deemed to have selected an Alternate Base Rate Loan to replace the affected LIBOR
Rate Loan;

 

(D)          no Interest
Period in respect of any Loan shall extend beyond the Revolving Commitment
Termination Date; and

 

(E)           no more
than five (5) LIBOR Rate Loans may be in effect at any time. For
purposes hereof, LIBOR Rate Loans with different Interest Periods shall be
considered as separate LIBOR Rate Loans, even if they shall begin on the same
date and have the same duration, although borrowings, extensions and
conversions may, in accordance with the provisions hereof, be combined at the
end of existing Interest Periods to constitute a new LIBOR Rate Loan with a
single Interest Period.

 

“Inventory” shall mean all “inventory”, as such
term is defined in the UCC as in effect on the date hereof in the State of New
York, now owned or hereafter acquired by any Borrowing Base Party, wherever
located.

 

“Issuing Lender” shall mean Wachovia and any
other Lender acceptable to the Borrower and the Administrative Agent which has
committed to issue Letters of Credit pursuant to the LOC Commitment.

 

“Issuing Lender Fees” shall have the meaning
set forth in Section 2.4(c).

 

“Joinder Agreement” shall mean a Joinder
Agreement substantially in the form of Schedule 5.10, executed
and delivered by an Additional Credit Party in accordance with the provisions
of Section 5.10.

 

“Letter of Credit” shall mean any letter of
credit issued by the Issuing Lender pursuant to the terms hereof, as such
Letter of Credit may be amended, modified, extended, renewed or replaced
from time to time.

 

“Letter of Credit Fee” shall have the meaning
set forth in Section 2.4(b).

 

“LIBOR Lending Office” shall mean, initially,
the office of each Lender designated as such Lender’s LIBOR Lending Office
shown on Schedule 9.2, and, thereafter, such other office of such
Lender as such Lender may from time to time specify to the Administrative
Agent and the Borrower as the office of such Lender at which the LIBOR Rate
Loans of such Lender are to be made.

 

“LIBOR” shall mean, for any LIBOR Rate Loan for
any Interest Period therefor, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Telerate Page 3750 (or
any successor page) as the London interbank offered rate for deposits in
Dollars at approximately 11:00 a.m. (London time) two (2) Business
Days prior to the first day of such Interest Period for a term comparable to
such Interest Period. If for any reason such rate is not available, the term “LIBOR”
shall mean, for any LIBOR Rate Loan for any Interest Period therefor, the rate
per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing
on Reuters Screen LIBO Page as the London interbank offered rate for
deposits in Dollars at approximately 11:00 a.m. (London time) two Business
Days prior to the first day of such Interest Period for a term comparable to
such Interest Period; provided, however, if more than one rate is
specified on Reuters Screen LIBO Page, the applicable rate shall be the
arithmetic mean of all such rates (rounded upwards, if necessary, to the
nearest 1/100 of 1%). If, for any reason, neither of such rates is available,
then “LIBOR” shall mean the rate per annum at which, as determined by the
Administrative Agent, Dollars in an amount comparable to the Loans then
requested are being offered to leading banks at approximately 11:00 a.m. London
time, two (2) Business Days prior to the commencement of the applicable
Interest Period for settlement in immediately available funds by leading banks
in the London interbank market for a period equal to the Interest Period
selected.

 

11

 

“LIBOR Rate” shall mean a rate per annum
(rounded upwards, if necessary, to the next higher 1/100th of 1%) determined by
the Administrative Agent pursuant to the following formula:

 

LIBOR Rate = LIBOR
divided by (1.00 - Eurodollar Reserve Percentage).

 

“LIBOR Rate Loan” shall mean Loans the rate of
interest applicable to which is based on the LIBOR Rate.

 

“Lien” shall mean any mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), charge or other security interest or any preference, priority or other
security agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention
agreement and any Capital Lease having substantially the same economic effect
as any of the foregoing).

 

“Loan” shall mean a Revolving Loan and/or a
Swingline Loan, as appropriate.

 

“LOC Commitment” shall mean the commitment of
the Issuing Lender to issue Letters of Credit, and with respect to each Lender,
the commitment of such Lender to purchase participation interests in the
Letters of Credit up to such Lender’s LOC Committed Amount as specified in Schedule 2.1(a),
as such amount may be reduced from time to time in accordance with the
provisions hereof.

 

“LOC Committed Amount” shall mean,
collectively, the aggregate amount of all of the LOC Commitments of the Lenders
to issue and participate in Letters of Credit as referenced in Section 2.2
and, individually, the amount of each Lender’s LOC Commitment as specified in Schedule 2.1(a).

 

“LOC Documents” shall mean, with respect to any
Letter of Credit, such Letter of Credit, any amendments thereto, any documents
delivered in connection therewith, any application therefor, and any
agreements, instruments, guarantees or other documents (whether general in
application or applicable only to such Letter of Credit) governing or providing
for (i) the rights and obligations of the parties concerned or (ii) any
collateral security for such obligations.

 

“LOC Obligations” shall mean, at any time, the
sum of (i) the maximum amount which is, or at any time thereafter may become,
available to be drawn under Letters of Credit then outstanding, assuming
compliance with all requirements for drawings referred to in such Letters of
Credit plus (ii) the aggregate amount of all drawings under Letters
of Credit honored by the Issuing Lender but not theretofore reimbursed.

 

“Management Agreement” means the management
agreement with the AEA Group, its affiliates or designees as in effect on the
date hereof on the terms described in the Note Documents and attached hereto as
Schedule 1.1(c).

 

“Management Group” means the group consisting
of the directors, executive officers and other management personnel of the
Borrower or any direct or indirect parent entity of the Borrower, as the case may be,
on the Closing Date, including, without limitation, the Management
Shareholders, together with (1) any new directors whose election by such
boards of directors or whose nomination for election by the shareholders of the
Borrower or any direct or indirect parent entity of the Borrower as applicable,
was approved by a vote of a majority of the directors of the Borrower or any
direct or indirect parent entity of the Borrower as applicable, then still in
office who were either directors on the Closing Date or whose election or
nomination was previously so approved and (2) executive officers and other
management personnel of the Borrower or any direct or indirect parent entity of
the Borrower, as applicable, hired at a time when the directors on the Closing
Date together with the directors so approved constituted a majority of the
directors of the Borrower or any direct or indirect parent entity of the
Borrower, as applicable.

 

“Management Shareholders” shall mean James
Kiesling, Ralph Bruno, Michael Kapuscinski and John Chalaris, collectively.

 

12

 

“Mandatory Borrowing” shall have the meaning
set forth in Section 2.2(e), Section 2.2(f) or Section 2.3(b)(ii),
as the context may require.

 

“Material Adverse Effect” shall mean a material
adverse effect on (a) the business, assets, liabilities, results of
operations, property or financial condition of the Borrower and its
Subsidiaries taken as a whole, (b) the ability of the Borrower or any
Guarantor to perform its obligations, when such obligations are required
to be performed, under this Agreement, any of the Notes or any other Credit
Document or (c) the validity or enforceability of this Agreement, any of
the Notes or any of the other Credit Documents or the rights or remedies of the
Administrative Agent or the Lenders hereunder or thereunder or the perfection
or priority of any Lien in favor of the Administrative Agent; provided
that for purposes of any Material Adverse Effect qualifier applicable to the
Closing Date by reason of Section 4.1, Material Adverse Effect shall
exclude any Material Adverse Effect arising from: (i) conditions relating
to the industry in which the Credit Parties primarily operate in general and
not specifically relating to the Credit Parties (provided that such
changes do not adversely affect the Credit Parties (taken as a whole) in a
disproportionate manner) or affecting the United States economy generally; (ii) changes
resulting from acts of terrorism, acts of war or the escalation of hostilities;
(iii) financial, banking or securities markets (including any disruption
thereof and any decline in the price of any security or any market index); (iv) changes
in GAAP; (v) changes in any laws, rules, regulations, orders, or other
binding directives issued by any Governmental Authority; (vi) any action
taken by a party to the Acquisition Agreement in accordance therewith; (vii) any
adverse change in or effect on the business of the Credit Parties that is cured
by the Credit Parties by the Closing; (viii) the public announcement of
the transactions contemplated by the Acquisition Agreement; or (ix) the
completion of the Transactions.

 

“Material Contract” shall mean any contract or
other arrangement, whether written or oral, to which the Borrower or any of its
Subsidiaries is a party as to which the breach, nonperformance, cancellation or
failure to renew by any party thereto could reasonably be expected to have a
Material Adverse Effect including, without limitation, the Securities Purchase
Agreement.

 

“Materials of Environmental Concern” shall mean
any gasoline or petroleum (including crude oil or any fraction thereof) or
petroleum products or any pollutant, contaminant, chemical, constituent,
substance, material or waste subject to regulation or which may give rise
to liability in each case under any Environmental Law, including, without
limitation, asbestos, polychlorinated biphenyls and urea-formaldehyde
insulation.

 

“Moody’s” shall mean Moody’s Investors Service, Inc.

 

“Mortgage Amendment” shall have the meaning set
forth in Section 4.1(e)(i)(A).

 

“Mortgage Instrument” shall mean the mortgages,
deeds of trust or deeds to secure debt executed by the applicable Credit Party
in favor of the Administrative Agent for the benefit of the Secured Parties
pursuant to the terms of Section 4.1(e)(i), 5.10 or 5.12 of the Existing
Credit Agreement, as such mortgages, deeds of trust or deeds to secure debt may be
amended by the Mortgage Amendments described in Section 4.1(e)(i)(A) hereof,
and any other mortgages, deeds of trust or deeds to secure debt executed by any
Credit Party in favor of the Administrative Agent for the benefit of the
Secured Parties pursuant to the terms of Sections 4.1(e)(i)(B), 5.10 and
5.12, in each case, as the same may be amended, modified, restated or supplemented
from time to time.

 

“Mortgage Policy” shall mean, with respect to
any Mortgage Instrument, an ALTA mortgagee title insurance policy issued by a
Title Insurance Company in such amount as reasonably approved by the
Administrative Agent, assuring the Administrative Agent that such Mortgage
Instrument creates a valid and enforceable First Priority mortgage lien on the
applicable Mortgaged Property, free and clear of all defects and encumbrances
except Permitted Liens, which Mortgage Policy shall be in form and
substance reasonably satisfactory to the Administrative Agent and shall provide
for affirmative insurance and such reinsurance as the Administrative Agent may reasonably
request.

 

“Mortgaged Property” shall mean any owned or
leased real property of a Credit Party with respect to which such Credit Party
executes a Mortgage Instrument in favor of the Administrative Agent.

 

13

 

“Multiemployer Plan” shall mean a Plan which is
a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

 

“Note” or “Notes” shall mean the
Revolving Notes and/or the Swingline Note, collectively, separately or
individually, as appropriate.

 

“Notes Agreements” shall mean any indenture, note
purchase agreement or other agreement pursuant to which the Senior Floating
Rate Notes and/or the Senior Notes, or any other notes issued under the Notes
Documents with terms, taken as a whole, substantially the same in all material
respects or more favorable to the Lenders than the terms of the Senior Floating
Rate Notes and/or the Senior Notes, are issued as in effect on the date hereof
and thereafter amended from time to time subject to the requirements of this
Agreement.

 

“Notes Documents” shall mean the Senior
Floating Rate Notes, the Senior Notes, the Notes Agreements, the Senior
Floating Rate Note Guarantees, the Senior Note Guarantees and all other
documents executed and delivered with respect to the Senior Floating Rate
Notes, the Senior Notes or the Notes Agreements.

 

“Notice of Borrowing” shall mean a request for
a Revolving Loan borrowing pursuant to Section 2.1(b)(i) or a
Swingline Loan borrowing pursuant to Section 2.3(b)(i), as appropriate.

 

“Notice of Conversion” shall mean the written
notice of extension or conversion as referenced and defined in Section 2.9.

 

“Obligations” shall mean, collectively, Loans
and LOC Obligations and all other obligations of the Credit Parties to the
Administrative Agent and the Lenders under the Credit Documents.

 

“OFAC” shall have the meaning set forth in Section 3.32.

 

“Other Parties” shall have the meaning set
forth in Section 10.7(c).

 

“Other Taxes” shall have the meaning set forth
in Section 2.17(e).

 

“Participant” shall have the meaning set forth
in Section 9.6(b).

 

“Participation Interest” shall mean the
purchase by a Lender of a participation interest in Letters of Credit as
provided in Section 2.2 and in Swingline Loans as provided in Section 2.3.

 

“Patent License” shall mean all agreements,
whether written or oral, providing for the grant by or to a Credit Party of any
right to manufacture, use or sell any invention covered by a Patent, including,
without limitation, any thereof referred to in Schedule 3.17.

 

“Patents” shall mean (a) all letters
patent of the United States or any other country and all reissues and
extensions thereof, including, without limitation, any thereof referred to in Schedule 3.17,
and (b) all applications for letters patent of the United States or any
other country and all divisions, continuations and continuations-in-part thereof,
including, without limitation, any thereof referred to in Schedule 3.17.

 

“Patriot Act” shall have the meaning set forth
in Section 9.18.

 

“PBGC” shall mean the Pension Benefit Guaranty
Corporation established pursuant to Subtitle A of Title IV of ERISA.

 

“Perfection Certificate” shall mean a
certificate supplement in the form of Schedule 1.1(d) or
any other form approved by the Collateral Agent.

 

“Permits” shall have the meaning set forth in Section 3.6.

 

14

 

“Permitted Acquisition” shall mean an
acquisition or any series of related acquisitions by a Credit Party of (a) all
or substantially all of the assets or a majority of the outstanding Voting
Stock or economic interests of a Person that is incorporated, formed or
organized in the United States or (b) any division, line of business or
other business unit of a Person that is incorporated, formed or organized in
the United States or in any other country; provided that in the case of
a direct or indirect acquisition of a Foreign Subsidiary or any assets,
business line, unit or division located outside the United States of America,
on a pro forma basis after giving effect to such acquisition as of the last day
of the fiscal quarter recently ended, Domestic Subsidiaries account for (A) at
least 80% of the consolidated assets of the Borrower and its Subsidiaries as of
the last day of the fiscal quarter most recently ended and (B) at least
80% of the consolidated revenues of the Borrower and its Subsidiaries for the
last four full fiscal quarters most recently ended (such Person or such
division, line of business or other business unit of such Person or such joint
venture shall be referred to herein as the “Target”), in each case that
is a type of business (or assets used in a type of business) permitted to be
engaged in by the Credit Parties and their Subsidiaries pursuant to Section 6.3
hereof, so long as (i) no Default or Event of Default shall then exist or
would exist after giving effect thereto, (ii) the Credit Parties shall
demonstrate to the reasonable satisfaction of the Administrative Agent and the
Required Lenders that, after giving effect to the acquisition on a pro forma
basis, the Senior Secured Leverage Ratio shall be less than or equal to 1.5 to
1.0, (iii) the Administrative Agent, on behalf of the Lenders, shall have
received (or shall receive in connection with the closing of such acquisition)
a First Priority perfected security interest in all property (including,
without limitation, Capital Stock) acquired with respect to the Target in
accordance with the terms of Sections 5.10 and 5.12 and the Target, if a
Person, shall have executed a Joinder Agreement in accordance with the terms of
Section 5.10, (iv) after giving effect to the Pro Forma Cost Savings
related to such Permitted Acquisition (which shall not exceed the greater of
$3,000,000 and 7% of Consolidated EBITDA), the Target shall have earnings
before interest, taxes, depreciation and amortization for the four fiscal
quarter period prior to the acquisition date in an amount greater than $0, (v) such
acquisition shall not be a “hostile” acquisition and shall have been approved
by the Board of Directors and/or shareholders of the applicable Credit Party
and the Target, (vi) the aggregate consideration (including, without
limitation, equity consideration, earn outs or deferred compensation or
non-competition arrangements and the amount of Indebtedness and other
liabilities assumed by the Credit Parties and their Subsidiaries) paid by the
Credit Parties and their Subsidiaries for all acquisitions made during the term
of this Agreement shall not exceed $25,000,000 and (vii) after each such
Permitted Acquisition there remains at least $15,000,000 in Excess Availability.

 

“Permitted Investments” shall mean

 

(1)          investments
by the Parent or any Subsidiary of the Parent in any Person (a) that is a
Guarantor or (b) as a result of which such Person shall become a
Subsidiary of (i) the Borrower or (ii) a Subsidiary of the Borrower
or that will merge with or be consolidated into the Borrower or a Subsidiary of
the Borrower (in each case to the extent not prohibited by the definition of “Permitted
Acquisition), in each case provided that (i) any investment in the form of
a loan or advance shall be evidenced by the Subordinated Intercompany Notes and
made only where the subordination obligation owing from such Person to the
Parent or Subsidiary lender is enforceable under all applicable law and (ii),
in the case of a loan or advance by a Credit Party, pledged by such Credit
Party as Collateral pursuant to the Security Documents;

 

(2)          investments
in the Borrower by any Subsidiary, provided that any investment in the form of
a loan or advance shall be evidenced by the Subordinated Intercompany Notes
and, in the case of a loan or advance by a Credit Party, pledged by such Credit
Party as Collateral pursuant to the Security Documents;

 

(3)           investments
in cash and Cash Equivalents;

 

(4)           (x) loans
and advances to directors, employees and officers of the Parent and its
Subsidiaries in the ordinary course of business for bona fide (including,
without limitation, in connection with the purchase of Capital Stock by such
directors, employees and officers) business purposes not in excess of
$5,000,000 at any one time outstanding and (y) investments made in connection
with split-dollar life insurance program;

 

(5)           Hedging
Agreements entered into not for speculative purposes in the Borrower’s or any
Subsidiary’s business and otherwise in compliance with this Agreement;

 

15

 

(6)           other
investments not to exceed $7,500,000 at any one time outstanding;

 

(7)           investments
in securities of trade creditors or members received pursuant to any plan of
reorganization or similar arrangement upon the bankruptcy or insolvency of such
trade creditors or members or in good faith settlement of delinquent
obligations of such trade creditors or members;

 

(8)           investments
represented by guarantees that are otherwise permitted under this Agreement;

 

(9)           investments
the payment for which is Capital Stock of the Parent or direct or indirect
parent entity of the Parent that does not constitute Indebtedness hereunder;

 

(10)        investments
made by the Parent or its Subsidiaries as a result of consideration received in
connection with an asset sale made in compliance with Section 6.4;

 

(11)        receivables
owing to the Borrower or any Subsidiary if created or acquired in the ordinary
course of business;

 

(12)        payroll, travel,
commission and similar advances to cover matters that in good faith are
expected at the time of such advances to be treated as expenses for accounting
purposes in accordance with GAAP and that are made in the ordinary course of
business;

 

(13)        investments
in prepaid expenses, negotiable instruments held for collection, and lease,
utility, worker’s compensation, performance and other similar deposits provided
to third parties in the ordinary course of business;

 

(14)        investments
in existence on the Closing Date after giving effect to the Transactions that
are set forth on Schedule 1.1(e) and an investment in any
Person to the extent such investment replaces or refinances an investment in
such Person existing on the Closing Date in an amount not exceeding the amount
of the investment being replaced or refinanced; provided, however,
that the new investment is on terms and conditions no less favorable
than the investment being renewed or replaced;

 

(15)        any customary
indemnity, purchase price adjustment, earnout or similar obligation in each
case benefiting the Borrower or any of its Subsidiaries created as a result of
any acquisition or disposition of the assets of the Borrower or the assets or
Capital Stock of a Person that is a Subsidiary or becomes a Subsidiary as a
result of such transaction, but limited in any event to the limitations set
forth in the definition of Permitted Acquisition;

 

(16)        investments
consisting of purchases and acquisitions of inventory, supplies, material or
equipment or the licensing or contribution of intellectual property pursuant to
joint marketing arrangements with other Persons and progress payments made in
respect of capital expenditures, in each case in the ordinary course of
business;

 

(17)        investments
by the Borrower or any Subsidiary in joint ventures made in compliance with Section 6.4(c) and
which, together with all obligations (including, without limitation,
Indebtedness, contingent liabilities and capital calls) arising from such
investment, do not at any one time exceed $5,000,000 in the aggregate;

 

(18)        intercompany
loans, to the extent permitted by Section 6.1; and

 

(19)        investments
acquired in connection with (and not created in anticipation of) a Permitted
Acquisition, provided that such investments shall not require or have
any contractual provisions the compliance with which would cause the violation
of this Agreement.

 

16

 

As used herein, “investment” shall mean all
investments, in cash or by delivery of property made, directly or indirectly
in, to or from any Person, whether by acquisition of shares of Capital Stock,
property, assets, indebtedness or other obligations or securities or by loan
advance, capital contribution or otherwise.

 

“Permitted Liens” shall mean:

 

(i)            Liens
created by or otherwise existing, under or in connection with this Agreement or
the other Credit Documents in favor of the Administrative Agent for the benefit
of the Lenders;

 

(ii)           Liens
in favor of a Hedging Agreement Provider in connection with a Secured Hedging
Agreement, but only (A) to the extent such Liens are on the same
Collateral as to which the Administrative Agent on behalf of the Lenders also
has a Lien and (B) if such Hedging Agreement Provider and the
Administrative Agent, on behalf of the Lenders, shall share pari passu in the
Collateral subject to such Liens;

 

(iii)          purchase
money Liens securing purchase money Indebtedness (and refinancings thereof) and
Liens arising in connection with Capital Leases, but not extending to any other
property or assets, in each case to the extent such purchase money Indebtedness
and Capital Leases are permitted under Section 6.1(d);

 

(iv)          Liens
for taxes, assessments, charges or other governmental levies not yet due or as
to which the period of grace, if any, related thereto has not expired or which
are being contested in good faith by appropriate proceedings; provided
that adequate reserves with respect thereto are maintained on the books of the
Borrower or its Subsidiaries, as the case may be, in conformity with GAAP
(or, in the case of Subsidiaries with significant operations outside of the
United States of America, generally accepted accounting principles in effect
from time to time in their respective jurisdictions of incorporation);

 

(v)           statutory
and contractual Liens of landlords and carriers’, warehousemen’s, mechanics’,
materialmen’s, repairmen’s inchoate, unperfected or other like Liens arising in
the ordinary course of business which are not overdue for a period of more than
90 days or which are being contested in good faith by appropriate proceedings; provided
that a reserve or other appropriate provision shall have been made therefor;

 

(vi)          pledges
or deposits in connection with workers’ compensation, unemployment insurance
and other social security legislation and deposits securing liability to
insurance carriers under insurance or self-insurance arrangements;

 

(vii)         deposits
to secure the performance of bids, trade contracts (other than for borrowed
money), leases, statutory obligations, surety and appeal bonds, performance
bonds and other obligations of a like nature incurred in the ordinary course of
business;

 

(viii)        Liens
on property of a Person existing at the time such Person is acquired or merged
with or into or consolidated with the Borrower or any of its Subsidiaries to
the extent permitted hereunder (and not created in anticipation or
contemplation thereof); provided that such Liens do not extend to
property or assets not subject to such Liens at the time of acquisition (other
than improvements thereon) and are no more favorable to the lienholders than
such existing Lien;

 

(ix)           any
extension, renewal or replacement (or successive extensions, renewals or replacements),
in whole or in part, of any Lien referred to in the foregoing clauses; provided
that such extension, renewal or replacement Lien shall be limited to all or a part of
the property which secured the Lien so extended, renewed or replaced (plus
improvements on such property);

 

(x)            Liens
existing on the Closing Date and set forth on Schedule 1.1(f); provided
that (a) no such Lien shall at any time be extended to cover property or
assets other than the property or assets subject thereto on the Closing Date
and (b) the principal amount of the Indebtedness secured by such Liens shall
not be increased, extended, renewed, refunded or refinanced;

 

17

 

(xi)           judgment
Liens not giving rise to an Event of Default;

 

(xii)          Liens
encumbering deposits made to secure obligations arising from statutory,
regulatory, contractual or warranty requirements of the Credit Parties;

 

(xiii)         leases,
subleases, licenses and sublicenses of real or personal property or
Intellectual Property granted to others that do not materially interfere with
the ordinary course of business of the Credit Parties;

 

(xiv)        Liens
in favor of customs and revenue authorities arising as a matter of law to
secure custom duties in connection with the importation of goods;

 

(xv)         easements,
rights-of-way, zoning restrictions, minor defects or irregularities in title
and other similar encumbrances not interfering in any material respect with the
value or use of the property to which such lien is attached;

 

(xvi)        bankers’
Liens, rights of setoff and other similar Liens existing solely with respect to
cash and Cash Equivalents on deposit in one or more accounts maintained by the
Borrower, in each case granted in the ordinary course of business in favor of
the bank or banks with which such accounts are maintained, securing amounts
owing to such bank with respect to cash management and operating account
arrangements, including those involving pooled accounts and netting
arrangements; provided that, unless such Liens are non-consensual and
arise by operation of law, in no case shall any such Liens secure (either
directly or indirectly) the repayment of any Indebtedness;

 

(xvii)       the
filing of UCC financing statements solely as a precautionary measure in
connection with operating leases or consignment of goods; and

 

(xviii)      other
Liens in addition to those permitted by the foregoing clauses securing
Indebtedness in an aggregate amount not to exceed $5,000,000.

 

 “Permitted Tax Distributions” shall mean (1) in the event that
the Borrower is treated as a corporation for applicable federal, state or local
income tax purposes and is a member of a consolidated, combined or similar U.S.
federal, state or local income tax group of which the Parent or another direct or indirect parent of the Borrower is
the common parent, payments, dividends or distributions to Parent, or another
direct or indirect parent of the Borrower, as the case may be, in order to
pay the portion of any such consolidated, combined or similar income taxes that
are attributable to the income of the Borrower and its Subsidiaries (to the extent
such taxes are not payable directly by the Borrower or its Subsidiaries); provided
that the amount of such payments, dividends or distributions, plus the amount
of any such taxes payable directly by the Borrower and its Subsidiaries, do not
exceed the taxes that the Borrower and its Subsidiaries would have paid as a
stand-alone group; or (2) in the event that the Borrower is treated as a
partnership for applicable U.S. federal, state or local income tax purposes,
aggregate payments, dividends or distributions to Parent, or any other direct
parent entity of the Borrower, as the case may be, in an amount equal to,
with respect to any taxable year of the Borrower, the product of (x) the
highest combined U.S. federal, state (or provincial) and local statutory tax
rate (after taking into account the deductibility of state (or provincial) and
local income tax for U.S. federal income tax purposes) applicable to any direct
(or, where the direct equity holder is a pass-through entity, indirect) equity
holder of the Borrower, or any other direct parent entity of the Borrower, as
the case may be, multiplied by (y) the taxable income of the Borrower
(to the extent such taxes are not payable directly by the Borrower or its
Subsidiaries).

 

“Person” shall
mean an individual, partnership, corporation, limited liability company,
business trust, joint stock company, trust, unincorporated association, joint
venture, Governmental Authority or other entity of whatever nature.

 

“Plan” shall mean, at any particular time, any
employee benefit plan which is covered by Title IV of ERISA and in respect of
which the Borrower or a Commonly Controlled Entity is (or, if such plan were
terminated at 

 

18

 

such time, would under Section 4069 of ERISA be
deemed to be) an “employer” as defined in Section 3(5) of ERISA.

 

“Pledge Agreement” shall mean the Amended and
Restated Pledge Agreement dated as of the Closing Date to be executed in favor
of the Administrative Agent for the benefit of the Secured Parties by the
Borrower and each of the other Credit Parties, as amended, modified, restated,
supplemented, extended, renewed or replaced from time to time.

 

“Prime Rate” shall have the meaning set forth
in the definition of “Alternate Base Rate”.

 

“Pro Forma Basis” shall mean, in connection
with any calculation of Consolidated EBITDA and Indebtedness, after giving
effect on a pro forma basis for the period of such calculation to: (1) the
incurrence or repayment of any Indebtedness of the Credit Parties (and the
application of the proceeds thereof) giving rise to the need to make such
calculation and any incurrence or repayment of other Indebtedness (and the
application of the proceeds thereof), other than the incurrence or repayment of
Indebtedness in the ordinary course of business for working capital purposes
pursuant to this Agreement, occurring during the four-quarter period or at any
time subsequent to the last day of the four-quarter period and on or prior to
the date of such incurrence or repayment, as if such incurrence or repayment,
as the case may be (and the application of the proceeds thereof), occurred on
the first day of the four-quarter period; and (2) any asset sales or asset
acquisitions (including, without limitation, any Permitted Acquisition giving
rise to the need to make such calculation as a result of the Credit Parties
(including any Person who becomes a Credit Party as a result of such Permitted
Acquisition) incurring, assuming or otherwise being liable for Acquired
Indebtedness and also including any Consolidated EBITDA attributable to the
assets that are the subject of the Permitted Acquisition or asset sale during
the four-quarter period) occurring during the four-quarter period or at any
time subsequent to the last day of the four-quarter period and on or prior to
the Date of such asset sale or Permitted Acquisition, as if such asset sale or
Permitted Acquisition (including the incurrence, assumption or liability for
any such Acquired Indebtedness) occurred on the first day of the four-quarter
period, including giving effect to any Pro Forma Cost Savings; provided that
such pro forma effect pursuant to this clause (2) shall be determined using the
relevant financial statements of the business acquired or to be acquired if available
and, in any event, shall be satisfactory to the Administrative Agent.

 

“Pro Forma Cost Savings” with respect to any
period, the reductions in costs that (1) occurred during the Four-Quarter
Period that are directly attributable to a stock or an asset acquisition and
calculated on a basis that is consistent with Article 11 of Regulation S-X
under the Securities Act or (2) are implemented, committed to be implemented,
the commencement of implementation of which has begun or reasonably expected to
be implemented in good faith by the business that was the subject of any such a
stock or asset acquisition within six months of the date of the stock or asset
acquisition and that are supportable and quantifiable, as if, in the case of
each of clauses (1) and (2), all such reductions in costs had been effected as
of the beginning of such period, decreased by any non-one-time incremental
expenses incurred or to be incurred during the Four-Quarter Period in order to
achieve such reduction in costs.

 

“Properties” shall have the meaning set forth
in Section 3.11(a).

 

“Purchasing Lenders” shall have the meaning set
forth in Section 9.6(c).

 

“Register” shall have the meaning set forth in Section 9.6(d).

 

“Related Fund” shall mean, with respect to any
Lender or other Person who invests in commercial bank loans in the ordinary
course of business, any other fund or trust or entity that invests in commercial
bank loans in the ordinary course of business and is advised or managed by such
Lender, by an Affiliate of such Lender or other Persons or the same investment
advisor as such Lender or by an Affiliate of such Lender or investment advisor.

 

“Reorganization” shall mean, with respect to
any Multiemployer Plan, the condition that such Plan is in reorganization
within the meaning of such term as used in Section 4241 of ERISA.

 

19

 

“Reportable Event” shall mean any of the events
set forth in Section 4043(c) of ERISA, other than those events as to
which the thirty-day notice period is waived under PBGC Reg. § 4043.

 

“Required Lenders” shall mean Lenders holding
in the aggregate more than 50% of the Revolving Commitments (and Participation
Interests therein) (or, if the Revolving Commitments have been terminated, the
outstanding Loans and Participation Interests (including the Participation
Interests of the Issuing Lender (in its capacity as a Lender) in any Letters of
Credit and of the Swingline Lender (in its capacity as a Lender) in any
Swingline Loans)); provided, however, that if any Lender shall be
a Defaulting Lender at such time, then there shall be excluded from the
determination of Required Lenders, Obligations (including Participation Interests)
owing to such Defaulting Lender and such Defaulting Lender’s Commitments or,
after termination of the Commitments, the principal balance of the Obligations
owing to such Defaulting Lender.

 

“Requirement of Law” shall mean, as to any
Person, the Certificate of Incorporation and By-laws or other organizational or
governing documents of such Person, and each law, treaty, rule or
regulation or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.

 

“Responsible Officer” shall mean, as to (a) the
Borrower, any of the President, the Chief Executive Officer or the Chief
Financial Officer of the Borrower or (b) any other Credit Party, any duly
authorized officer thereof.

 

“Restricted Payment” shall mean (a) any
dividend or other distribution, direct or indirect, on account of any shares of
any class of Capital Stock of any Credit Party or any of its Subsidiaries,
now or hereafter outstanding, (b) any redemption, retirement, sinking fund
or similar payment, purchase or other acquisition for value, direct or indirect,
of any shares of any class of Capital Stock of any Credit Party or any of
its Subsidiaries, now or hereafter outstanding, (c) any payment made to
retire, or to obtain the surrender of, any outstanding warrants, options or
other rights to acquire shares of any class of Capital Stock of any Credit
Party or any of its Subsidiaries, now or hereafter outstanding or (d) any
payment or prepayment of principal of, premium (if any), or interest on,
redemption, purchase, retirement, defeasance, sinking fund or similar payment
with respect to, any Subordinated Debt.

 

“Revolving Commitment” shall mean, with respect
to each Revolving Lender, the commitment of such Revolving Lender to make
Revolving Loans in an aggregate principal amount at any time outstanding up to
an amount equal to such Revolving Lender’s Revolving Commitment Percentage of
the Revolving Committed Amount.

 

“Revolving Commitment Percentage” shall mean,
for each Revolving Lender, the percentage identified as its Revolving
Commitment Percentage on Schedule 2.1(a) or in the Register,
as such percentage may be modified in connection with any assignment made
in accordance with the provisions of Section 9.6(c).

 

“Revolving Commitment Termination Date” shall
mean the date which is six (6) years from the Closing Date.

 

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

 

“Revolving Exposure” shall mean, with respect
to any Revolving Lender at any time, the aggregate principal amount at such
time of all outstanding Revolving Loans of such Lender, plus the
aggregate amount at such time of such Lender’s LOC Committed Amount, plus
the aggregate amount at such time of such Lender’s Swingline Exposure.

 

“Revolving Lender” shall mean, as of any date
of determination, a Lender holding a Revolving Commitment on such date.

 

“Revolving Loans” shall have the meaning set
forth in Section 2.1.

 

“Revolving Note” or “Revolving Notes”
shall mean the promissory notes of the Borrower provided pursuant to Section 2.1(e) in
favor of each of the Lenders evidencing the Revolving Loans, individually or
collectively, as 

 

20

 

appropriate, as such promissory notes may be
amended, modified, restated, supplemented, extended, renewed or replaced from
time to time.

 

“S&P” shall mean Standard & Poor’s
Ratings Group, a division of The McGraw-Hill Companies, Inc.

 

“Secured Hedging Agreement” shall mean any
Hedging Agreement between a Credit Party and a Hedging Agreement Provider, as
amended, modified, restated, supplemented, extended, renewed or replaced from
time to time in accordance with its terms.

 

“Secured Parties”
shall mean, collectively, the Administrative Agent, the Lenders and each party
to a Hedging Agreement relating to the Loans if at the date of entering into
such Hedging Agreement such person was a Lender or an Affiliate of a Lender and
such person executes and delivers to the Administrative Agent a letter
agreement in form and substance acceptable to the Administrative Agent
pursuant to which such person appoints the Administrative Agent as its agent
under the applicable Credit Documents.

 

“Securities Purchase Agreement” shall mean the
Securities Purchase Agreement dated as of March 12, 2005 between the
Original Borrowers, Parent, CPCapitol Acquisition Corp. and Compression
Polymers Holdings LLC.

 

“Security Agreement” shall mean the Second
Amended and Restated Security Agreement dated as of Closing Date given by the
Borrower and the other Credit Parties to the Administrative Agent for the
benefit of the Secured Parties, as amended, modified, restated, supplemented,
extended, renewed or replaced from time to time in accordance with its terms.

 

“Security Documents” shall mean the Security Agreement,
the Pledge Agreement, the Mortgage Instruments and any other documents executed
and delivered in connection with the granting, attachment and perfection of the
Administrative Agent’s (for the benefit of the Secured Parties) security
interests and liens arising thereunder, and all UCC or other financing
statements or instruments of perfection required by this Agreement, the Security
Agreement, any Mortgage Instrument or any other such security document or
pledge agreement to be filed with respect to the security interests in property
and fixtures created pursuant to the Security Agreement or any Mortgage Instrument
and any other document or instrument utilized to pledge or grant or purport to
pledge or grant a security interest or lien on any property as collateral for
the Credit Party Obligations.

 

“Senior Floating Rate Note Guarantees” shall
mean the guarantees of the Guarantors of the Senior Floating Rate Notes
pursuant to the Notes Agreements.

 

“Senior Floating Rate Notes” shall mean the
Borrower’s Senior Floating Rate Notes due 2012 issued pursuant to the Notes
Agreements and any registered notes issued by the Borrower in exchange for, and
as contemplated by, such notes with substantially identical terms as such
notes.

 

“Senior Note Guarantees” shall mean the
guarantees of the Guarantors of the Senior Notes pursuant to the Notes
Agreements.

 

“Senior Notes” shall mean the Borrower’s 11%
Senior Notes due 2013 issued pursuant to the Notes Agreements and any
registered notes issued by the Borrower in exchange for, and as contemplated
by, such notes with substantially identical terms as such notes.

 

“Senior Secured Leverage Ratio” shall mean,
with respect to the Borrower and its Subsidiaries on a consolidated basis for
the twelve-month period ending on the last day of any fiscal quarter, the ratio
of (a) secured Indebtedness (other than Indebtedness expressly
subordinated to the Loans and Indebtedness under clauses (j) and (k) of the
definition thereof) on the last day of such period to (b) Consolidated EBITDA
for such twelve month period, in each case calculated on a Pro Forma Basis.

 

 “Single
Employer Plan” shall mean any Plan which is not a Multiemployer Plan.

 

21

 

“Significant Subsidiary” means a Subsidiary of
the Borrower which constitutes a “significant subsidiary” within the meaning of
Regulation S-X under the Securities Act.

 

 “Specified
Sales” shall mean (a) the sale, transfer, lease or other disposition
of inventory and materials in the ordinary course of business and (b) the
sale, transfer or other disposition of Permitted Investments described in
clause (2) of the definition thereof.

 

 “Subordinated
Debt” shall mean any Indebtedness incurred by any Credit Party which by its
terms is specifically subordinated in right of payment to the prior payment of
the Credit Party Obligations and contains subordination and other terms
acceptable to the Required Lenders.

 

“Subordinated Intercompany Note” shall mean a
promissory note substantially in the form of Schedule 1.1(g).

 

 “Subsidiary”
shall mean, as to any Person, a corporation, partnership, limited liability
company or other entity of which shares of stock or other ownership interests
having ordinary voting power (other than stock or such other ownership interests
having such power only by reason of the happening of a contingency) to elect a
majority of the board of directors or other managers of such corporation,
partnership, limited liability company or other entity are at the time owned,
or the management of which is otherwise controlled, directly or indirectly
through one or more intermediaries, or both, by such Person. Unless otherwise
qualified, all references to a “Subsidiary” or to “Subsidiaries” in this
Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower.

 

“Survey” shall mean, with respect to any
Mortgaged Property, maps or plats of an as-built survey of the site of such
Mortgaged Property, certified to the Administrative Agent and the Title Insurance
Company in a manner reasonably satisfactory to them, dated a date satisfactory
to each of the Administrative Agent and the Title Insurance Company by an
independent firm of professional licensed land surveyors reasonably
satisfactory to each of the Administrative Agent and the Title Insurance
Company, which maps or plats and the survey on which they are based shall be
sufficient to delete any standard printed survey exception contained in the
applicable title policy and be made in accordance with the Minimum Standard
Detail Requirements for Land Title Surveys jointly established and adopted by
the American Land Title Association and the American Congress on Surveying and
Mapping in 1992, and, without limiting the generality of the foregoing, there
shall be surveyed and shown on such maps, plats or survey the following:  (a) the locations on such site of all
the buildings, structures and other improvements and the established building
setback lines; (b) the lines of streets abutting the site and width
thereof; (c) all access and other easements appurtenant to the site
necessary to use the site; (d) all roadways, paths, driveways, easements,
encroachments and overhanging projections and similar encumbrances affecting
the site, whether recorded, apparent from a physical inspection of the site or
otherwise known to the surveyor; (e) any encroachments on any adjoining
property by the building structures and improvements on the site; and (f) if
the site is described as being on a filed map, a legend relating the survey to
said map.

 

“Swingline Commitment” shall mean the
commitment of the Swingline Lender to make Swingline Loans in an aggregate
principal amount at any time outstanding up to the Swingline Committed Amount,
and the commitment of the Revolving Lenders to purchase participation interests
in the Swingline Loans as provided in Section 2.3(b)(ii), as such amounts may be
reduced from time to time in accordance with the provisions hereof.

 

“Swingline Committed Amount” shall mean the
amount of the Swingline Lender’s Swingline Commitment as specified in Section 2.3(a).

 

“Swingline Exposure” shall mean at any time the
aggregate principal amount at such time of all outstanding Swingline Loans. The
Swingline Exposure of any Revolving Lender at any time shall equal its Pro Rata
Percentage of the aggregate Swingline Exposure at such time.

 

“Swingline Lender” shall mean Wachovia.

 

“Swingline Loan” shall have the meaning set
forth in Section 2.3(a).

 

22

 

“Swingline Note” shall mean the promissory note
of the Borrower in favor of the Swingline Lender evidencing the Swingline Loans
provided pursuant to Section 2.3(d), as such promissory note may be
amended, modified, supplemented, extended, renewed or replaced from time to
time.

 

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

 

“Taxes” shall have the meaning set forth in Section 2.17(a).

 

“Tax Exempt Certificate” shall have the meaning
set forth in Section 2.17(b).

 

“Title Insurance Company” shall mean First
American Title Insurance Company of New York or any other title insurance
company reasonable acceptable to the Administrative Agent.

 

“Total Leverage Ratio” shall mean, at any date
of determination, with respect to the Borrower and its Subsidiaries on a
consolidated basis for the twelve-month period ending on the last day of any
fiscal quarter, the ratio of Consolidated Indebtedness on such date to
Consolidated EBITDA.

 

“Trademark License” shall mean any agreement,
written or oral, providing for the grant by or to a Credit Party of any right
to use any Trademark, including, without limitation, any thereof referred to in
Schedule 3.17.

 

“Trademarks” shall mean (a) all
trademarks, trade names, corporate names, company names, business names,
fictitious business names, trade dress and service marks, logos and other
source or business identifiers, and the goodwill associated therewith, now
existing or hereafter adopted or acquired, all registrations and recordings
thereof, and all applications in connection therewith (but excluding any
intent-to-use United States trademark applications for which an amendment to
allege use or statement of use has not been filed under 15 U.S.C. § 1051(c) or
15 U.S.C. § 1051(d), respectively, or, if filed, has not been deemed in
conformance with 15 U.S.C. § 1051(a) or examined and accepted,
respectively, by the United States Patent and Trademark Office), whether in the
United States Patent and Trademark Office or in any similar office or agency of
the United States, any State thereof or any other country or any political
subdivision thereof, or, otherwise, including, without limitation, any thereof
referred to in Schedule 3.17, and (b) all renewals thereof, including,
without limitation, any thereof referred to in Schedule 3.17.

 

“Transferee” shall have the meaning set forth
in Section 9.6(f).

 

“Transfer Effective Date” shall have the
meaning set forth in each Commitment Transfer Supplement.

 

“Type” shall mean, as to any Loan, its nature
as an Alternate Base Rate Loan or LIBOR Rate Loan, as the case may be.

 

“UCP” shall have the meaning set forth in Section 2.2(h).

 

“Voting Stock” shall mean, with respect to any
Person, Capital Stock issued by such Person the holders of which are
ordinarily, in the absence of contingencies, entitled to vote for the election
of directors (or persons performing similar functions) of such Person, even
though the right so to vote has been suspended by the happening of such a
contingency.

 

“Wachovia” shall mean Wachovia Bank, National
Association, together with its successors and/or permitted assigns.

 

“Weighted Average Life to Maturity” means, when
applied to any Indebtedness at any date, the number of years obtained by
dividing: (1) the then outstanding aggregate principal amount of such
Indebtedness into (2) the sum of the total of the products obtained by
multiplying (x) the amount of each then remaining installment, sinking fund,
serial maturity or other required payment of principal, including payment at
final maturity, in respect thereof, by (y) the number of years (calculated to
the nearest one-twelfth) which will elapse between such date and the making of
such payment.

 

23

 

“Works” shall mean all works which are subject
to copyright protection pursuant to Title 17 of the United States Code.

 

Section 1.2               Other
Definitional Provisions.

 

(a)            Unless
otherwise specified therein, all terms defined in this Agreement shall have the
defined meanings when used in the Notes or other Credit Documents or any certificate
or other document made or delivered pursuant hereto.

 

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

 

(c)            The
meanings given to terms defined herein shall be equally applicable to both the
singular and plural forms of such terms.

 

(d)            All
certificates and other documents or statements of any sort provided, executed,
or attested to by, any officer, director or employee of any Credit Party, are
and will be provided, executed or attested to on behalf of such Credit Party,
and not in such officer’s, director’s or employee’s individual capacity.

 

Section 1.3               Accounting
Terms.

 

Unless otherwise specified herein, all accounting
terms used herein shall be interpreted, all accounting determinations hereunder
shall be made, and all financial statements required to be delivered hereunder
shall be prepared in accordance with GAAP applied on a basis consistent with
the most recent audited consolidated financial statements of the Borrower
delivered to the Lenders; provided that, if the Borrower shall notify
the Administrative Agent that it wishes to amend the covenant in Section 5.9
and the related definitions to eliminate the effect of any change in GAAP on
the operation of such covenant, then the Borrower’s compliance with such
covenant shall be determined on the basis of GAAP in effect immediately before
the relevant change in GAAP became effective, until either such notice is
withdrawn or such covenant is amended in a manner satisfactory to the Borrower
and the Required Lenders.

 

The Borrower shall deliver to the Administrative Agent
and each Lender at the same time as the delivery of any annual or quarterly
financial statements given in accordance with the provisions of Section 5.1,
(i) a description in reasonable detail of any material change in the
application of accounting principles employed in the preparation of such
financial statements from those applied in the most recently preceding
quarterly or annual financial statements as to which no objection shall have
been made in accordance with the provisions above and (ii) a reasonable
estimate of the effect on the financial statements on account of such changes
in application.

 

ARTICLE II

 

THE LOANS; AMOUNT AND
TERMS

 

Section 2.1               Revolving
Loans.

 

(a)            Revolving
Commitment. During the Commitment Period, subject to the terms and conditions
hereof, each Revolving Lender severally agrees to make revolving credit loans (“Revolving
Loans”) to the Borrower from time to time, in an aggregate principal amount
of up to such Revolving Lender’s Revolving Commitment Percentage of FORTY MILLION DOLLARS ($40,000,000) (as such aggregate
maximum amount may be reduced from time to time as provided in Section 2.5,
the “Revolving Committed Amount”) for the purposes set forth in Section 3.12(a);
provided, however, that (i) with regard to each Revolving
Lender individually, the sum of such Revolving Lender’s share of outstanding
Revolving Loans plus such Revolving Lender’s Revolving Commitment
Percentage of outstanding Swingline Loans plus  

 

24

 

such Revolving Lender’s
Revolving Commitment Percentage of LOC Obligations at any time shall not exceed
the lesser of (A) such Revolving Lender’s Revolving Commitment and (B) such
Revolving Lender’s Pro Rata Percentage multiplied by the Borrowing Base then in
effect and (ii) with regard to the Revolving Lenders collectively, the sum
of the outstanding Revolving Loans plus outstanding Swingline Loans plus
outstanding LOC Obligations at any time shall not exceed the lesser of (A) the
Revolving Committed Amount and (B) the Borrowing Base then in effect. Revolving
Loans may consist of Alternate Base Rate Loans or LIBOR Rate Loans, or a
combination thereof, as the Borrower may request, and may be repaid
and reborrowed in accordance with the provisions hereof; provided, however,
Revolving Loans made on the Closing Date or on any of the ten (10) Business
Days following the Closing Date may only consist of Alternate Base Rate
Loans or one-month LIBOR Rate Loans. LIBOR Rate Loans shall be made by each
Revolving Lender at its LIBOR Lending Office and Alternate Base Rate Loans at
its Domestic Lending Office.

 

(b)            Revolving
Loan Borrowings.

 

(i)      Notice of Borrowing. The
Borrower may request a Revolving Loan borrowing by delivering a written
Notice of Borrowing (or telephone notice promptly confirmed in writing by
delivery of a written Notice of Borrowing, which delivery may be by fax)
to the Administrative Agent not later than 12:00 Noon (Charlotte, North
Carolina time) on the Business Day prior to the date of requested borrowing in
the case of Alternate Base Rate Loans, and on the third Business Day prior to
the date of the requested borrowing in the case of LIBOR Rate Loans. Each such
Notice of Borrowing shall be irrevocable and shall specify (A) that a
Revolving Loan is requested, (B) the date of the requested borrowing
(which shall be a Business Day), (C) the aggregate principal amount to be
borrowed and (D) whether the borrowing shall be comprised of Alternate
Base Rate Loans, LIBOR Rate Loans or a combination thereof and, if LIBOR Rate
Loans are requested, the Interest Period(s) therefor. If the Borrower shall
fail to specify in any such Notice of Borrowing (I) an applicable Interest
Period in the case of a LIBOR Rate Loan, then such notice shall be deemed to be
a request for an Interest Period of one month, or (II) the type of Revolving
Loan requested, then such notice shall be deemed to be a request for an
Alternate Base Rate Loan hereunder. The Administrative Agent shall give notice
to each Revolving Lender promptly upon receipt of each Notice of Borrowing, the
contents thereof and each such Revolving Lender’s share thereof.

 

(ii)     Minimum Amounts. Each
Revolving Loan which is an Alternate Base Rate Loan shall be in a minimum
aggregate amount of $500,000 and in integral multiples of $100,000 in excess
thereof (or the remaining amount of the Revolving Committed Amount, if less). Each
Revolving Loan which is a LIBOR Rate Loan shall be in a minimum aggregate
amount of $1,000,000 and in integral multiples of $500,000 in excess thereof
(or the remaining amount of the Revolving Committed Amount, if less).

 

(iii)    Advances. Each
Revolving Lender will make its Revolving Commitment Percentage of each
Revolving Loan borrowing available to the Administrative Agent for the account
of the Borrower at the office of the Administrative Agent specified in Schedule 9.2,
or at such other office as the Administrative Agent may designate in
writing, by 12:00 Noon (Charlotte, North Carolina time) on the date specified
in the applicable Notice of Borrowing in Dollars and in funds immediately
available to the Administrative Agent. Such borrowing will then be made
available to the Borrower by the Administrative Agent by crediting the account
of the Borrower on the books of such office with the aggregate of the amounts
made available to the Administrative Agent by the Revolving Lenders and in like
funds as received by the Administrative Agent.

 

(c)            Repayment.
The outstanding principal amount of all Revolving Loans shall be due and
payable in full on the Revolving Commitment Termination Date.

 

(d)            Interest.
Subject to the provisions of Section 2.8, Revolving Loans shall bear
interest as follows:

 

(i)      Alternate
Base Rate Loans. During such periods as Revolving Loans shall be comprised
of Alternate Base Rate Loans, each such Alternate Base Rate Loan shall bear
interest at a per annum rate equal to the sum of the Alternate Base Rate plus
the Applicable Percentage; and

 

25

 

(ii)     LIBOR
Rate Loans. During such periods as Revolving Loans shall be comprised of
LIBOR Rate Loans, each such LIBOR Rate Loan shall bear interest at a per annum
rate equal to the sum of the LIBOR Rate plus the Applicable Percentage.

 

Interest on Revolving Loans shall be payable in
arrears on each Interest Payment Date.

 

(e)            Revolving
Notes. Each Revolving Lender’s Revolving Commitment may, if requested by
such Revolving Lender, be evidenced by a duly executed promissory note of the
Borrower to such Revolving Lender in substantially the form of Schedule 2.1(e).

 

Section 2.2               Letter
of Credit Subfacility.

 

(a)            Existing Letters of Credit. On the Closing Date, the Issuing Lender
shall be deemed, without further action by any party hereto, to have sold to
each Revolving Lender, and each such Revolving Lender shall be deemed, without
further action by any party hereto, to have purchased from the Issuing Lender,
without recourse or warranty, an undivided participation interest in each
Letter of Credit issued and outstanding under the Existing Credit Agreement and
the related LOC Obligations in the proportion to its Revolving Commitment
Percentage (although any Issuing Lender’s Fee payable under Section 2.4(c) shall
be payable directly to the Administrative Agent for the account of the Issuing
Lender, and the Lenders (other than the Issuing Lender) shall have no right to
receive any portion of such Issuing Lender’s Fees) and any security therefore
or guaranty pertaining thereto. On and after the Closing Date, each Letter of
Credit issued and outstanding under the Existing Credit Agreement shall
constitute a Letter of Credit for all purposes hereof.

 

(b)            Issuance.
Subject to the terms and conditions hereof and of the LOC Documents, if any,
and any other terms and conditions which the Issuing Lender may reasonably
require, during the Commitment Period the Issuing Lender shall issue, and the
Revolving Lenders shall participate in, Letters of Credit for the account of
the Borrower or any other Credit Party (so long as the Borrower acts as a
co-applicant for such Letters of Credit) from time to time upon request in a form acceptable
to the Issuing Lender; provided, however, that (i) the
aggregate amount of LOC Obligations at any time shall not at any time exceed FIVE MILLION DOLLARS ($5,000,000) (the “LOC Committed
Amount”), (ii) the total Revolving Exposures at any time shall not
exceed the lesser of (A) the total Revolving Commitments and (B) the
Borrowing Base then in effect, (iii) all Letters of Credit shall be
denominated in Dollars and (iv) Letters of Credit shall be issued for the
purposes set forth in Section 3.12(b) and may be issued as
standby letters of credit, including in connection with workers’ compensation
and other insurance programs, and trade letters of credit. Except as otherwise
expressly agreed upon by all the Revolving Lenders, no Letter of Credit shall
have an original expiry date more than twelve (12) months from the date of
issuance; provided, however, so long as no Default or Event of
Default has occurred and is continuing and subject to the other terms and
conditions to the issuance of Letters of Credit hereunder, the expiry dates of
Letters of Credit may be extended annually or periodically from time to
time on the request of the Borrower or by operation of the terms of the
applicable Letter of Credit to a date not more than twelve (12) months from the
date of extension; provided, further, that no Letter of Credit,
as originally issued or as extended, shall have an expiry date extending beyond
the date that is thirty (30) days prior to the Revolving Commitment Termination
Date. Each Letter of Credit shall comply with the related LOC Documents. The
issuance date and expiry date of each Letter of Credit shall each be a Business
Day. Any Letters of Credit issued hereunder shall be in a minimum original face
amount of $100,000. All Letters of Credit issued after the Closing Date shall
be issued only by the Issuing Lender.

 

(c)            Notice
and Reports. The request for the issuance of a Letter of Credit shall be
submitted to the Issuing Lender at least five (5) Business Days prior to
the requested date of issuance. The Issuing Lender will promptly upon request
provide to the Administrative Agent for dissemination to the Revolving Lenders
a detailed report specifying the Letters of Credit which are then issued and
outstanding and any activity with respect thereto which may have occurred
since the date of any prior report and include therein, among other things, the
account party, the beneficiary, the face amount, expiry date as well as any
payments or expirations which may have occurred. The Issuing Lender will
further provide to the Administrative Agent promptly upon request copies of the
Letters of Credit. The Issuing Lender will further provide to the 

 

26

 

Administrative Agent
promptly upon request a summary report of the nature and extent of LOC Obligations
then outstanding.

 

(d)            Participations.
Each Revolving Lender, upon issuance of a Letter of Credit, shall be
deemed to have purchased without recourse a risk participation from the Issuing
Lender in such Letter of Credit and the obligations arising thereunder and any
collateral relating thereto, in each case in an amount equal to its Revolving
Commitment Percentage of the obligations under such Letter of Credit and shall
absolutely, unconditionally and irrevocably assume, as primary obligor and not
as surety, and be obligated to pay to the Issuing Lender therefor and discharge
when due, its Revolving Commitment Percentage of the obligations arising under
such Letter of Credit. Without limiting the scope and nature of each Revolving
Lender’s participation in any Letter of Credit, to the extent that the Issuing
Lender has not been reimbursed as required hereunder or under any LOC Document,
each such Revolving Lender shall pay to the Issuing Lender its Revolving
Commitment Percentage of such unreimbursed drawing in same day funds on the day
of notification by the Issuing Lender of an unreimbursed drawing pursuant to
and in accordance with the provisions of subsection (d) hereof. The
obligation of each Revolving Lender to so reimburse the Issuing Lender shall be
absolute and unconditional and shall not be affected by the occurrence of a
Default, an Event of Default or any other occurrence or event. Any such
reimbursement shall not relieve or otherwise impair the obligation of the
Borrower to reimburse the Issuing Lender under any Letter of Credit, together
with interest as hereinafter provided.

 

(e)            Reimbursement.
In the event of any drawing under any Letter of Credit, the Issuing Lender will
promptly notify the Borrower and the Administrative Agent. The Borrower shall
reimburse the Issuing Lender on the day of drawing under any Letter of Credit
(with the proceeds of a Revolving Loan obtained hereunder or otherwise) in same
day funds as provided herein or in the LOC Documents. If the Borrower shall
fail to reimburse the Issuing Lender as provided herein, the unreimbursed
amount of such drawing shall bear interest at a per annum rate equal to the
Alternate Base Rate plus two percent (2%) for so long as such amount
shall be unreimbursed. Unless the Borrower shall immediately notify the Issuing
Lender and the Administrative Agent of its intent to otherwise reimburse the
Issuing Lender, the Borrower shall be deemed to have requested a Revolving Loan
(a “Mandatory Borrowing”) in the amount of the drawing as provided in
subsection (e) hereof, the proceeds of which will be used to satisfy
the reimbursement obligations. The Borrower’s reimbursement obligations
hereunder shall be absolute and unconditional under all circumstances
irrespective of any rights of set-off, counterclaim or defense to payment the
Borrower may claim or have against the Issuing Lender, the Administrative
Agent, the Revolving Lenders, the beneficiary of the Letter of Credit drawn
upon or any other Person, including, without limitation, any defense based on
any failure of the Borrower to receive consideration or the legality, validity,
regularity or unenforceability of the Letter of Credit. The Issuing Lender will
promptly notify the other Revolving Lenders of the amount of any unreimbursed
drawing and each Revolving Lender shall promptly pay to the Administrative
Agent, for the account of the Issuing Lender in Dollars and in immediately
available funds, the amount of such Revolving Lender’s Revolving Commitment
Percentage of such unreimbursed drawing. Such payment shall be made on the day
such notice is received by such Revolving Lender from the Issuing Lender if
such notice is received at or before 2:00 P.M. (Charlotte, North Carolina
time), otherwise such payment shall be made at or before 12:00 Noon (Charlotte,
North Carolina time) on the Business Day next succeeding the day such notice is
received. If such Revolving Lender does not pay such amount to the Issuing
Lender in full upon such request, such Revolving Lender shall, on demand, pay
to the Administrative Agent for the account of the Issuing Lender interest on
the unpaid amount during the period from the date of such drawing until such
Revolving Lender pays such amount to the Issuing Lender in full at a rate per
annum equal to, if paid within two (2) Business Days of the date of
drawing, the Federal Funds Effective Rate and thereafter at a rate equal to the
Alternate Base Rate. Each Revolving Lender’s obligation to make such payment to
the Issuing Lender, and the right of the Issuing Lender to receive the same,
shall be absolute and unconditional, shall not be affected by any circumstance
whatsoever and without regard to the termination of this Agreement or the
Commitments hereunder, the existence of a Default or Event of Default or the
acceleration of the Credit Party Obligations hereunder and shall be made
without any offset, abatement, withholding or reduction whatsoever.

 

(f)             Repayment
with Revolving Loans. On any day on which the Borrower shall have
requested, or been deemed to have requested, a Revolving Loan to reimburse a
drawing under a Letter of 

 

27

 

Credit, the
Administrative Agent shall give notice to the Revolving Lenders that a
Revolving Loan has been requested or deemed requested in connection with a
drawing under a Letter of Credit, in which case a Revolving Loan borrowing
comprised entirely of Alternate Base Rate Loans (each such borrowing, a “Mandatory
Borrowing”) shall be immediately made (without giving effect to any termination
of the Commitments pursuant to Section 7.2) pro rata based on each
Revolving Lender’s respective Revolving Commitment Percentage (determined
before giving effect to any termination of the Commitments pursuant to Section 7.2).
The proceeds of such Mandatory Borrowing shall be paid directly to the Issuing
Lender for application to the respective LOC Obligations. Each Revolving Lender
hereby irrevocably agrees to make such Revolving Loans immediately upon any
such request or deemed request on account of each Mandatory Borrowing in the
amount and in the manner specified in the preceding sentence and on the same
such date notwithstanding (i) the amount of Mandatory Borrowing may not
comply with the minimum amount for borrowings of Revolving Loans otherwise
required hereunder, (ii) whether any conditions specified in Section 4.2
are then satisfied, (iii) whether a Default or an Event of Default then
exists, (iv) failure for any such request or deemed request for Revolving
Loan to be made by the time otherwise required in Section 2.1(b)(i), (v) the
date of such Mandatory Borrowing, or (vi) any reduction in the Revolving
Committed Amount or termination of the Revolving Commitments immediately prior
to such Mandatory Borrowing or contemporaneously therewith; provided, however,
that in the event any such Mandatory Borrowing should be less than the minimum
amount for borrowings of Revolving Loans otherwise provided in Section 2.1(b)(ii),
the Borrower shall pay to the Administrative Agent for its own account an
administrative fee of $500. In the event that any Mandatory Borrowing cannot
for any reason be made on the date otherwise required above (including, without
limitation, as a result of the commencement of a proceeding under the
Bankruptcy Code), then each Revolving Lender hereby agrees that it shall
forthwith fund (as of the date the Mandatory Borrowing would otherwise have
occurred, but adjusted for any payments received from the Borrower on or after
such date and prior to such purchase) its Participation Interests in the
outstanding LOC Obligations; provided, further, that in the event
any Revolving Lender shall fail to fund its Participation Interest on the day
the Mandatory Borrowing would otherwise have occurred, then the amount of such
Revolving Lender’s unfunded Participation Interest therein shall bear interest
payable by such Revolving Lender to the Issuing Lender upon demand, at the rate
equal to, if paid within two (2) Business Days of such date, the Federal
Funds Effective Rate, and thereafter at a rate equal to the Alternate Base
Rate.

 

(g)            Modification,
Extension. The issuance of any supplement, modification, amendment, renewal,
or extension to any Letter of Credit shall, for purposes hereof, be treated in
all respects the same as the issuance of a new Letter of Credit hereunder,
except that no Issuing Lender’s Fees shall be due upon extension of evergreen
Letters of Credit.

 

(h)            Uniform Customs
and Practices. The Issuing Lender shall have the Letters of Credit be
subject to The Uniform Customs and Practice for Documentary Credits, as
published as of the date of issue by the International Chamber of Commerce (the
“UCP”), in which case the UCP may be incorporated therein and deemed
in all respects to be a part thereof.

 

Section 2.3               Swingline
Loan Subfacility.

 

(a)            Swingline
Commitment. During the Commitment Period, subject to the terms and
conditions hereof, the Swingline Lender, in its individual capacity, agrees to
make certain revolving credit loans to the Borrower (each, a “Swingline Loan”
and, collectively, the “Swingline Loans”) for lawful corporate purposes;
provided, however, that (i) the aggregate amount of
Swingline Loans outstanding at any time shall not exceed FIVE MILLION
DOLLARS ($5,000,000) (the “Swingline Committed Amount”), and (ii) the
total Revolving Exposures shall not exceed the lesser of (A) the total
Revolving Commitments and (B) the Borrowing Base then in effect. Swingline
Loans hereunder may be repaid and reborrowed in accordance with the provisions
hereof.

 

(b)            Swingline
Loan Borrowings.

 

(i)      Notice of Borrowing and
Disbursement. The Swingline Lender will make Swingline Loans available to
the Borrower on any Business Day upon delivery of a Notice of Borrowing (which
delivery may be by fax) by the Borrower to the Administrative Agent not
later than 12:00 Noon (Charlotte, North Carolina time) on such 

 

28

 

Business Day. Swingline
Loan borrowings hereunder shall be made in minimum amounts of $100,000 and in
integral amounts of $50,000 in excess thereof.

 

(ii)     Repayment of Swingline
Loans. Each Swingline Loan borrowing shall be due and payable on the
Revolving Commitment Termination Date. The Swingline Lender, at any time and
from time to time no less frequently than once weekly shall by written notice
to the Borrower and the Administrative Agent that complies with Section 2.1(b)(i) demand
repayment of its Swingline Loans by way of a Revolving Loan borrowing, in which
case the Borrower shall be deemed to have requested a Revolving Loan borrowing
comprised entirely of Alternate Base Rate Loans in the amount of such Swingline
Loans; provided, however, that, in the following circumstances,
any such demand shall also be deemed to have been given one Business Day prior
to each of (A) the Revolving Commitment Termination Date, (B) the
occurrence of any Event of Default described in Section 7.1(e), (C) upon
acceleration of the Credit Party Obligations hereunder, whether on account of
an Event of Default described in Section 7.1(e) or any other Event of
Default, and (D) the exercise of remedies in accordance with the
provisions of Section 7.2 hereof (each such Revolving Loan borrowing made
on account of any such deemed request therefor as provided herein being
hereinafter referred to as “Mandatory Borrowing”). Each Revolving Lender
hereby irrevocably agrees to make such Revolving Loans promptly upon any such
request or deemed request on account of each Mandatory Borrowing in the amount
and in the manner specified in the preceding sentence and on the same such date
notwithstanding (1) the amount of Mandatory Borrowing may not comply
with the minimum amount for borrowings of Revolving Loans otherwise required
hereunder, (2) whether any conditions specified in Section 4.2 are
then satisfied, (3) whether a Default or an Event of Default then exists, (4) failure
of any such request or deemed request for Revolving Loans to be made by the
time otherwise required in Section 2.1(b)(i), (5) the date of such
Mandatory Borrowing, or (6) any reduction in the Revolving Committed
Amount or termination of the Revolving Commitments immediately prior to such
Mandatory Borrowing or contemporaneously therewith. In the event that any
Mandatory Borrowing cannot for any reason be made on the date otherwise
required above (including, without limitation, as a result of the commencement
of a proceeding under the Bankruptcy Code), then each Revolving Lender hereby
agrees that it shall forthwith purchase (as of the date the Mandatory Borrowing
would otherwise have occurred, but adjusted for any payments received from the
Borrower on or after such date and prior to such purchase) from the Swingline
Lender such participations in the outstanding Swingline Loans as shall be
necessary to cause each such Revolving Lender to share in such Swingline Loans
ratably based upon its respective Revolving Commitment Percentage (determined
before giving effect to any termination of the Commitments pursuant to Section 7.2);
provided that (x) all interest payable on the Swingline Loans shall be
for the account of the Swingline Lender until the date as of which the
respective participation is purchased, and (y) at the time any purchase of
participations pursuant to this sentence is actually made, the purchasing
Revolving Lender shall be required to pay to the Swingline Lender interest on
the principal amount of such participation purchased for each day from and
including the day upon which the purchase occurs hereunder to but excluding the
date of payment for such participation, at the rate equal to, if paid within
two (2) Business Days of the date of the Mandatory Borrowing, the Federal
Funds Effective Rate, and thereafter at a rate equal to the Alternate Base
Rate.

 

(c)            Interest
on Swingline Loans. Subject to the provisions of Section 2.8,
Swingline Loans shall bear interest at a per annum rate equal to the Alternate
Base Rate plus the Applicable Percentage for Revolving Loans that are
Alternate Base Rate Loans. Interest on Swingline Loans shall be payable in
arrears on each Interest Payment Date.

 

(d)            Swingline
Note. The Swingline Loans shall be evidenced by a duly executed promissory
note of the Borrower to the Swingline Lender in the original amount of the
Swingline Committed Amount and substantially in the form of Schedule 2.3(d).

 

Section 2.4               Fees.

 

(a)            Commitment
Fee. In consideration of the Revolving Commitment, the Borrower agrees to
pay to the Administrative Agent for the ratable benefit of the Revolving
Lenders a commitment fee (the “Commitment Fee”) in an amount equal to
the Applicable Percentage per annum on the average daily unused amount of the
Revolving Committed Amount. For purposes of computation of the Commitment Fee,
LOC Obligations shall be considered usage of the Revolving Committed Amount but
Swingline Loans shall not be considered usage of the Revolving Committed Amount.
The Commitment Fee shall be payable 

 

29

 

quarterly in arrears on
the 15th day following the last day of each calendar quarter for the prior
calendar quarter.

 

(b)            Letter
of Credit Fees. In consideration of the LOC Commitments, the Borrower
agrees to pay to the Issuing Lender, for the benefit of all Revolving Lenders,
a fee (the “Letter of Credit Fee”) equal to the Applicable Percentage
per annum on the average daily maximum amount available to be drawn under each
Letter of Credit from the date of issuance to the date of expiration. In
addition to such Letter of Credit Fee, the Issuing Lender may charge, and
retain for its own account without sharing by the other Lenders, an additional
facing fee of one-fourth of one percent (1⁄4%) per annum on the average daily
maximum amount available to be drawn under each such Letter of Credit issued by
it. The Issuing Lender shall promptly pay over to the Administrative Agent for
the ratable benefit of the Revolving Lenders (including the Issuing Lender in
its capacity as a Revolving Lender) the Letter of Credit Fee. The Letter of
Credit Fee shall be payable quarterly in arrears on the 15th day following the
last day of each calendar quarter for such calendar quarter.

 

(c)            Issuing
Lender Fees. In addition to the Letter of Credit Fees payable pursuant to
subsection (b) hereof, the Borrower shall pay to the Issuing Lender,
for its own account without sharing by the other Lenders the reasonable and
customary charges from time to time of the Issuing Lender with respect to the
amendment, transfer, administration, cancellation and conversion of, and
drawings under, such Letters of Credit (collectively, the “Issuing Lender
Fees”).

 

(d)            Administrative
Fee. The Borrower agrees to pay to the Administrative Agent the annual
administrative fee as described in the Fee Letter.

 

Section 2.5               Commitment
Reductions.

 

(a)            Voluntary
Reductions. The Borrower shall have the right to terminate or permanently
reduce the unused portion of the Revolving Committed Amount at any time or from
time to time upon not less than (x) three (3) Business Days’ prior notice
to the Administrative Agent in the case of LIBOR Rate Loans and (y) the same
Business Day notice to the Administrative Agent in the case of the Alternate
Base Rate Loans (and the Administrative Agent shall notify the Revolving
Lenders thereof as soon as practicable) of each such termination or reduction,
which notice shall specify the effective date thereof and the amount of any
such reduction which shall be in a minimum amount of $1,000,000 or a whole
multiple of $1,000,000 in excess thereof and shall be irrevocable and effective
upon receipt by the Administrative Agent; provided that no such
reduction or termination shall be permitted if, after giving effect thereto and
to any prepayments of the Loans made on the effective date thereof, the
aggregate of the Revolving Exposures would exceed the Revolving Committed
Amount.

 

(b)            Revolving
Commitment Termination Date. The Revolving Commitment, the Swingline
Commitment and the LOC Commitment shall automatically terminate on the
Revolving Commitment Termination Date.

 

Section 2.6               Prepayments.

 

(a)            Optional
Prepayments. The Borrower shall have the right to prepay Loans in whole or
in part from time to time as they may elect; provided, however,
that each partial prepayment of a Revolving Loan shall be in a minimum
principal amount of $1,000,000 and integral multiples of $500,000 in excess
thereof, and each partial prepayment of a Swingline Loan shall be in a minimum
principal amount of $100,000 and integral multiples of $50,000 in excess
thereof. The Borrower shall give three Business Days’ irrevocable notice in the
case of LIBOR Rate Loans and same-day irrevocable notice on any Business Day in
the case of Alternate Base Rate Loans, to the Administrative Agent (which shall
notify the Lenders thereof as soon as practicable). All prepayments under this Section 2.6(a) shall
be subject to Section 2.16, but otherwise without premium or penalty. Interest
on the principal amount prepaid shall be payable on the next occurring Interest
Payment Date that would have occurred had such loan not been prepaid or, at the
request of the Administrative Agent, interest on the principal amount prepaid
shall be payable on any date that 

 

30

 

a prepayment is made
hereunder through the date of prepayment. Amounts prepaid on the Revolving
Loans and the Swingline Loans may be reborrowed in accordance with the
terms hereof.

 

(b)            Mandatory
Prepayments.

 

(i)      Revolving Committed
Amount. If at any time after the Closing Date, the total Revolving
Exposures shall exceed the Revolving Committed Amount, the Borrower immediately
shall prepay the Loans in an amount sufficient to eliminate such excess (such
prepayment to be applied as set forth in Section 2.11).

 

(ii)     In the event that the total
Revolving Exposures exceeds the Borrowing Base then in effect, the Borrower
shall, without notice or demand, immediately, first, repay or prepay
Swingline Loans, second, repay or prepay Revolving Borrowings and, third,
replace outstanding Letters of Credit in an aggregate amount sufficient to
eliminate such excess.

 

Section 2.7               Minimum
Borrowing Amounts and Principal Amount

 

All borrowings, payments and prepayments in respect of
Revolving Loans shall be in such amounts and be made pursuant to such elections
so that after giving effect thereto the aggregate principal amount of the Revolving
Loans shall be (a) with respect to Alternate Base Rate Loans, $500,000 or
a whole multiple of $100,000 in excess thereof and (b) with respect to
LIBOR Rate Loans, $1,000,000 or a whole multiple of $500,000 in excess thereof.

 

Section 2.8               Default
Rate and Payment Dates.

 

During the continuance of any Default or Event of
Default under Section 7.1(a) or (e), to the extent permitted by
applicable law, all overdue amounts (whether principal, interest or otherwise)
in the case of a Default or Event of Default under Section 7.1(a) and
all amounts (whether principal, interest or otherwise) in the case of a Default
or Event of Default under Section 7.1(e) shall bear interest at a
rate per annum equal to 2.00% in excess of the highest applicable interest rate
(including the Applicable Margin), which shall be payable upon demand.

 

Section 2.9               Conversion
Options.

 

(a)            The
Borrower may elect from time to time to convert Alternate Base Rate Loans
to LIBOR Rate Loans, by giving the Administrative Agent at least three Business
Days’ prior irrevocable written notice of such election. A form of Notice
of Conversion/ Extension is attached as Schedule 2.9. If the date
upon which an Alternate Base Rate Loan is to be converted to a LIBOR Rate Loan
is not a Business Day, then such conversion shall be made on the next
succeeding Business Day and during the period from such last day of an Interest
Period to such succeeding Business Day such Loan shall bear interest as if it
were an Alternate Base Rate Loan. All or any part of outstanding Alternate
Base Rate Loans may be converted as provided herein; provided that (i) no
Loan may be converted into a LIBOR Rate Loan when any Default or Event of
Default has occurred and is continuing and (ii) partial conversions shall
be in an aggregate principal amount of $1,000,000 or a whole multiple of
$1,000,000 in excess thereof.

 

(b)            Any
LIBOR Rate Loans may be continued as such upon the expiration of an
Interest Period with respect thereto by compliance by the Borrower with the
notice provisions contained in Section 2.9(a); provided that no
LIBOR Rate Loan may be continued as such when any Default or Event of
Default has occurred and is continuing, in which case such Loan shall be
automatically converted to an Alternate Base Rate Loan at the end of the
applicable Interest Period with respect thereto. If the Borrower shall fail to
give timely notice of an election to continue a LIBOR Rate Loan, or the
continuation of LIBOR Rate Loans is not permitted hereunder, such LIBOR Rate
Loans shall be automatically converted to Alternate Base three-month LIBOR Rate
Loans at the end of the applicable Interest Period with respect thereto.

 

Section 2.10             Computation
of Interest and Fees.

 

(a)            Interest
payable hereunder with respect to Alternate Base Rate Loans based on the Prime
Rate shall be calculated on the basis of a year of 365 days (or 366 days, as
applicable) for the actual days 

 

31

 

elapsed. All other fees,
interest and all other amounts payable hereunder shall be calculated on the
basis of a 360-day year for the actual days elapsed. The Administrative Agent
shall as soon as practicable notify the Borrower and the Lenders of each
determination of a LIBOR Rate on the Business Day of the determination thereof.
Any change in the interest rate on a Loan resulting from a change in the
Alternate Base Rate shall become effective as of the opening of business on the
day on which such change in the Alternate Base Rate shall become effective. The
Administrative Agent shall as soon as practicable notify the Borrower and the
Lenders of the effective date and the amount of each such change.

 

(b)            Each
determination of an interest rate by the Administrative Agent pursuant to any
provision of this Agreement shall be conclusive and binding on the Borrower and
the Lenders in the absence of manifest error. The Administrative Agent shall,
at the request of the Borrower, deliver to the Borrower a statement showing the
computations used by the Administrative Agent in determining any interest rate.

 

(c)            It
is the intent of the Lenders and the Credit Parties to conform to and
contract in strict compliance with applicable usury law from time to time in
effect. All agreements between the Lenders and the Credit Parties are hereby
limited by the provisions of this paragraph which shall override and control
all such agreements, whether now existing or hereafter arising and whether
written or oral. In no way, nor in any event or contingency (including, but not
limited to, prepayment or acceleration of the maturity of any Obligation),
shall the interest taken, reserved, contracted for, charged, or received under
this Agreement, under the Notes or otherwise, exceed the maximum nonusurious
amount permissible under applicable law. If, from any possible construction of
any of the Credit Documents or any other document, interest would otherwise be
payable in excess of the maximum nonusurious amount, any such construction
shall be subject to the provisions of this paragraph and such interest shall be
automatically reduced to the maximum nonusurious amount permitted under
applicable law, without the necessity of execution of any amendment or new
document. If any Lender shall ever receive anything of value which is characterized
as interest on the Loans under applicable law and which would, apart from
this provision, be in excess of the maximum non-usurious amount, an amount
equal to the amount which would have been excessive interest shall, without
penalty, be applied to the reduction of the principal amount owing on the Loans
and not to the payment of interest, or refunded to the Borrower or the other
payor thereof if and to the extent such amount which would have been excessive
exceeds such unpaid principal amount of the Loans. The right to demand payment
of the Loans or any other Indebtedness evidenced by any of the Credit Documents
does not include the right to receive any interest which has not otherwise
accrued on the date of such demand, and the Lenders do not intend to charge or
receive any unearned interest in the event of such demand. All interest paid or
agreed to be paid to the Lenders with respect to the Loans shall, to the extent
permitted by applicable law, be amortized, prorated, allocated, and spread
throughout the full stated term (including any renewal or extension) of the
Loans so that the amount of interest on account of such indebtedness does not
exceed the maximum nonusurious amount permitted by applicable law.

 

Section 2.11             Pro
Rata Treatment and Payments.

 

(a)            Application
of Payments. Each borrowing of Revolving Loans and any reduction of the
Revolving Commitments shall be made pro rata according to the respective
Revolving Commitment Percentages of the Lenders. Each payment, including,
without limitation, any mandatory prepayment pursuant to Section 2.6(b),
under this Agreement or any Note shall be applied, first, to any fees
then due and owing by the Borrower pursuant to Section 2.4, second,
to interest then due and owing in respect of the Notes of the Borrower and, third,
to principal then due and owing hereunder and under the Notes of the Borrower. Each
payment on account of any fees pursuant to Section 2.4 shall be made pro
rata in accordance with the respective amounts due and owing (except as to the
portion of the Letter of Credit retained by the Issuing Lender and the Issuing
Lender Fees). Prepayments made pursuant to Section 2.14 shall be applied
in accordance with such section. All payments (including prepayments) to be
made by the Borrower on account of principal, interest and fees shall be made
without defense, set-off or counterclaim (except as provided in Section 2.17(b))
and shall be made to the Administrative Agent for the account of the Lenders at
the Administrative Agent’s office specified on Schedule 9.2 in
Dollars and in immediately available funds not later than 12:00 Noon
(Charlotte, North Carolina time) on the date when due. The Administrative Agent
shall distribute such payments to the Lenders entitled thereto promptly upon
receipt in like funds as received. If any payment hereunder (other than
payments on the LIBOR Rate Loans) becomes due and payable on a day 

 

32

 

other than a Business
Day, such payment shall be extended to the next succeeding Business Day, and,
with respect to payments of principal, interest thereon shall be payable at the
then applicable rate during such extension. If any payment on a LIBOR Rate Loan
becomes due and payable on a day other than a Business Day, the maturity
thereof shall be extended to the next succeeding Business Day unless the result
of such extension would be to extend such payment into another calendar month,
in which event such payment shall be made on the immediately preceding Business
Day.

 

(b)            Allocation
of Payments After Event of Default. Notwithstanding any other provisions of
this Agreement to the contrary, after the exercise of remedies (other than the
invocation of default interest pursuant to Section 2.8) by the
Administrative Agent or the Lenders pursuant to Section 7.2 (or after the
Commitments shall automatically terminate and the Loans (with accrued interest
thereon) and all other amounts under the Credit Documents (including, without
limitation, the maximum amount of all contingent liabilities under Letters of
Credit) shall automatically become due and payable in accordance with the terms
of such Section), all amounts collected or received by the Administrative Agent
or any Lender on account of the Credit Party Obligations or any other amounts
outstanding under any of the Credit Documents or in respect of the Collateral
shall 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 the Administrative Agent in connection with enforcing the rights of the
Lenders under the Credit Documents and any protective advances made by the
Administrative Agent with respect to the Collateral under or pursuant to the
terms of the Collateral Documents;

 

SECOND, to the payment of any fees owed to the
Administrative Agent in its capacity as such;

 

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 the Credit
Documents or otherwise enforcing its rights with respect to the Credit Party
Obligations owing to such Lender (irrespective of whether such fees and
expenses are allowed, permitted or recognized as a claim in any proceeding
resulting from the occurrence of a Bankruptcy Event);

 

FOURTH, to the payment of all of the Credit Party
Obligations consisting of accrued fees and interest, including, with respect to
any Secured Hedging Agreement, any fees, premiums and scheduled periodic
payments due under such Secured Hedging Agreement, in each case of types
comparable to interest on loans and not comparable to items referred to in the
following clause FIFTH, and any interest accrued thereon (irrespective of
whether such fees, interest, premiums or scheduled periodic payments are
allowed, permitted or recognized as a claim in any proceeding resulting from
the occurrence of a Bankruptcy Event);

 

FIFTH, to the payment of the outstanding principal
amount of the Credit Party Obligations, including the payment or cash
collateralization of the outstanding LOC Obligations and, with respect to any
Secured Hedging Agreement, any breakage, termination or other payments due
under such Secured Hedging Agreement and any interest accrued thereon;

 

SIXTH, to all other Credit Party Obligations and other
obligations which shall have become due and payable under the Credit Documents
or otherwise and not repaid pursuant to clauses “FIRST” through “FIFTH” above
(irrespective of whether such First Lien Credit Party Obligations or other
obligations are allowed, permitted or recognized as a claim in any proceeding
resulting from the occurrence of a Bankruptcy Event); and

 

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

 

In carrying out the foregoing, (i) amounts
received shall be applied in the numerical order provided until exhausted prior
to application to the next succeeding category; (ii) each of the Lenders
and any Hedging Agreement Providers shall receive an amount equal to its pro
rata share (based on the proportion that the then outstanding Loans and LOC
Obligations held by such Lender or the outstanding obligations payable to such
Hedging Agreement Provider bears 

 

33

 

to the aggregate then outstanding Loans, LOC
Obligations and obligations payable under all Secured Hedging Agreements) of
amounts available to be applied pursuant to clauses “THIRD”, “FOURTH”, “FIFTH”,
“SIXTH” and “SEVENTH” above; and (iii) 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 the Administrative Agent in a cash collateral account and
applied (A) first, to reimburse the Issuing Lender from time to time for
any drawings under such Letters of Credit and (B) then, following the
expiration of all Letters of Credit, to all other obligations of the types
described in clauses “FIFTH”, “SIXTH” and “SEVENTH”, above in the manner
provided in this Section 2.11(b). Notwithstanding the foregoing terms of
this Section 2.11(b), only Collateral proceeds and payments under the
Guaranty with respect to Secured Hedging Agreements shall be applied to
obligations under any Secured Hedging Agreement.

 

Section 2.12             Non-Receipt
of Funds by the Administrative Agent.

 

(a)            Unless
the Administrative Agent shall have been notified in writing by a Lender prior
to the date a Loan is to be made by such Lender (which notice shall be
effective upon receipt) that such Lender does not intend to make the proceeds
of such Loan available to the Administrative Agent, the Administrative Agent may assume
that such Lender has made such proceeds available to the Administrative Agent
on such date, and the Administrative Agent may in reliance upon such
assumption (but shall not be required to) make available to the Borrower a corresponding
amount. If such corresponding amount is not in fact made available to the
Administrative Agent, the Administrative Agent shall be able to recover such
corresponding amount from such Lender. If such Lender does not pay such
corresponding amount forthwith upon the Administrative Agent’s demand therefor,
in accordance with the terms hereof, the Administrative Agent will promptly
notify the Borrower of, and the Borrower shall immediately pay, such
corresponding amount to the Administrative Agent. The Administrative Agent
shall also be entitled to recover from the Lender or the Borrower, as the case may be,
interest on such corresponding amount in respect of each day from the date such
corresponding amount was made available by the Administrative Agent to the
Borrower to the date such corresponding amount is recovered by the
Administrative Agent at a per annum rate equal to (i) from the Borrower at
the applicable rate for the applicable borrowing pursuant to the Notice of
Borrowing and (ii) from a Lender at the Federal Funds Effective Rate.

 

(b)            Unless
the Administrative Agent shall have been notified in writing by the Borrower,
prior to the date on which any payment is due from it hereunder (which notice
shall be effective upon receipt) that the Borrower does not intend to make such
payment, the Administrative Agent may assume that the Borrower has made
such payment when due, and the Administrative Agent may in reliance upon
such assumption (but shall not be required to) make available to each Lender on
such payment date an amount equal to the portion of such assumed payment to
which such Lender is entitled hereunder, and if the Borrower has not in fact
made such payment to the Administrative Agent, such Lender shall, on demand,
repay to the Administrative Agent the amount made available to such Lender. If
such amount is repaid to the Administrative Agent on a date after the date such
amount was made available to such Lender, such Lender shall pay to the
Administrative Agent on demand interest on such amount in respect of each day
from the date such amount was made available by the Administrative Agent to
such Lender to the date such amount is recovered by the Administrative Agent at
a per annum rate equal to the Federal Funds Effective Rate.

 

(c)            A
certificate of the Administrative Agent submitted to the Borrower or any Lender
with respect to any amount owing under this Section 2.12 shall be
conclusive in the absence of manifest error.

 

Section 2.13             Inability
to Determine Interest Rate.

 

Notwithstanding any other provision of this Agreement,
if (i) the Administrative Agent shall reasonably determine (which
determination shall be conclusive and binding absent manifest error) that, by
reason of circumstances affecting the relevant market, reasonable and adequate
means do not exist for ascertaining LIBOR for such Interest Period, or (ii) the
Required Lenders shall reasonably determine (which determination shall be
conclusive and binding absent manifest error) that the LIBOR Rate does not
adequately and fairly reflect the cost to such Lenders of funding LIBOR Rate
Loans that the Borrower has requested be outstanding as a Loan during such
Interest Period, the Administrative Agent shall forthwith give telephone notice
of such determination, confirmed in writing, to the Borrower, and the Lenders
at least two Business Days prior to the first day of such Interest Period. Unless
the 

 

34

 

Borrower shall have notified the Administrative Agent
upon receipt of such telephone notice that they wish to rescind or modify their
request regarding such LIBOR Rate Loans, any Loans that were requested to be
made as LIBOR Rate Loans shall be made as Alternate Base Rate Loans and any
Loans that were requested to be converted into or continued as LIBOR Rate Loans
shall remain as or be converted into Alternate Base Rate Loans. Until any such
notice has been withdrawn by the Administrative Agent, no further Loans shall
be made as, continued as, or converted into, LIBOR Rate Loans for the Interest
Periods so affected.

 

Section 2.14             Illegality.

 

Notwithstanding any other provision of this Agreement,
if the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof by the relevant Governmental Authority to
any Lender shall make it unlawful for such Lender or its LIBOR Lending Office
to make or maintain LIBOR Rate Loans as contemplated by this Agreement or to
obtain in the interbank eurodollar market through its LIBOR Lending Office the
funds with which to make such Loans, (a) such Lender shall promptly notify
the Administrative Agent and the Borrower thereof, (b) the commitment of
such Lender hereunder to make LIBOR Rate Loans or continue LIBOR Rate Loans as
such shall forthwith be suspended until the Administrative Agent shall give
notice that the condition or situation which gave rise to the suspension shall
no longer exist, and (c) such Lender’s Loans then outstanding as LIBOR
Rate Loans, if any, shall be converted on the last day of the Interest Period
for such Loans or within such earlier period as required by law as Alternate
Base Rate Loans. The Borrower hereby agrees to promptly pay any Lender, upon
its demand, any additional amounts necessary to compensate such Lender for
actual and direct costs (but not including anticipated profits) reasonably
incurred by such Lender in making any repayment in accordance with this Section including,
but not limited to, any interest or fees payable by such Lender to lenders of
funds obtained by it in order to make or maintain its LIBOR Rate Loans
hereunder. A certificate as to any additional amounts payable pursuant to this Section submitted
by such Lender, through the Administrative Agent, to the Borrower shall be
conclusive in the absence of manifest error. Each Lender agrees to use
reasonable efforts (including reasonable efforts to change its LIBOR Lending
Office) to avoid or to minimize any amounts which may otherwise be payable
pursuant to this Section; provided, however, that such efforts
shall not cause the imposition on such Lender of any additional costs or legal
or regulatory burdens deemed by such Lender in its sole discretion to be material.

 

Section 2.15             Requirements
of Law.

 

(a)            If
the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof or compliance by any Lender with any
request or directive (whether or not having the force of law) from any central
bank or other Governmental Authority made subsequent to the date hereof or, in
the case of a Lender that is an assignee or transferee of an interest under
this Agreement pursuant to Section 9.6(c), made subsequent to the date of
such assignment or transfer;

 

(i)      shall
subject such Lender to any tax of any kind whatsoever with respect to any
Letter of Credit or any application relating thereto, any LIBOR Rate Loan made
by it, or change the basis of taxation of payments to such Lender in respect
thereof (except for tax on the overall net income of such Lender and changes in
the rate of such tax);

 

(ii)     shall
impose, modify or hold applicable any reserve, special deposit, compulsory loan
or similar requirement against assets held by, deposits or other liabilities in
or for the account of, advances, loans or other extensions of credit by, or any
other acquisition of funds by, any office of such Lender which is not otherwise
included in the determination of the LIBOR Rate hereunder; or

 

(iii)    shall
impose on such Lender any other condition;

 

and the result of any of the foregoing is to increase
the cost to such Lender of making or maintaining LIBOR Rate Loans or the
Letters of Credit or to reduce any amount receivable hereunder or under any
Note, then, in any such case, the Borrower shall promptly pay such Lender, upon
its demand, any additional amounts necessary to compensate such Lender for such
additional cost or reduced amount receivable which such Lender reasonably deems
to be material as determined by such Lender with respect to its LIBOR Rate
Loans or Letters of Credit. A certificate as to any additional amounts payable
pursuant to this Section submitted by such Lender, through the
Administrative 

 

35

 

Agent, to the Borrower shall be conclusive in the absence
of manifest error. Each Lender agrees to use reasonable efforts (including
reasonable efforts to change its Domestic Lending Office or LIBOR Lending
Office, as the case may be) to avoid or to minimize any amounts which
might otherwise be payable pursuant to this paragraph of this Section; provided,
however, that such efforts shall not cause the imposition on such Lender
of any additional costs or legal or regulatory burdens deemed by such Lender to
be material.

 

(b)            If
any Lender is incapable to make LIBOR Rate Loans, as provided in Section 2.14,
or requests compensation under Section 2.15(a) or (c), or if the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.17,
or if any Lender defaults in its obligation to fund Loans hereunder or if the
Borrower exercises its replacement rights under Section 9.1(b), then the
Borrower may, at its sole expense and effort, upon notice to such Lender and
the Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in, and
consents required by, Section 9.6), all of their interests, rights and
obligations under this Agreement and the other Credit Documents to an assignee
that shall assume such obligations (which assignee may be another Lender,
if a Lender accepts such assignment); provided that:

 

(i)      the
Borrower shall have paid to the Administrative Agent the processing and
recordation fee specified in Section 9.6(e);

 

(ii)     such
Lender shall have received payment of an amount equal to the outstanding
principal of its Loans and participations in the LOC Commitment Amount and
Swingline Loans, accrued interest thereon, accrued fees and all other amounts
payable to it hereunder and under the other Credit Documents from the assignee
(to the extent of such outstanding principal and accrued interest and fees) or
the Borrower (in the case of all other amounts);

 

(iii)    in
the case of any such assignment resulting from a claim for compensation under Section 2.15
or payments required to be made pursuant to Section 2.17, such assignment
will result in a reduction in such compensation or payments thereafter; and

 

(iv)    such
assignment does not conflict with applicable Requirements of Law.

 

A Lender shall not be required to make any such
assignment or delegation if, prior thereto, as a result of a waiver by such
Lender or otherwise, the circumstances entitling the Borrower to require such
assignment and delegation cease to apply.

 

(c)            If
any Lender shall have reasonably determined that the adoption of or any change
in any Requirement of Law regarding capital adequacy or in the interpretation
or application thereof or compliance by such Lender or any corporation
controlling such Lender with any request or directive regarding capital
adequacy (whether or not having the force of law) from any central bank or
Governmental Authority made subsequent to the date hereof does or shall have
the effect of reducing the rate of return on such Lender’s or such corporation’s
capital as a consequence of its obligations hereunder to a level below that
which such Lender or such corporation could have achieved but for such
adoption, change or compliance (taking into consideration such Lender’s or such
corporation’s policies with respect to capital adequacy) by an amount
reasonably deemed by such Lender to be material, then from time to time, within
fifteen (15) days after demand by such Lender, the Borrower shall pay to such
Lender such additional amount as shall be certified by such Lender as being
required to compensate it for such reduction. Such a certificate as to any
additional amounts payable under this Section submitted by a Lender (which
certificate shall include a description of the basis for the computation),
through the Administrative Agent, to the Borrower shall be conclusive absent
manifest error.

 

(d)            The
agreements in this Section 2.15 shall survive the termination of this
Agreement and payment of the Notes and all other amounts payable hereunder.

 

36

 

Section 2.16             Indemnity.

 

The Borrower hereby agrees to indemnify each Lender
and to hold such Lender harmless from any funding loss or expense which such
Lender may sustain or incur as a consequence of (a) default by the
Borrower in payment of the principal amount of or interest on any Loan by such
Lender in accordance with the terms hereof, (b) default by the Borrower in
accepting a borrowing after the Borrower has given a notice in accordance with
the terms hereof, (c) default by the Borrower in making any prepayment
after the Borrower has given a notice in accordance with the terms hereof,
and/or (d) the making by the Borrower of a prepayment of a Loan, or the
conversion thereof, on a day which is not the last day of the Interest Period
with respect thereto, in each case including, but not limited to, any such loss
or expense arising from interest or fees payable by such Lender to lenders of
funds obtained by it in order to maintain its Loans hereunder. A certificate as
to any additional amounts payable pursuant to this Section submitted by
any Lender, through the Administrative Agent, to the Borrower (which certificate
must be delivered to the Administrative Agent within thirty days following such
default, prepayment or conversion) shall be conclusive in the absence of
manifest error. The agreements in this Section shall survive termination
of this Agreement and payment of the Notes and all other amounts payable
hereunder.

 

Section 2.17             Taxes.

 

(a)            All
payments made by any Credit Party hereunder or under any Note to any Lender or
Administrative Agent shall be, except as provided in this Section 2.17(a) or
in Section 2.17(b), made free and clear of, and without deduction or
withholding for, any present or future taxes, levies, imposts, duties, fees,
assessments or other charges of whatever nature now or hereafter imposed by any
Governmental Authority or by any political subdivision or taxing authority
thereof or therein with respect to such payments (but excluding any tax
(including franchise taxes or taxes imposed on or measured by net income or net
profits) imposed by a jurisdiction as a result of a connection or former
connection between such Lender and the jurisdiction imposing the tax including
a connection arising from such Lender being a citizen or resident of such
jurisdiction, being organized in such jurisdiction, or having a permanent
establishment or fixed place of business therein, but excluding any such
connection arising from the activities of such recipient pursuant to or in
respect of this Agreement or the Credit Documents including, but not limited
to, executing, delivering or performing its obligations or receiving a payment
under or enforcing this agreement or any Credit Document) and all interest,
penalties or similar liabilities with respect thereto (all such non-excluded
taxes, levies, imposts, duties, fees, assessments or other charges being
referred to collectively as “Taxes”). If any Credit Party shall be
required by applicable law to deduct or withhold any Taxes (including any Other
Taxes) from such payments, then (i) the sum payable shall be increased as
necessary so that after making all required deductions or withholdings
(including deductions or withholdings applicable to additional sums payable
under this Section) the Administrative Agent or Lender, as the case may be,
receives an amount equal to the sum it would have received had no such
deductions or withholdings been made, (ii) the applicable Credit Party
shall make such deductions or withholdings and (iii) the applicable Credit
Party shall timely pay the full amount deducted or withheld to the relevant
governmental authority in accordance with applicable law. The Borrower will
furnish to the Administrative Agent as soon as practicable after the date the
payment of any Taxes or Other Taxes is due pursuant to applicable law certified
copies (to the extent reasonably available and required by law) of tax receipts
evidencing such payment by the Borrower. The Borrower agrees to indemnify and
hold harmless each Lender, and reimburse such Lender upon its written request,
for the amount of any Taxes or Other Taxes (including Taxes or Other Taxes
imposed or asserted or attributable to amounts payable under this clause) paid
by such Lender.

 

(b)            Each
Lender that is not a United States person (as such term is defined in Section 7701(a)(30)
of the Code) agrees to deliver to the Borrower and the Administrative Agent on
or prior to the Closing Date, or in the case of a Lender that is an assignee or
transferee of an interest under this Agreement pursuant to Section 9.6(c) (unless
the respective Lender was already a Lender hereunder immediately prior to such
assignment or transfer), on the date of such assignment or transfer to such
Lender and upon any change in lending office, (i) if the Lender is a “bank”
within the meaning of Section 881(c)(3)(A) of the Code, two accurate
and complete original signed copies of Internal Revenue Service Form W-8BEN
(claiming benefits under a U.S. income tax treaty) W-8ECI or successor forms)
certifying such Lender’s entitlement to a complete exemption from United States
withholding tax with respect to payments to be made under this Agreement and
under any Note, or (ii) if the Lender is not a “bank” within the meaning
of Section 

 

37

 

881(c)(3)(A) of the
Code, either Internal Revenue Service Form W-8BEN (claiming benefits under
a U.S. income tax treaty) W-8ECI as set forth in clause (i) above, or (x)
a certificate substantially in the form of Schedule 2.17(b) (any
such certificate, a “Tax Exempt Certificate”) and (y) two accurate and
complete original signed copies of Internal Revenue Service Form W-8BEN
(or successor form) certifying such Lender’s entitlement to an exemption from
United States withholding tax with respect to payments of interest to be made
under this Agreement and under any Note. Each Lender that is a United States
person (as such term is defined in Section 7701(a)(30) of the Code) and is
not a person whose name indicates that it is an “exempt recipient” (as such
term is defined in Section 1.6049-4(c)(ii) of the United States
Treasury Regulations) agrees to deliver to the Borrower and the Administrative
Agent on or prior to the Closing Date, or in the case of a Lender that is an
assignee or transferee of an interest under this Agreement pursuant to Section 9.6(c) (unless
the respective Lender was already a Lender hereunder immediately prior to such
assignment or transfer) on the date of such Assignment or transfer of such
Lender two accurate and complete original signed copies of Form W-9 (or
successor forms). In addition, each Lender agrees that it will deliver upon the
Borrower’s reasonable request updated versions of the foregoing, as applicable,
whenever the previous certification has become obsolete or inaccurate in any
material respect, together with such other forms as may be required in
order to confirm or establish the entitlement of such Lender to a continued
exemption from in United States withholding tax with respect to payments under
this Agreement and any Note. Notwithstanding anything to the contrary contained
in Section 2.17(a), but subject to the immediately succeeding sentence,
(x) the Borrower shall be entitled, to the extent it is required to do so by
law, to deduct or withhold Taxes imposed by the United States (or any political
subdivision or taxing authority thereof or therein) from interest, fees or
other amounts payable hereunder for the account of any Lender to the extent
that such Lender has not provided to the Borrower U.S. Internal Revenue Service
Forms that establish a complete exemption from such deduction or withholding
and (y) the Borrower shall not be obligated pursuant to Section 2.17(a) hereof
to gross-up payments to be made to a Lender in respect of Taxes imposed by the
United States if (I) such Lender has not provided to the Borrower the Internal
Revenue Service Forms required to be provided to the Borrower pursuant to this Section 2.17(b) or
(II) in the case of a payment, other than interest, to a Lender described in
clause (ii) above, to the extent that such Forms do not establish a
complete exemption from withholding of such Taxes on such payments. Notwithstanding
anything to the contrary contained in the preceding sentence or elsewhere in
this Section 2.17, the Borrower agrees to pay additional amounts and to
indemnify each Lender in the manner and to the extent set forth in Section 2.17(a) in
respect of any amounts deducted or withheld by it as described in the
immediately preceding sentence as a result of any changes after the Closing
Date (or, in the case of a Lender that is an assignee or transferee of an
interest under this Agreement pursuant to the Section 9.6(c), subsequent
to the date of such assignment or transfer) in any applicable law, treaty,
governmental rule, regulation, guideline or order, or in the interpretation
thereof including, without limitation, any such change that precludes a lender
from providing a form or certificate described in Section 2.17(b).

 

(c)            Each
Lender agrees to use reasonable efforts (including reasonable efforts to change
its Domestic Lending Office or LIBOR Lending Office, as the case may be)
to avoid or to minimize any amounts which might otherwise be payable pursuant
to this Section; provided, however, that such efforts shall not
cause the imposition on such Lender of any additional costs or legal or
regulatory burdens deemed by such Lender in its sole discretion to be material.

 

(d)            If
the Borrower pays any additional amount pursuant to this Section 2.17 with
respect to a Lender, such Lender shall use reasonable efforts to obtain a
refund of tax or credit against its tax liabilities on account of such payment;
provided that such Lender shall have no obligation to use such
reasonable efforts to obtain a credit if it is in an excess foreign tax credit
position and shall have no obligation to use such reasonable efforts if it
believes in good faith, in its sole discretion, that claiming a refund or
credit would cause adverse tax consequences to it. In the event that such
Lender receives such a refund or credit, such Lender shall pay to the Borrower
an amount that such Lender reasonably determines is equal to the net tax
benefit obtained by such Lender as a result of such payment by the Borrower, so
as to leave such Lender in no worse position that in which it would have been
in if payment of the relevant additional amount had not been made. Nothing
contained in this Section 2.17(d) shall require a Lender to disclose
or detail the basis of its calculation of the amount of any tax benefit or any
other amount or the basis of its determination referred to in the proviso to
the first sentence of this Section 2.17(d) to the Borrower or any
other party.

 

38

 

 

(e)                                     Borrower
shall timely pay all present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies arising from any payment
made hereunder or under any other Credit Document or from the execution,
delivery or enforcement of, or otherwise with respect to, any Credit Document (“Other
Taxes”) to the relevant governmental authority in accordance with
applicable law.

 

(f)                                       The
agreements in this Section 2.17 shall survive the termination of this
Agreement and the payment of the Notes and all other amounts payable hereunder.

 

Section 2.18                                      Indemnification;
Nature of Issuing Lender’s Duties.

 

(a)                                     In
addition to its other obligations under Section 2.2, the Borrower hereby
agrees to protect, indemnify, pay and save each Issuing Lender harmless from
and against any and all claims, demands, liabilities, damages, losses, costs,
charges and expenses (including reasonable attorneys’ fees) that the Issuing
Lender may incur or be subject to as a consequence, direct or indirect, of
(i) the issuance of any Letter of Credit or (ii) the failure of the
Issuing Lender to honor a drawing under a Letter of Credit as a result of any
act or omission, whether rightful or wrongful, of any present or future de jure
or de facto government or governmental authority (all such acts or omissions,
herein called “Government Acts”).

 

(b)                                    As
between the Borrower and the Issuing Lender, the Borrower shall assume all
risks of the acts, omissions or misuse of any Letter of Credit by the
beneficiary thereof. The Issuing Lender shall not be responsible:  (i) for the form, validity, sufficiency,
accuracy, genuineness or legal effect of any document submitted by any party in
connection with the application for and issuance of any Letter of Credit, even
if it should in fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged; (ii) for the validity or sufficiency of
any instrument transferring or assigning or purporting to transfer or assign
any Letter of Credit or the rights or benefits thereunder or proceeds thereof,
in whole or in part, that may prove to be invalid or ineffective for any
reason; (iii) for failure of the beneficiary of a Letter of Credit to
comply fully with conditions required in order to draw upon a Letter of Credit;
(iv) for 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) for errors in interpretation of
technical terms; (vi) for any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under a Letter of
Credit or of the proceeds thereof; and (vii) for any consequences arising
from causes beyond the control of the Issuing Lender, including, without
limitation, any Government Acts. None of the above shall affect, impair, or prevent
the vesting of the Issuing Lender’s rights or powers hereunder.

 

(c)                                     In
furtherance and extension and not in limitation of the specific provisions
hereinabove set forth, any action taken or omitted by the Issuing Lender, under
or in connection with any Letter of Credit or the related certificates, if
taken or omitted in good faith, shall not put such Issuing Lender under any
resulting liability to the Borrower. It is the intention of the parties that
this Agreement shall be construed and applied to protect and indemnify the
Issuing Lender against any and all risks involved in the issuance of the
Letters of Credit, all of which risks are hereby assumed by the Borrower, including,
without limitation, any and all risks of the acts or omissions, whether
rightful or wrongful, of any Government Authority. The Issuing Lender shall
not, in any way, be liable for any failure by the Issuing Lender or anyone else
to pay any drawing under any Letter of Credit as a result of any Government
Acts or any other cause beyond the control of the Issuing Lender.

 

(d)                                    Nothing
in this Section 2.18 is intended to limit the reimbursement obligation of
the Borrower contained in Section 2.2(e) hereof. The obligations of
the Borrower under this Section 2.18 shall survive the termination of this
Agreement. No act or omissions of any current or prior beneficiary of a Letter
of Credit shall in any way affect or impair the rights of the Issuing Lender to
enforce any right, power or benefit under this Agreement.

 

(e)                                     Notwithstanding
anything to the contrary contained in this Section 2.18, the Borrower
shall have no obligation to indemnify any Issuing Lender in respect of any
liability incurred by such Issuing Lender arising out of the gross negligence
or willful misconduct of the Issuing Lender (including action not taken by an
Issuing Lender), as determined by a court of competent jurisdiction.

 

39

 

ARTICLE III

 

REPRESENTATIONS AND
WARRANTIES

 

To induce the Lenders to enter into this Agreement and
to make the Extensions of Credit herein provided for, the Credit Parties hereby
jointly and severally represent and warrant to the Administrative Agent and to
each Lender that after giving effect to the initial Extension of Credit and the
transactions to occur on the Closing Date and thereafter:

 

Section 3.1                                             Financial
Condition.

 

(a)                                     (i) The
audited consolidated and consolidating financial statements of the Borrower and
its Subsidiaries for the fiscal years ended December 31, 2004 and 2003,
together with the related consolidated and consolidating statements of income
or operations, equity and cash flows for the fiscal years ended on such dates
and (ii) a pro forma balance sheet of the Borrower and its Subsidiaries as
of December 31, 2004:

 

(A)                              were
prepared in accordance with GAAP (to the extent applicable) consistently
applied throughout the period covered thereby, except as otherwise expressly
noted therein; and

 

(B)                                fairly
present in all material respects the financial condition of the Borrower and
its Subsidiaries as of the date thereof (subject, in the case of the unaudited
financial statements and the pro forma balance sheet, to normal yearend
adjustments) and results of operations for the period covered thereby.

 

(b)                                    The
six-year projections of the Borrower and its Subsidiaries delivered to the
Lenders on or prior to the Closing Date have been prepared in good faith based
upon reasonable assumptions.

 

Section 3.2                                             No Change.

 

Since December 31, 2004 (and, after the delivery
of annual audited financial statements in accordance with Section 5.1(a),
from the date of the most recently delivered annual audited financial
statements) there has been no development or event which, individually or in
the aggregate, has had or could reasonably be expected to have a Material
Adverse Effect.

 

Section 3.3                                             Corporate
Existence; Compliance with Law.

 

The Borrower and each of the other Credit Parties (a) is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (b) has the requisite power and
authority and the legal right to own and operate all its material property, to
lease the material property it operates as lessee and to conduct the business
in which it is currently engaged, (c) is duly qualified to conduct
business and in good standing under the laws of (i) the jurisdiction of
its organization and (ii) each other jurisdiction where its ownership,
lease or operation of property or the conduct of its business requires such
qualification except to the extent that the failure to so qualify or be in good
standing could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect, (d) is in compliance with the Patriot Act
and (e) is in compliance with all other Requirements of Law, including,
without limitation, all federal and state securities laws, except to the extent
that the failure to comply therewith could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

 

Section 3.4                                             Corporate
Power; Authorization; Enforceable Obligations.

 

The Borrower and each of the other Credit Parties has
full power and authority and the legal right to make, deliver and perform the
Credit Documents to which it is party and has taken all necessary limited
liability company or corporate action to authorize the execution, delivery and
performance by it of the Credit Documents to which it is party. No consent or
authorization of, filing with, notice to or other act by or in respect of, any
Governmental Authority or any other Person is required in connection with the
borrowings hereunder or with the execution, delivery or performance of any
Credit Document by the Borrower or the other Credit Parties (other than those
which have

 

40

 

been obtained) or with the validity or enforceability
of any Credit Document against the Borrower or the other Credit Parties (except
such filings as are necessary in connection with the perfection of the Liens
created by such Credit Documents). Each Credit Document to which it is a party
has been duly executed and delivered on behalf of the Borrower or the other
Credit Parties, as the case may be. Each Credit Document to which it is a
party constitutes a legal, valid and binding obligation of the Borrower and
each of the other Credit Parties party thereto, as the case may be,
enforceable against the Borrower and such other Credit Party party thereto, as
the case may be, in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors’ rights generally and by
general equitable principles (whether enforcement is sought by proceedings in
equity or at law).

 

Section 3.5                                             No Legal
Bar; No Default.

 

The execution, delivery and performance of the Credit
Documents, the borrowings thereunder and the use of the proceeds of the Loans
will not violate any Requirement of Law or any Contractual Obligation of any
Credit Party (except those as to which waivers or consents have been obtained)
and will not result in, or require, the creation or imposition of any Lien on
any of their respective properties or revenues pursuant to any Requirement of
Law or Contractual Obligation other than the Liens arising under or
contemplated in connection with the Credit Documents. Neither the Borrower nor
any other Credit Party is in default under or with respect to any of its
Contractual Obligations in any respect which could reasonably be expected to
have a Material Adverse Effect. No Default or Event of Default has occurred and
is continuing.

 

Section 3.6                                             Permits.

 

Each of the Credit Parties has such certificates, permits,
licenses, franchises, consents, approvals, authorizations and clearances that
are material to the condition (financial or otherwise), business or operations
of the Credit Parties taken as a whole (“Permits”), and all such Permits
are valid and in full force and effect. Each of the Credit Parties is in
compliance in all material respects with its obligations under such Permits,
and no event has occurred that allows, or after notice or lapse of time would
allow, revocation or termination of such Permits.

 

Section 3.7                                             No
Material Litigation.

 

No litigation, investigation or proceeding of or
before any arbitrator or Governmental Authority is pending or, to the best
knowledge of the Credit Parties, threatened by or against any Credit Party or
any of its Subsidiaries or against any of such Credit Party’s or its
Subsidiaries’ respective properties or revenues which (a) challenges the enforceability
of the Credit Documents or any Extension of Credit, (b) seeks to enjoin
the Transactions or (c) if adversely determined, could reasonably be
expected to have a Material Adverse Effect.

 

Section 3.8                                             Investment
Company Act.

 

None of the Credit Parties is an “investment company”,
or a company “controlled” by an “investment company”, within the meaning of the
Investment Company Act of 1940, as amended. None of the Credit Parties is subject
to regulation under the Public Utility Holdings Company Act of 1935, as
amended, the Federal Power Act, the Interstate Commerce Act, or any federal or
state statute or regulation limiting its ability to incur the Credit Party
Obligations.

 

Section 3.9                                             Margin
Regulations.

 

No part of the proceeds of any Loan hereunder
will be used directly or indirectly for any purpose which violates, or which
would be inconsistent with, the provisions of Regulation T, U or X of the Board
of Governors of the Federal Reserve System as now and from time to time
hereafter in effect. The Credit Parties taken as a group do not own “margin
stock” except as identified in the financial statements referred to in Section 3.1,
and the aggregate value of all “margin stock” owned by the Borrower and its
Subsidiaries taken as a group does not exceed 25% of the value of their assets.

 

41

 

Section 3.10                                      ERISA.

 

Neither a Reportable Event nor an “accumulated funding
deficiency” (within the meaning of Section 412 of the Code or Section 302
of ERISA) has occurred during the five-year period prior to the date on which
this representation is made or deemed made with respect to any Plan, and each
Plan has complied in all material respects with the applicable provisions of
ERISA and the Code, except to the extent that any such occurrence or failure to
comply, when combined with other such occurrences or failures to comply, would
not reasonably be expected to have a Material Adverse Effect. No termination of
a Single Employer Plan has occurred resulting in any liability that has remained
underfunded, and no Lien in favor of the PBGC or a Plan has arisen, during such
five-year period which could reasonably be expected to have a Material Adverse
Effect. The present value of all accrued benefits under each Single Employer
Plan (based on those assumptions used to fund such Plans) did not, as of the
last annual valuation date prior to the date on which this representation is
made or deemed made, exceed the value of the assets of such Plan allocable to
such accrued benefits by an amount which, as determined in accordance with
GAAP, could reasonably be expected to have a Material Adverse Effect. Neither
the Borrower nor any Commonly Controlled Entity is currently subject to any
liability for a complete or partial withdrawal from a Multiemployer Plan which
could reasonably be expected to have a Material Adverse Effect.

 

Section 3.11                                      Environmental Matters.

 

Except as set forth on Schedule 3.11,
which matters, when considered either individually or in the aggregate, could
not be reasonably expected to have a Material Adverse Effect and, except as
otherwise could not reasonably be expected to have a Material Adverse Effect:

 

(a)                                  The
facilities and properties owned, leased or operated by the Borrower and the
other Credit Parties or any of their Subsidiaries (the “Properties”) do
not contain any Materials of Environmental Concern in amounts or concentrations
which (i) constitute a violation of, or (ii) could reasonably be
expected to give rise to liability under, any Environmental Law.

 

(b)                                 The
Properties and all operations of the Borrower and the other Credit Parties
and/or their Subsidiaries at the Properties (the “Business”) are in
compliance with all applicable Environmental Laws.

 

(c)                                  Neither
the Borrower nor any of the other Credit Parties has received any written
notice of violation, alleged violation, non-compliance with any Environmental
Law or liability or potential liability under any Environmental Laws with
regard to any of the Properties or the Business, nor does the Borrower, any of
the other Credit Parties or any of their Subsidiaries have knowledge or reason
to believe that any such notice is threatened.

 

(d)                                 Materials
of Environmental Concern have not been transported or disposed of from the
Properties in violation of, or in a manner or to a location which could give
rise to liability under any Environmental Law, nor have any Materials of Environmental
Concern been generated, treated, stored or disposed of at, on or under any of
the Properties in violation of, or in a manner that could give rise to
liability under, any applicable Environmental Law.

 

(e)                                  No
judicial proceeding or governmental or administrative action is pending or, to
the knowledge of the Borrower and the other Credit Parties, threatened, under
any Environmental Law to which any Credit Party or any Subsidiary is or will be
named as a party with respect to the Properties or the Business, nor are there
any consent decrees or other decrees, consent orders, administrative orders or
other orders, or other administrative or judicial requirements outstanding
under any Environmental Law with respect to the Properties or the Business.

 

(f)                                    There
has been no release or threat of release of Materials of Environmental Concern
at, on, under or from the Properties, or arising from or related to the
operations of any Credit Party or any Subsidiary in connection with the
Properties or otherwise in connection with the Business, in violation of or in
amounts or in a manner that could reasonably be expected to give rise to
liability under Environmental Laws.

 

42

 

Section 3.12                                      Purpose of Loans.

 

The proceeds of the Extensions of Credit shall be used
solely by the Borrower as follows:

 

(a)                                  with
respect to the Loans, (i) to refinance indebtedness under the Existing
Credit Agreement, (ii) for potential working capital adjustments in
connection with the Transactions and transactions relating thereto, (iii) to
pay fees and expenses owing to the Lenders and the Administrative Agent in
connection with this Agreement and (iv) to provide for the working capital
and general corporate purposes (including Permitted Acquisitions) of the
Borrower and its Subsidiaries; and

 

(b)                                 the
Letters of Credit shall be used only for or in connection with appeal bonds,
reimbursement obligations arising in connection with surety and reclamation
bonds, reinsurance, domestic or international trade transactions and
obligations not otherwise aforementioned relating to transactions entered into
by the applicable account party in the ordinary course of business.

 

Notwithstanding the foregoing, except as provided in
clause (a)(i) above, the proceeds of the Extensions of Credit may not
be used to finance the Transactions.

 

Section 3.13                                      Subsidiaries.

 

Set forth on Schedule 3.13 is a complete
and accurate list of all Subsidiaries of the Credit Parties. Information on
such Schedule includes jurisdiction of incorporation or organization; the
number of shares of each class of Capital Stock or other equity interests
outstanding; the number and percentage of outstanding shares of each class of
Capital Stock; and the number and effect, if exercised, of all outstanding
options, warrants, rights of conversion or purchase and similar rights. The
outstanding Capital Stock and other equity interests of all such Subsidiaries
is validly issued, fully paid and non-assessable and is owned, free and clear
of all Liens (other than those arising under or contemplated in connection with
the Credit Documents).

 

Section 3.14                                      Ownership.

 

Each Credit Party and its Subsidiaries is the owner
of, and has good and marketable title to, all of the respective material assets
owned by it and a valid leasehold interest in all assets leased by it and none
of such assets is subject to any Lien other than Permitted Liens.

 

Section 3.15                                      Indebtedness.

 

Except as otherwise permitted under Section 6.1,
the Parent and its Subsidiaries have no Indebtedness.

 

Section 3.16                                      Taxes.

 

Each of the Credit Parties and their Subsidiaries has (a) timely
filed or caused to be timely filed all material federal, state, local and
foreign Tax Returns or materials required to have been filed by it and all such
Tax Returns are true and correct in all material respects and (b) duly and
timely paid, collected or remitted or caused to be duly and timely paid,
collected or remitted all Taxes (whether or not shown on any Tax Return) due
and payable, collectible or remittable by it and all assessments received by
it, except Taxes (i) that are being contested in good faith by appropriate
proceedings and for which adequate reserves are being maintained in accordance
with GAAP and (ii) which could not, individually or in the aggregate, have
a Material Adverse Effect. Each of the Credit Parties and their Subsidiaries
has made adequate provision in accordance with GAAP for all Taxes not yet due
and payable. Each of the Credit Parties and their Subsidiaries is unaware of
any proposed or pending tax assessments, deficiencies or audits that could be
reasonably expected to, individually or in the aggregate, result in a Material
Adverse Effect. No Credit Party or Subsidiary has ever been a party to any
understanding or arrangement constituting a “tax shelter” within the meaning of
Section 6111(c), Section 6111(d) or Section 6662(d)(2)(C)(iii) of
the Code, or has ever “participated” in a “reportable transaction” within the
meaning of Treasury Regulation Section 1.6011-4, except as could not be
reasonably expected to, individually or in the aggregate, result in a Material
Adverse Effect.

 

43

 

Section 3.17                                      Intellectual
Property.

 

Each of the Credit Parties and their Subsidiaries
owns, or has the legal right to use, all Intellectual Property, technology,
know-how and processes necessary for each of them to conduct its business as
currently conducted. Set forth on Schedule 3.17 is a list of all
Copyrights, Registrations for or applications to register Trademarks and
Patents, and all material Copyright Licenses, Trademark Licenses and Patent
Licenses, owned by each of the Credit Parties and its Subsidiaries or that the
Credit Parties or any of their Subsidiaries has the right to use. Except as
provided on Schedule 3.17, no claim has been asserted and is
pending by any Person challenging or questioning the use of any such Intellectual
Property or the validity or effectiveness of any such Intellectual Property,
nor do the Credit Parties or any of their Subsidiaries know of any such claim,
and, to the knowledge of the Credit Parties and their Subsidiaries, the use of
such Intellectual Property by the Credit Parties or any of their Subsidiaries
does not infringe on the rights of any Person, except for such claims and
infringements that, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect. Schedule 3.17 may be
updated from time to time by the Credit Parties to include new Copyrights,
Registrations for or applications to register Trademarks and Patents, and
material Copyright Licenses, Trademark Licenses and Patent Licenses by giving
written notice thereof to the Administrative Agent.

 

Section 3.18                                      Solvency.

 

The fair saleable value of all of the Credit Parties’
assets, measured on a going concern basis, exceeds all probable liabilities of
the Credit Parties, including those to be incurred pursuant to this Agreement. None
of the Credit Parties (a) has unreasonably small capital in relation to
the business in which it is or proposes to be engaged or (b) has incurred,
or believes that it will incur after giving effect to the transactions
contemplated by this Agreement, debts beyond its ability to pay such debts as
they become due.

 

Section 3.19                                      Investments.

 

All investments of each of the Credit Parties and
their Subsidiaries are Permitted Investments.

 

Section 3.20                                      Location of
Collateral.

 

Set forth on Schedule 3.20(a) is a
list of the Properties of the Credit Parties and their Subsidiaries as of the
Closing Date with street address, county and state where located and an
indication as to whether such Properties are leased or owned. Set forth on Schedule 3.20(b) is
a list of all locations where any tangible personal property of the Credit
Parties and their Subsidiaries is located as of the Closing Date, including
county and state where located. Set forth on Schedule 3.20(c) is
the chief executive office and principal place of business of each of the
Credit Parties and their Subsidiaries as of the Closing Date.

 

Section 3.21                                      No Burdensome
Restrictions.

 

Except for the Notes Documents, neither the Parent nor
any of its Subsidiaries is a party to any agreement or instrument or subject to
any other obligation or any charter or corporate restriction or any provision of
any applicable law, rule or regulation which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.

 

Section 3.22                                      Brokers’ Fees.

 

Except as set forth on Schedule 3.22,
neither the Parent nor any of its Subsidiaries has any obligation to any Person
in respect of any finder’s, broker’s, investment banking or other similar fee
in connection with any of the transactions contemplated under the Credit
Documents other than the closing and other fees payable pursuant to this
Agreement.

 

44

 

Section 3.23                                      Labor Matters.

 

There are no collective bargaining agreements or
Multiemployer Plans covering the employees of the Credit Parties or any of
their Subsidiaries as of the Closing Date, other than as set forth in Schedule 3.23
hereto, and none of the Credit Parties or any of their Subsidiaries (i) has
suffered any strikes, walkouts, work stoppages or other material labor
difficulty within the last five years, other than as set forth in Schedule 3.23
hereto or (ii) has knowledge of any potential or pending strike, walkout
or work stoppage.

 

Section 3.24                                      Security
Documents.

 

The Security Documents create valid security interests
in, and Liens on, the Collateral purported to be covered thereby, which
security interests and Liens are currently (or will be, upon the Administrative
Agent obtaining control over those items of Collateral that are perfected
through control, filing of appropriate financing statements, the filing of
appropriate notices with the United States Patent and Trademark Office and the
United States Copyright Office and the recordation of the applicable Mortgage
Instruments in each case in favor of the Administrative Agent on behalf of the
Secured Parties) perfected First Priority security interests and Liens. Except
for filings in favor of the Administrative Agent and filings in connection with
Permitted Liens, (a) no effective Uniform Commercial Code financing
statement, fixture filing or other instrument similar in effect covering all or
any part of the Collateral is on file in any filing or recording office
and (b) no effective filing covering all or any part of the
Intellectual Property is on file in the United States Patent and Trademark
Office or the United States Copyright Office.

 

Section 3.25                                      Accuracy and
Completeness of Information.

 

All factual information heretofore, contemporaneously
or hereafter furnished by or on behalf of any Credit Party or any of its
Subsidiaries to the Administrative Agent or any Lender for purposes of or in
connection with this Agreement or any other Credit Document, or any transaction
contemplated hereby or thereby including, without limitation, the Transactions,
is or will be true and accurate in all material respects and not incomplete by
omitting to state any material fact necessary to make such information not
misleading in light of the circumstances under which they were made. There is
no fact now known to the Borrower, any other Credit Party or any of its
Subsidiaries which has, or could reasonably be expected to have, a Material
Adverse Effect which fact has not been set forth herein, in the financial
statements of the Borrower and its Subsidiaries furnished to the Administrative
Agent and/or the Lenders, or in any certificate, opinion or other written
statement made or furnished by any Credit Party to the Administrative Agent
and/or the Lenders.

 

Section 3.26                                      [Intentionally
Omitted].

 

Section 3.27                                      Material
Contracts.

 

Schedule 3.27 hereto lists the
following contracts or other agreements to which any of the Credit Parties is a
party as of the date hereof:

 

(a)                                  any
agreement, contract or commitment relating to capital expenditures in excess of
$250,000;

 

(b)                                 any
service, consulting, employment or any similar type of contract which provides
for the payment of $250,000 or more and is not cancelable without penalty
within 90 days;

 

(c)                                  any
distribution agreement or copyright license agreement which provides for the
payment or receipt of $250,000 or more and is not cancelable without penalty
within 90 days;

 

(d)                                 any
agreement (or group of related agreements) in respect of the creation,
incurrence or assumption of any Indebtedness for borrowed money or any
guarantee in respect of any Indebtedness or obligation of any Person (other
than the endorsement of negotiable instruments for collection in the ordinary
course of business);

 

45

 

(e)                                  any
loan or advance to, or investment in, any Person, or any agreement, contract or
commitment relating to the making of any such loan, advance or investment;

 

(f)                                    any
agreement (or group of related agreements) for the lease of personal property
to or from any Person providing for lease payments in excess of $250,000;

 

(g)                                 any
agreement (or group of related agreements) for the purchase or sale of raw
materials, supplies, products or other personal property, or for the furnishing
or receipt of services, the performance of which will extend over a period of
more than one year, result in a material loss to any Credit Party, or involve
consideration in excess of $250,000 and is not cancelable without penalty
within 90 days;

 

(h)                                 any
agreement concerning a partnership or joint venture;

 

(i)                                     any
Capital Lease Obligations in excess of $250,000 or under which a security
interest has been imposed on any of the assets or properties of any Credit
Party;

 

(j)                                     any
agreement concerning non-competition;

 

(k)                                  any
agreement under which the consequences of a default or termination could
reasonably be expected to have a Material Adverse Effect;

 

(l)                                     any
agreement, contract or commitment (or group of related agreements, contracts or
commitments) which involves $250,000 or more and is not cancelable without penalty
within 90 days; or

 

(m)                               any
collective bargaining agreements.

 

Except as set forth on Schedule 3.27, the
Credit Parties have delivered to the Administrative Agent for its review a
correct and complete copy of each written agreement listed in Schedule 3.27
(as amended to date) and a written summary setting forth the terms and
conditions of each oral agreement referred to in such Schedule. Except as set
forth on Schedule 3.27, each contract or agreement set forth on or
referred to in Schedule 3.27 is in full force and effect and no
Credit Party has violated in any material respect any such contract, commitment
or agreement and, to the knowledge of the Credit Parties, all the material
covenants to be performed by any other party under such contract, commitment or
agreement have been performed in all material respects. Any agreement, contract
or commitment made in the ordinary course of business, consistent with past
practice, involving an obligation or commitment on the part of any of the
Credit Parties of less than $250,000 shall be deemed not to be material for
purposes of this Section 3.27 and shall not be required to be disclosed on
Schedule 3.27.

 

Section 3.28                                      Insurance.

 

The present insurance coverage of the Credit Parties
and their Subsidiaries is outlined as to carrier, policy number, expiration
date, type and amount on Schedule 3.28 and such insurance coverage
complies with the requirements set forth in Section 5.5(b).

 

Section 3.29                                      Tax Regulations.

 

The Borrower does not intend to treat the Loans and
the Letters of Credit and related transactions as being a “reportable transaction”
(within the meaning of Treasury Regulation Section 1.6011-4). In the event
the Borrower determines to take any action inconsistent with such intention, it
will promptly notify the Administrative Agent thereof. If the Borrower so
notifies the Administrative Agent, the Borrower acknowledges that one or more
of the Lenders may treat its Loans, Letters of Credit and Participation
Interests in Swingline Loans and Letters of Credit as part of a
transaction that is subject to Treasury Regulation Section 301.6112-1, and
such Lender or Lenders, as applicable, will maintain the lists and other
records required by such Treasury Regulation.

 

46

 

Section 3.30                                      Capitalization of
the Borrower.

 

As of the Closing Date, the capitalization of the
Borrower shall be 10 common shares issued and outstanding. All outstanding
shares of the Borrower have been duly authorized by all necessary corporate
action. All outstanding shares of the Borrower are validly issued and shall be
free and clear of all Liens, and the issuance of the outstanding shares has not
been or will not be, as the case may be, subject to preemptive rights in
favor of any Person and will not result in the issuance of any additional
shares of the Borrower or the triggering of any antidilution or similar rights
contained in any options, warrants, debentures or other securities or agreements
of the Borrower.

 

Section 3.31                                      Location of
Material Inventory.

 

Schedule 3.31 sets forth all
locations in the United States where the aggregate value of Inventory owned by
the Borrowing Base Parties exceeds $500,000.

 

Section 3.32                                      Anti-Terrorism
Law.

 

No Credit Party and, to the knowledge of each Credit
Party, none of its Affiliates is in violation of any Requirement of Law relating
to terrorism or money laundering (“Anti-Terrorism Laws”), including
Executive Order No. 13224 on Terrorist Financing, effective September 24,
2001 (the “Executive Order”), and the Uniting and Strengthening America
by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act
of 2001, Public Law 107-56.

 

No Credit Party and to
the knowledge of the Credit Parties, no Affiliate or broker or other agent of
any Credit Party acting or benefiting in any capacity in connection with the
Loans is any of the following:

 

(i)                  a person that is
listed in the annex to, or is otherwise subject to the provisions of, the Executive
Order;

 

(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, the Executive Order;

 

(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 the
Executive Order; or

 

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

 

Section 3.33                                      Accuracy of
Borrowing Base.

 

At the time any Borrowing Base Certificate is
delivered pursuant to this Agreement, each Account and each item of Inventory
included in the calculation of the Borrowing Base is an Eligible Account and an
item of Eligible Inventory, respectively.

 

Section 3.34                                      Liens Unimpaired.

 

After giving effect to this Agreement and the Mortgage
Amendments, neither the modification of the Existing Credit Agreement effected
pursuant to this Agreement nor the execution, delivery, performance or effectiveness
of this Agreement

 

47

 

(a)                                  impairs
the validity, effectiveness or priority of the Liens granted pursuant to any
Loan Document (as such term is defined in the Existing Credit Agreement), and
such Liens continue unimpaired with the same priority to secure repayment of
all Obligations, whether heretofore or hereafter incurred; or

 

(b)                                 requires
that any new filings be made or other action taken to perfect or to maintain
the perfection of such Liens.

 

ARTICLE IV

 

CONDITIONS PRECEDENT

 

Section 4.1                                             Conditions
to Closing Date and Initial Revolving Loans.

 

This Agreement shall become effective upon, and the
obligation of the Lenders to make the initial Revolving Loans on the Closing
Date is subject to, the satisfaction of the following conditions precedent:

 

(a)                                  Execution
of Agreement. The Administrative Agent shall have received (i) counterparts
of this Agreement from each of the Credit Parties, the Administrative Agent and
the Lenders, (ii) for the account of each Revolving Lender, a Revolving
Note, (iii) for the account of the Swingline Lender, the Swingline Note,
and (iv) counterparts of the Security Agreement, the Pledge Agreement, the
Mortgage Instruments and any of the other Security Documents from the Credit
Parties and the Administrative Agent, in each case conforming to the
requirements of this Agreement and executed by a duly authorized officer of
each party thereto.

 

(b)                                 Authority
Documents. The Administrative Agent shall have received the following:

 

(i)                  Articles of
Incorporation. Copies of the articles of incorporation or other charter
documents, as applicable, of each Credit Party certified to be true and
complete as of a recent date by the appropriate Governmental Authority of the
state of its incorporation and by an officer of such Credit Party as of the
Closing Date.

 

(ii)               Resolutions.
Copies of resolutions of the board of directors or comparable managing body of
each Credit Party approving and adopting the Credit Documents, the transactions
contemplated therein and authorizing execution and delivery thereof, certified
by an officer of such Credit Party as of the Closing Date to be true and
correct and in force and effect as of such date.

 

(iii)            Bylaws. A copy
of the bylaws or comparable operating agreement of each Credit Party certified
by an officer of such Credit Party as of the Closing Date to be true and correct
and in force and effect as of such date.

 

(iv)           Good Standing. Copies
of (A) certificates of good standing, existence or its equivalent with
respect to the each Credit Party certified as of a recent date by the
appropriate Governmental Authorities of its state of organization and each
other state in which the failure to so qualify and be in good standing could
reasonably be expected to have a Material Adverse Effect on the business or
operations of the Borrower and its Subsidiaries in such state and (B) a
certificate indicating payment of all corporate franchise taxes certified as of
a recent date by the appropriate governmental taxing authorities.

 

(v)              Incumbency. An
incumbency certificate of each Credit Party certified by-an officer
of such Credit Party as of the Closing Date to be true and correct.

 

Each
officer’s certificate delivered pursuant to this Section 4.1(b) shall
be substantially in the form of Schedule 4.1(b) hereto.

 

48

 

(c)                                  Legal
Opinions of Counsel. The Administrative Agent shall have received an
opinion or opinions of counsel for the Credit Parties, dated the Closing Date
and addressed to the Administrative Agent and the Lenders, in form and
substance acceptable to the Administrative Agent (which shall include, without
limitation, opinions with respect to the due organization and valid existence
of each Credit Party and opinions as to perfection of the Liens granted to the
Administrative Agent pursuant to the Security Documents).

 

(d)                                 Personal
Property Collateral. The Administrative Agent shall have received, in form and
substance satisfactory to the Administrative Agent:

 

(i)                  the Subordinated
Intercompany Notes executed by and among the Borrower and each of its
Subsidiaries, accompanied by instruments of transfer undated and endorsed in
blank;

 

(ii)               searches of Uniform Commercial
Code filings, tax and judgment liens in the jurisdiction of the chief executive
office and the jurisdiction of incorporation or formation of each Credit Party
and each jurisdiction where any portion of Collateral with a value of $500,000
or more is located or where a filing would need to be made in order to perfect
the Administrative Agent’s Liens, searches in the United States Patent and
Trademark Office and United States Copyright Office, and security interests in
the Collateral, copies of the financing statements on file in such
jurisdictions and evidence that no Liens exist other than Permitted Liens;

 

(iii)            completed UCC
financing statements (including the federal tax identification number of each
Credit Party to the extent required) for each appropriate jurisdiction as is
necessary, in the Administrative Agent’s sole discretion, to perfect the
Administrative Agent’s Liens and security interests in the Collateral;

 

(iv)           duly executed consents
as are necessary, in the Administrative Agent’s sole discretion, to perfect the
Administrative Agent’s Liens and security interests in the Collateral;

 

(v)              in the case of any
personal property Collateral located at premises leased by a Credit Party, such
estoppel letters, consents and waivers from the landlords for such premises as may be
required by the Administrative Agent and as such Credit Party may be able
to procure using its commercially reasonable efforts; provided that, if
such Credit Party is not able to procure such letters, consents, or waivers
using its commercially reasonable efforts, it shall promptly so notify the
Administrative Agent;

 

(vi)           evidence of any other
filings, recordations, pay-off letters, satisfactions of judgments, control
agreements, instruments necessary to perfect the Administrative Agent’s
security interest in any Chattel Paper and Instruments of each Credit Party, or
other documents or actions that are, in the Administrative Agent’s reasonable
opinion, necessary for the purpose of perfecting the Administrative Agent’s
Liens and security interests in the Collateral; and

 

(vii)        a Control Agreement
executed by the applicable Credit Party and the applicable depository
institution or securities intermediary, which such Control Agreement shall be
in form and substance satisfactory to the Administrative Agent, and, to
the extent the applicable depository institution or securities intermediary
refuses to execute an acceptable Control Agreement as required by this clause
(vii), the Credit Parties shall take such other actions with respect to such
deposit or securities account as the Administrative Agent may reasonably
require.

 

(e)                                  Real
Property Collateral and Leased Real Property. The Administrative Agent
shall have received, in form and substance satisfactory to the
Administrative Agent and the Lenders:

 

(i)                  with respect to (A) each
Mortgage Instrument encumbering each Mortgaged Property listed in Schedule 3.20(a) owned
by the Borrower on the closing date of the Existing Credit Agreement, a
Mortgage Amendment thereto substantially in the form of

 

49

 

Schedule 4.1(e)(i)(A) (each,
a “Mortgage Amendment”) and with respect to (B) the Mortgaged
Property located at 888 North Keyser
Avenue, Scranton, Pennsylvania, a Mortgage Instrument substantially in
the form of Schedule 4.1(e)(i)(B), in each case duly executed
and acknowledged by the applicable Credit Party, and otherwise in form for
recording in the recording office where each such Mortgage Instrument shall be
recorded, together with such certificates, affidavits, questionnaires or
returns as shall be required in connection with the recording or filing thereof
under applicable law, all of which shall be in form and substance reasonably
satisfactory to the Administrative Agent;

 

(ii)               with respect to (A) each
Mortgaged Property owned by the Borrower on the closing date of the Existing
Credit Agreement, a copy of the Mortgage Policy relating to the Mortgage
Instrument encumbering such Mortgaged Property and an endorsement with respect
thereto (each, an “Amended Mortgage Policy”) assuring the Administrative
Agent that the Mortgage Instrument, as amended by the Mortgage Amendment, is a
valid and enforceable First Priority Lien on such Mortgaged Property in favor
of the Administrative Agent for the benefit of the Secured Parties free and
clear of all defects and encumbrances and liens except Permitted Liens, and
such Amended Mortgage Policy shall otherwise be in form and substance reasonably
satisfactory to the Administrative Agent and (B) the Mortgaged Property
located at 888 North Keyser Avenue,
Scranton, Pennsylvania, a Mortgage Policy relating to the Mortgage
Instrument encumbering such Mortgaged Property assuring the Administrative
Agent that the Mortgage Instrument is a valid and enforceable First Priority
Lien on such Mortgaged Property in favor of the Administrative Agent for the
benefit of the Secured Parties free and clear of all defects and encumbrances
and liens except Permitted Liens, and such Mortgage Policy shall otherwise be
in form and substance reasonably satisfactory to the Administrative Agent;
and

 

(iii)            evidence as to (A) whether
any such Mortgaged Property listed in Schedule 3.20(a) is in
an area designated by the Federal Emergency Management Agency as having special
flood or mud slide hazards (a “Flood Hazard Property”) and (B) if
any such Mortgaged Property is a Flood Hazard Property, (1) whether the
community in which such Mortgaged Property is located is participating in the
National Flood Insurance Program, (2) the applicable Credit Party’s
written acknowledgment of receipt of written notification from the
Administrative Agent (x) as to the fact that such Mortgaged Property is a Flood
Hazard Property and (y) as to whether the community in which each such Flood
Hazard Property is located is participating in the National Flood Insurance
Program and (z) copies of insurance policies or certificates of insurance of
the Credit Parties evidencing flood insurance reasonably satisfactory to the
Administrative Agent and naming the Administrative Agent as sole loss payee on
behalf of the Secured Parties;

 

(iv)           with respect to each of
the Mortgaged Properties listed in Schedule 3.20(a), an opinion of
counsel to the Credit Parties for the jurisdiction in which such Mortgaged
Property is located, dated the Closing Date and addressed to the Administrative
Agent and the Lenders, in form and substance acceptable to the
Administrative Agent.

 

(f)                                    Liability,
Casualty and Business Interruption Insurance. The Administrative Agent
shall have received copies of insurance policies or certificates of insurance
evidencing liability, casualty and business interruption insurance meeting the
requirements set forth herein or in the Security Documents. The Administrative
Agent shall be named as loss payee and additional insured on all such insurance
policies for the benefit of the Lenders.

 

(g)                                 Fees.
The Administrative Agent and the Lenders shall have received all fees, if any,
owing pursuant to the Fee Letter and Section 2.4.

 

(h)                                 Solvency
Certificate. The Administrative Agent shall have received an officer’s
certificate for the Credit Parties prepared by the chief financial officer of
the Borrower as to the solvency of the Credit Parties on a consolidated basis
after giving effect to the Acquisition and the initial borrowings under the
Credit Documents, in substantially the form of Schedule 4.1(h) hereto.

 

50

 

(i)                                     Officer’s
Certificate. The Administrative Agent shall have received an officer’s
certificate for the Borrower prepared by the chief financial officer of the
Borrower certifying and demonstrating that, after giving effect to the initial
Extensions of Credit to be made on the Closing Date and all other transactions
to occur on the Closing Date, the Credit Parties are in compliance with each of
the financial covenant set forth in Section 5.9 on a pro forma basis.

 

(j)                                     Patriot
Act Certificate. The Administrative Agent shall have received a certificate
satisfactory thereto, for benefit of itself and the Lenders, provided by the
Borrower that sets forth information required by the Patriot Act including,
without limitation, the identity of the Borrower, the name and address of the
Borrower and other information that will allow the Administrative Agent or any
Lender, as applicable, to identify the Borrower in accordance with the Patriot
Act.

 

(k)                                  Account
Designation Letter. The Administrative Agent shall have received the
executed Account Designation Letter in the form of Schedule 1.1(a) hereto.

 

(l)                                     Consents.
The Administrative Agent shall have received evidence that all material governmental,
board of director, shareholder and third party consents and approvals necessary
in connection with the financings and other transactions contemplated hereby
have been obtained and all applicable waiting periods have expired without any
action being taken by any authority that could restrain, prevent or impose any
material adverse conditions on such transactions or that could seek or threaten
any of such transactions.

 

(m)                               Bankruptcy.
There shall be no bankruptcy or insolvency proceedings with respect to the
Borrower or any of its Subsidiaries.

 

(n)                                 Material
Adverse Effect. No Material Adverse Effect shall have occurred or shall
result from the initial Extensions of Credit hereunder or the consummation of
the transactions contemplated hereunder to occur on the Closing Date.

 

(o)                                 Financial
Statements. The Administrative Agent shall have received copies of the
financial statements and information referenced in Section 3.1 hereof,
each in form and substance satisfactory to it.

 

(p)                                 Termination
of Existing Indebtedness. All existing Indebtedness for borrowed money of
the Borrower or any of its Subsidiaries (other than the Indebtedness listed on Schedule 6.1(b))
shall have been repaid in full and terminated and all Liens relating thereto
shall have been terminated.

 

(q)                                 Officer’s
Certificates. The Administrative Agent shall have received a certificate executed
by a responsible officer of the Borrower as of the Closing Date stating that (i) there
does not exist any pending or threatened litigation or investigation,
bankruptcy or insolvency, injunction, order or claim with respect to the
Borrower or any of its Subsidiaries (A) related to this Agreement or any
other Credit Document or (B) that could reasonably be expected to result
in a Material Adverse Effect, that has not been settled, dismissed, vacated,
discharged or terminated prior to the Closing Date, and (ii) immediately
after giving effect to this Agreement, the other Credit Documents and all the
transactions contemplated therein to occur on such date, (A) no Default or
Event of Default exists and (B) all representations and warranties
contained herein and in the other Credit Documents are true and correct.

 

(r)                                    Borrowing
Base Certificate and Minimum Excess Availability. A Borrowing Base
Certificate, dated as of the Closing Date, which Borrowing Base Certificate
shall evidence Excess Availability of no less than $32.0 million after giving
effect to the initial funding of Loans on the Closing Date and the consummation
of the Transactions.

 

(s)                                  Original
Closing Date. The obligation of each Lender and, if applicable, each
Issuing Bank to fund the initial Credit Extension requested to be made by it on
the closing date of the Existing

 

51

 

Credit Agreement
was subject to the satisfaction of all of the conditions precedent set forth in
Section 4.1 of the Existing Credit Agreement.

 

(t)                                    Equity
Contribution; Consummation of Notes Offerings. (i) The Equity
Contribution shall have been made and (ii) the offerings of the Senior
Floating Rate Notes and the Senior Notes shall have been consummated in
accordance with the terms of the Notes Documents and resulted in gross proceeds
of at least $215.0 million and onloaned by the Borrower to the Purchasers.

 

(u)                                 No
Amendment of Securities Purchase Agreement; Consummation of Transactions. The
Securities Purchase Agreement shall not have been amended or modified in any
material respect or any material condition therein waived without the prior
written consent of Wachovia and the Lenders (except for any amendment or
modification pursuant to and in accordance with Section 6.13 of the
Securities Purchase Agreement that is not, in the sole judgment of Wachovia,
adverse to the Lenders). The Transactions shall have been consummated in all
material respects in accordance with the terms of the Securities Purchase
Agreement and in compliance with Requirements of Law and regulatory approvals.

 

(v)                                 Minimum
Adjusted EBITDA. The Administrative Agent shall be reasonably satisfied
that, after giving pro forma effect to the Acquisition, the total Revolving
Exposures, if any, under this Agreement on the Closing Date, the Senior
Floating Rate Notes and the Senior Notes, and the consummation of the other
elements of the Transactions, the Adjusted EBITDA of the Borrower and its
consolidated Subsidiaries (calculated on a basis consistent with the
calculation of “Adjusted EBITDA” in Figure 58 of the Target’s Confidential
Information Memorandum dated November 12, 2004, which is attached hereto
as Schedule 4.1(v)) for the twelve (12) month period ending on
the last day of the month ending at least eight business days immediately
preceding the Closing Date shall be not less than $39.0 million.

 

(w)                               Additional
Matters. All other documents and legal matters in connection with the
Closing Date and the obligation of the Lenders to make the initial Revolving
Loans under this Agreement shall be reasonably satisfactory in form and
substance to the Administrative Agent and its counsel.

 

Section 4.2                                             Conditions
to All Extensions of Credit.

 

The obligation of each Lender to make any Extension of
Credit hereunder is subject to the satisfaction of the following conditions
precedent on the date of making such Extension of Credit:

 

(a)                                  Representations
and Warranties. The representations and warranties made by the Credit
Parties herein (other than, with respect to the Closing Date, Section 3.2),
in the Security Documents or which are contained in any certificate furnished
at any time under or in connection herewith shall be true and correct in all
material respects (except for those representations and warranties that are
already qualified by materiality, in which case such representations and
warranties will be correct in all respects as set forth herein) on and as of
the date of such Extension of Credit as if made on and as of such date, unless
expressly stated to relate to a specific date, in which case such
representations and warranties shall be true in correct in all material
respects as of such specific date.

 

(b)                                 No
Default or Event of Default. No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to the Extension
of Credit to be made on such date unless such Default or Event of Default shall
have been waived in accordance with this Agreement.

 

(c)                                  Compliance
with Commitments. Immediately after giving effect to the making of any such
Extension of Credit (and the application of the proceeds thereof), (i) the
total Revolving Exposures shall not exceed the lesser of (A) the total
Revolving Commitments and (B) the Borrowing Base then in effect, (ii) the
outstanding LOC Obligations shall not exceed the LOC Committed Amount and (iii) the
outstanding Swingline Loans shall not exceed the Swingline Committed Amount.

 

(d)                                 Additional
Conditions to Revolving Loans. If a Revolving Loan is requested, all
conditions set forth in Section 2.1 shall have been satisfied.

 

52

 

(e)                                  Additional
Conditions to Letters of Credit. If the issuance of a Letter of Credit is
requested, all conditions set forth in Section 2.2 shall have been
satisfied.

 

(f)                                    Additional
Conditions to Swingline Loans. If a Swingline Loan is requested, all
conditions set forth in Section 2.3 shall have been satisfied.

 

Each request for an Extension of Credit and each
acceptance by the Borrower of any such Extension of Credit shall be deemed to
constitute representations and warranties by the Borrower as of the date of
such Extension of Credit that the applicable conditions in paragraphs (a) through
(f) of this Section have been satisfied.

 

ARTICLE V

 

AFFIRMATIVE COVENANTS

 

The Credit Parties hereby covenant and agree that on
the Closing Date, and thereafter for so long as this Agreement is in effect and
until the Commitments have terminated, no Note remains outstanding and unpaid
and the Credit Party Obligations (other than contingent indemnity obligations),
together with interest, Commitment Fee and all other amounts owing to the
Administrative Agent or any Lender hereunder, are paid in full, the Credit
Parties shall, and shall cause each of their Subsidiaries (other than in the
case of Section 5.1, 5.2 or 5.7 hereof), to:

 

Section 5.1                                             Financial
Statements.

 

Furnish to the Administrative Agent and each of the
Lenders:

 

(a)                                  Annual
Financial Statements. As soon as available, but in any event within the
time period after the end of each fiscal year of the Borrower that would have
been required of the Borrower under Form 10-K had the Borrower been
subject to such requirements (which, for the year ending December 31,
2005, is expected to be March 31, 2006), a copy of the consolidated
balance sheet of the Borrower and its consolidated Subsidiaries as at the end
of such fiscal year and the related consolidated and consolidating statements
of income and retained earnings and of cash flows of the Borrower and its
consolidated Subsidiaries for such year which, other than in the case of the
consolidating statements, shall be audited by a firm of independent certified
public accountants of nationally recognized standing reasonably acceptable to
the Administrative Agent, setting forth in each case in comparative form the
figures for the previous year, reported on without a “going concern” or like
qualification or exception, or qualification indicating that the scope of the
audit was inadequate to permit such independent certified public accountants to
certify such financial statements without such qualification; provided
that the filing by the Borrower of Form 10-K that complies with the
requirements for such form with the Securities and Exchange Commission
shall satisfy the requirements of the foregoing paragraph;

 

(b)                                 Quarterly
Financial Statements. As soon as available and in any event within the time
period after the end of the first three fiscal quarters in each fiscal year of
the Borrower that would have been required of the Borrower under Form 10-Q
had the Borrower been subject to such requirements (which, for the quarters
ending March 31, June 30 and September 30, 2006, are expected to
be May 15, August 14 and November 14, 2006, respectively), a
copy of the consolidated balance sheet of the Borrower and its consolidated
Subsidiaries as at the end of such period and related consolidated and
consolidating statements of income and retained earnings and of cash flows for
the Borrower and its consolidated Subsidiaries for such quarterly period and
for the portion of the fiscal year ending with such period, in each case
setting forth in comparative form consolidated figures for the
corresponding period or periods of the preceding fiscal year (subject to normal
recurring year-end audit adjustments) and which statements shall reflect the
adjustment from the standard cost value to the actual value of the inventory of
the Borrower and its consolidated Subsidiaries for such quarterly period; provided
that the filing by the Borrower of Form 10-Q that complies with the
requirements for such form with the Securities and Exchange Commission
shall satisfy the requirements of the foregoing paragraph;

 

53

 

(c)                                  Monthly
Financial Statements. As soon as available and in any event within thirty
(30) days after the end of each calendar month (other than the last month of
each fiscal quarter), a company-prepared consolidated and consolidating balance
sheet of the Borrower and its consolidated Subsidiaries as at the end of such
period and related company-prepared statements of income and retained earnings
and of cash flows for the Borrower and its consolidated Subsidiaries for such
monthly period and for the portion of the fiscal year ending with such period,
in each case setting forth in comparative form consolidated figures for
the corresponding period or periods of the preceding fiscal year (subject to
normal recurring year-end audit adjustments) and which statements shall reflect
the adjustment from the standard cost value to the actual value of the
inventory of the Borrower and its consolidated Subsidiaries for such monthly
period; and

 

(d)                                 Annual
Operating Budget and Cash Flow Projections. As soon as available, but in
any event concurrently with the delivery of financial statements pursuant to Section 5.1(a),
a copy of the detailed annual operating budget or plan including cash flow
projections of the Borrower and its Subsidiaries for the next four fiscal
quarter period prepared on a quarterly basis, in form and detail
reasonably acceptable to the Administrative Agent and the Lenders, together
with a summary of the material assumptions made in the preparation of such annual
budget or plan;

 

all such financial statements to be complete and
correct in all material respects (subject, in the case of interim statements,
to normal recurring year-end audit adjustments and absence of footnotes) and to
be prepared in reasonable detail and, in the case of the annual and quarterly
financial statements provided in accordance with subsections (a) and (b) above,
in accordance with GAAP applied consistently throughout the periods reflected
therein and further accompanied by a description of, and an estimation of the
effect on the financial statements on account of, a change, if any, in the application
of accounting principles as provided in Section 1.3.

 

Section 5.2                                             Certificates;
Other Information.

 

Furnish to the Administrative Agent and each of the
Lenders:

 

(a)                                  concurrently
with the delivery of the financial statements referred to in Section 5.1(a) above,
a certificate of the independent certified public accountants reporting on such
financial statements stating that in making the examination necessary therefor
no knowledge was obtained of any Default or Event of Default, except as
specified in such certificate;

 

(b)                                 concurrently
with the delivery of the financial statements referred to in Sections 5.1(a) and
5.1(b) above, a certificate of a Responsible Officer, substantially in the
form of Schedule 5.2(b), (i) stating that, to the best of
such Responsible Officer’s knowledge, each of the Credit Parties during such period
observed or performed in all material respects all of its covenants and other
agreements, and satisfied in all material respects every condition, contained
in this Agreement to be observed, performed or satisfied by it, (ii) stating
that such Responsible Officer has obtained no knowledge of any Default or Event
of Default except as specified in such certificate, (iii) including the
calculations in reasonable detail required to indicate compliance with Section 5.9
as of the last day of such period, (iv) stating that the financial
information provided has been prepared in accordance with GAAP applied
consistently for the periods related thereto, and (v) stating that, during
such period, there have been no material changes in accounting policies as
required by GAAP or otherwise unless indicated on such certificate or in the
financial statements and accompanying notes;

 

(c)                                  promptly
upon receipt thereof, a copy of any other report or “management letter” submitted
by independent accountants to the Borrower or any of its Subsidiaries in
connection with any annual, interim or special audit of the books of such
Person;

 

(d)                                 concurrently
with the delivery of the financial statements referred to in Sections 5.1(a) and
5.1(b) above, a management report (i) describing the operations and
financial condition of the Credit Parties for the quarter then ended and the
portion of the current fiscal year then elapsed (or for the fiscal year then
ended in the case of year-end financials), (ii) setting forth in
comparative form the corresponding figures for the corresponding periods
of the previous fiscal year and the corresponding figures from the

 

54

 

most recent
projections for the current fiscal year, and (iii) discussing the reasons
for any significant variations. The information above shall be presented in
reasonable detail and shall be certified by the chief financial officer of the
Borrower to the effect that such information fairly presents the results of
operations and financial condition of the Credit Parties as at the dates and
for the periods indicated; provided that, unless the Administrative
Agent or any Lender reasonably requires the information set forth in this clause
(d), the management’s discussion and analysis of financial condition and
results of operation disclosure in Form 10-K or Form 10-Q, as
applicable, filed with the Securities and Exchange Commission shall satisfy the
requirements of this paragraph

 

(e)                                  promptly
upon their becoming available, copies of (i) all Securities and Exchange
Commission reports of the Credit Parties, (ii) all financial statements,
reports, notices and proxy statements sent or made available by the Credit
Parties to their security holders, (iii) all regular and periodic reports
and all registration statements and prospectuses, if any, filed by any of the
Credit Parties with any securities exchange or with the Securities and Exchange
Commission or any governmental or private regulatory authority, and (iv) all
press releases and other statements made available by any of the Credit Parties
to the public concerning material developments in the business of any of the
Credit Parties;

 

(f)                                    not
less than ten (10) Business Days prior to the consummation of any
Permitted Acquisition:

 

(i)                  a reasonably
detailed description of the material terms of such Permitted Acquisition
(including, without limitation, the purchase price and method and structure of
payment) and of each Target,

 

(ii)               if available,
audited financial statements of the Target for its two (2) most recent
fiscal years prepared by independent certified public accountants and unaudited
fiscal year-to-date statements for the two (2) most recent interim
periods, in each case which are reasonably satisfactory in form and
substance to the Administrative Agent,

 

(iii)            consolidated projected
income statements of the Borrower and its consolidated Subsidiaries (giving
effect to such Permitted Acquisition and the consolidation with the Borrower of
each relevant Target) for the three (3)-year period following the consummation
of such Permitted Acquisition, in reasonable detail, together with any
appropriate statement of assumptions and pro forma adjustments reasonably
acceptable to the Administrative Agent, it being understood that such
projections are by their nature speculative, and actual results may differ
materially,

 

(iv)           a certificate, in form and
substance reasonably satisfactory to the Administrative Agent, executed by a
Responsible Officer of the Borrower (A) setting forth the best good faith
estimate of the aggregate consideration (including, without limitation, equity
consideration, earn outs or deferred compensation or non-competition
arrangements and the amount of Indebtedness and other liabilities assumed by
the Credit Parties and their Subsidiaries) to be paid for each Target and (B) certifying
that (1) such Permitted Acquisition complies with the requirements of this
Credit Agreement and (2) after giving effect to such Permitted Acquisition
and any borrowings in connection therewith, the Borrower believes in good faith
that it will have sufficient availability under the Revolving Committed Amount
to meet its ongoing working capital requirements,

 

(v)              any due diligence
reports prepared by, or on behalf of, any Credit Party with respect to the
Target, and

 

(vi)           promptly, such
additional financial and other information as the Administrative Agent, on
behalf of any Lender, may from time to time reasonably request; and

 

(g)                                 promptly
but in no case less than ten (10) Business Days after the incurrence of
Indebtedness by the Parent under Section 6.1(m), the operative documents
governing such Indebtedness.

 

55

 

Section 5.3                                             Payment of
Taxes.

 

Except as could not reasonably be expected to have a
Material Adverse Effect, pay all taxes, assessments and other governmental
charges imposed upon it or any of its properties or assets or in respect of any
of its income, businesses or franchises before any penalty accrues thereon, and
all claims (including claims for labor, services, materials and supplies) for
sums that have become due and payable and that by law have or may become a
Lien upon any of its properties or assets, prior to the time when any penalty
or fine shall be incurred with respect thereto; provided that no such
charge or claim need be paid if it is being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted, so long
as (a) such reserve or other appropriate provision, if any, as shall be
required in conformity with GAAP shall have been made therefor and (b) in
the case of a charge or claim which has or may become a Lien against any
of the Collateral, such contest proceedings operate to stay the sale of any
portion of the Collateral to satisfy such charge or claim.

 

Section 5.4                                             Conduct of
Business and Maintenance of Existence.

 

Continue to engage in business of the same general
type as now conducted by it on the Closing Date and preserve, renew and keep in
full force and effect its corporate existence and take all reasonable action to
maintain all rights, privileges and franchises necessary or desirable in the
normal conduct of its business; and (b) comply with all Contractual
Obligations and Requirements of Law applicable to it except to the extent that
failure to comply therewith could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

 

Section 5.5                                             Maintenance
of Property; Insurance.

 

(a)                                     Keep
all material property useful and necessary in its business in good working
order and condition (ordinary wear and tear and obsolescence excepted);

 

(b)                                    Maintain
with financially sound and reputable insurance companies (i) insurance on
all its material property (including, without limitation, its material tangible
Collateral), (ii) the Key-Man Life Insurance Policy and (iii) business
interruption insurance in at least such amounts and against at least such risks
as are usually insured against in the same general area by companies engaged in
the same or a similar business; and furnish to the Administrative Agent, upon
written request, full information as to the insurance carried; provided,
however, that the Credit Parties and their Subsidiaries may maintain
self insurance plans to the extent companies of similar size and in similar
businesses do so. The Administrative Agent shall be named as loss payee or
mortgagee, as its interest may appear, and/or additional insured with
respect to any such insurance providing coverage in respect of any Collateral,
and each provider of any such insurance shall agree, by endorsement upon the
policy or policies issued by it or by independent instruments furnished to the
Administrative Agent, that it will give the Administrative Agent thirty (30)
days’ prior written notice before any such policy or policies shall be altered
or canceled, and that no act or default of the Credit Parties or any of their
Subsidiaries or any other Person shall affect the rights of the Administrative
Agent or the Lenders under such policy or policies; and

 

(c)                                     In
case of any material loss, damage to or destruction of the Collateral of any
Credit Party or any part thereof, such Credit Party shall promptly give
written notice thereof to the Administrative Agent generally describing the
nature and extent of such damage or destruction. In case of any loss, damage to
or destruction of the Collateral of any Credit Party or any part thereof,
such Credit Party, whether or not the insurance proceeds, if any, received on
account of such damage or destruction shall be sufficient for that purpose, at
such Credit Party’s cost and expense, will promptly repair or replace the
Collateral of such Credit Party so lost, damaged or destroyed.

 

Section 5.6                                             Inspection
of Property; Books and Records; Discussions.

 

Keep proper books of records and account in which
full, true and correct entries in conformity with GAAP and all Requirements of
Law shall be made of all dealings and transactions in relation to its
businesses and activities; and permit, during regular business hours and upon
reasonable notice by the Administrative Agent or any Lender, the Administrative
Agent or any Lender to visit and inspect any of its properties and examine and
make

 

56

 

abstracts from any of its books and records (other
than materials protected by the attorney-client privilege and materials which
the Borrower may not disclose without violation of a confidentiality
obligation binding upon it) at any reasonable time (upon three days advance
notice so long as no Default or Event of Default shall have occurred and be
continuing) and as often as may reasonably be desired, and to discuss the
business, operations, properties and financial and other condition of the
Parent and its Subsidiaries with officers and employees of the Parent and its
Subsidiaries and with their independent certified public accountants.

 

Section 5.7                                             Notices.

 

Give notice in writing to the Administrative Agent
(which shall promptly transmit such notice to each Lender) of:

 

(a)                                  promptly,
but in any event within two (2) Business Days after any Credit Party knows
or has reason to know thereof, the occurrence of any Default or Event of Default;

 

(b)                                 promptly,
any default or event of default under any Contractual Obligation of the
Borrower, or any of its Subsidiaries which could reasonably be expected to have
a Material Adverse Effect;

 

(c)                                  promptly,
any litigation, or any investigation or proceeding known to any Credit Party,
affecting the Borrower or any of its Subsidiaries which, if adversely
determined, could reasonably be expected to have a Material Adverse Effect;

 

(d)                                 as
soon as possible and in any event within thirty (30) days after any Credit
Party knows or has reason to know thereof (i) the occurrence or expected
occurrence of any Reportable Event with respect to any Plan, a failure to make
any required contribution to a Plan, the creation of any Lien in favor of the
PBGC (other than a Permitted Lien) or a Plan or any withdrawal from, or the
termination, Reorganization or Insolvency of, any Multiemployer Plan, in each case which such
Reportable Event, contribution, Lien, withdrawal, termination, Reorganization
or Insolvency is in an amount $2,500,000 or greater or (ii) the
institution of proceedings or the taking of any other action by the PBGC or any
Credit Party or any Commonly Controlled Entity or any Multiemployer Plan with
respect to the withdrawal from, or the terminating, Reorganization or
Insolvency of, any Plan in each case which such institution of proceedings
or taking of any other action is in an amount of $2,500,000 or greater;

 

(e)                                  promptly,
any notice of any violation received by any Credit Party from any Governmental
Authority including, without limitation, any notice of violation of Environmental
Laws; and

 

(f)                                    promptly,
any other development or event which could reasonably be expected to have a Material
Adverse Effect.

 

Each notice pursuant to this Section 5.7 shall be
accompanied by a statement of a Responsible Officer setting forth details of
the occurrence referred to therein and stating what action the Borrower
proposes to take with respect thereto. In the case of any notice of a Default
or Event of Default, the Borrower shall specify that such notice is a Default
or Event of Default notice on the face thereof.

 

Section 5.8                                             Environmental
Laws.

 

(a)                                     Comply
in all material respects with, and ensure compliance in all material respects
by all tenants and subtenants, if any, with, all applicable Environmental Laws
and obtain and comply in all material respects with and maintain, and ensure
that all tenants and subtenants obtain and comply in all material respects with
and maintain, any and all licenses, approvals, notifications, registrations or
permits required by applicable Environmental Laws except to the extent that
failure to do so could not reasonably be expected to have a Material Adverse
Effect;

 

(b)                                    Conduct
and complete all investigations, studies, sampling and testing, and all
remedial, removal and other actions required under Environmental Laws and
comply in all material respects with all

 

57

 

lawful orders and
directives of all Governmental Authorities regarding Environmental Laws except
to the extent that the same are being contested in good faith by appropriate
proceedings and the pendency of such proceedings could not reasonably be
expected to have a Material Adverse Effect; and

 

(c)                                      If
a Default caused by reason of a breach of Section 3.11 or Section 5.8(a) or
(b) shall have occurred and be continuing for more than thirty (30) days
without the Credit Parties commencing activities reasonably likely to cure such
Default in accordance with Environmental Laws, at the written request of the
Administrative Agent or the Lenders through the Administrative Agent, provide
to the Lenders within 45 days after such request, at the expense of the
Credit Parties, an environmental assessment report regarding the matters which
are the subject of such Default, including, where appropriate, soil and/or
groundwater sampling, prepared by an environmental consulting firm and, in the form and
substance, reasonably acceptable to the Administrative Agent and indicating the
presence or absence of Materials of Environmental Concern and the estimated
cost of any compliance or corrective action to address them.

 

(d)                                    Defend,
indemnify and hold harmless the Administrative Agent and the Lenders, and their
respective employees, agents, officers and directors, from and against any and
all claims, demands, penalties, fines, liabilities, settlements, damages, costs
and expenses of whatever kind or nature known or unknown, contingent or otherwise,
arising out of, or in any way relating to the violation of, noncompliance with
or liability under, any Environmental Law applicable to the operations of the
Credit Parties or any of their Subsidiaries or the Properties, or any orders,
requirements or demands of Governmental Authorities related thereto, including,
without limitation, reasonable attorney’s and consultant’s fees, investigation
and laboratory fees, response costs, court costs and litigation expenses,
except to the extent that any of the foregoing arise out of the gross
negligence or willful misconduct of the party seeking indemnification therefor
as determined by a court of competent jurisdiction. The agreements in this
paragraph shall survive repayment of the Notes and all other Credit Party Obligations
payable hereunder.

 

Section 5.9                                             Financial
Covenant.

 

Commencing on the
day immediately following the Closing Date, the Senior Secured Leverage Ratio
shall at all times be less than or equal to 1.50 to 1.00.

 

Section 5.10                                      Additional
Subsidiary Guarantors.

 

The Credit Parties will cause each of their Domestic
Subsidiaries, whether newly formed, after acquired or otherwise existing, to
promptly (and in any event within thirty (30) days after such Domestic
Subsidiary is formed or acquired (or such longer period of time as agreed to by
the Administrative Agent in its reasonable discretion)) become a Guarantor
hereunder by way of execution of a Joinder Agreement. In connection therewith,
the Credit Parties shall give notice to the Administrative Agent not less than
ten (10) days prior to creating a Subsidiary or acquiring the Capital
Stock of any other Person. The Credit Party Obligations shall be secured by,
among other things, a First Priority, perfected security interest in the
Collateral of such new Guarantor and a pledge of 100% of the Capital Stock of
such new Guarantor and its Domestic Subsidiaries and 65% (or such higher
percentage that would not result in material adverse tax consequences for such
new Guarantor) of the voting Capital Stock and 100% of the non-voting Capital
Stock of its first-tier Foreign Subsidiaries. In connection with the foregoing,
the Credit Parties shall deliver to the Administrative Agent, with respect to
each new Guarantor to the extent applicable, substantially the same
documentation required pursuant to Sections 4.1(b)-(f) and 5.12 and such
other documents or agreements as the Administrative Agent may reasonably
request.

 

Section 5.11                                      Compliance with
Law.

 

Each Credit Party will, and will cause each of its
Subsidiaries to, comply with all laws, rules, regulations and orders, and all
applicable restrictions imposed by all Governmental Authorities, applicable to
it and its Property if noncompliance with any such law, rule, regulation, order
or restriction could reasonably be expected to have a Material Adverse Effect.

 

58

 

Section 5.12                                      Pledged Assets.

 

Each Credit Party will, and will cause each of its
Subsidiaries to, be subject at all times to a First Priority, perfected Lien
with respect to all of such Person’s Collateral (subject in each case to
Permitted Liens) in favor of the Administrative Agent pursuant to the terms and
conditions of the Security Documents or such other security documents as the
Administrative Agent shall reasonably request. Each Credit Party shall, and
shall cause each of its Subsidiaries to, adhere to the covenants regarding the
location of personal property as set forth in the Security Documents.

 

Section 5.13                                      Security
Interests; Further Assurances.

 

Promptly, upon the reasonable request of the
Administrative Agent or any Lender, at Borrower’s expense, each Credit Party
will, and will cause each of its Subsidiaries to, execute, acknowledge and
deliver, or cause the execution, acknowledgment and delivery of, and thereafter
register, file or record, or cause to be registered, filed or recorded, in an
appropriate governmental office, any document or instrument supplemental to or
confirmatory of the Security Documents or otherwise deemed by the Administrative
Agent reasonably necessary or desirable for the continued validity, perfection
and priority of the Liens on the Collateral covered thereby subject to no other
Liens except as permitted by the applicable Security Document, or obtain any
consents or waivers as may be necessary or appropriate in connection
therewith. Each Credit Party will, and will cause each of its Subsidiaries to,
deliver or cause to be delivered to the Administrative Agent from time to time
such other documentation, consents, authorizations, approvals and orders in form and
substance reasonably satisfactory to the Administrative Agent as the Administrative
Agent shall reasonably deem necessary to perfect or maintain the Liens on the
Collateral pursuant to the Security Documents. Upon the exercise by the
Administrative Agent or any Lender of any power, right, privilege or remedy
pursuant to any Credit Document which requires any consent, approval,
registration, qualification or authorization of any Governmental Authority,
each Credit Party will, and will cause each of its Subsidiaries to, execute and
deliver all applications, certifications, instruments and other documents and
papers that the Administrative Agent such Lender may require. If the
Administrative Agent or the Required Lenders determine that they are required
by a Requirement of Law to have appraisals prepared in respect of the
Properties or any other real property of any Credit Party constituting
Collateral, the Borrower shall provide to the Administrative Agent appraisals
that satisfy the applicable requirements of the Real Estate Appraisal Reform Amendments
of FIRREA and are otherwise in form and substance satisfactory to the
Administrative Agent.

 

Section 5.14                                      Information
Regarding Collateral.

 

Not effect any change (i) in any Credit Party’s
legal name, (ii) in the location of any Credit Party’s chief executive
office, (iii) in any Credit Party’s identity or organizational structure, (iv) in
any Credit Party’s Federal Taxpayer Identification Number or organizational
identification number, if any, or (v) in any Credit Party’s jurisdiction
of organization (in each case, including by merging with or into any other
entity, reorganizing, dissolving, liquidating, reorganizing or organizing in
any other jurisdiction), until (A) it shall have given the Administrative
Agent not less than 10 days’ prior (or, in the case of the foregoing
clause (ii), prompt subsequent) written notice (in the form of an officers’
certificate), or such lesser notice period agreed to by the Administrative
Agent, of its intention so to do, clearly describing such change and providing
such other information in connection therewith as the Administrative Agent may reasonably
request and (B) it shall have taken all action reasonably satisfactory to
the Administrative Agent to maintain the perfection and priority of the
security interest of the Administrative Agent for the benefit of the Secured
Parties in the Collateral, if applicable. Each Credit Party agrees to promptly
provide the Administrative Agent with certified Organizational Documents
reflecting any of the changes described in the preceding sentence. Each Credit
Party also agrees to promptly notify the Administrative Agent of any change in
the location of any office in which it maintains books or records relating to
Collateral owned by it or any office or facility at which Collateral is located
(including the establishment of any such new office or facility), other than
changes in location to a Mortgaged Property or a leased property subject to a
Landlord Access Agreement.

 

Section 5.15                                      Use of Proceeds.

 

Use the proceeds of the Loans or the Swingline Loans
only for the purposes set forth in Section 3.12(a) and request the
issuance of Letters of Credit only for the purposes set forth in Section 3.12(b).
The net proceeds of the issuance of the Senior Floating Rate Notes and the
Senior Notes and the Equity Contribution used to finance the

 

59

 

Acquisition shall be onloaned to the Purchasers via
the Subordinated Intercompany Notes that shall be pledged by the Borrower as
Collateral pursuant to the Security Documents.

 

Section 5.16                                      Borrowing Base-Related
Reports.

 

The Borrower shall deliver or cause to be delivered
(at the expense of the Borrower) to the Administrative Agent the following:

 

(a)                                  in
no event less frequently than fifteen (15) days after the end of each month for
the month most recently ended, a Borrowing Base Certificate, together with such
supporting detail and documentation as shall be requested by the Administrative
Agent in its reasonable credit judgment; and

 

(b)                                 such
other reports, statements and reconciliations with respect to the Borrowing
Base or Collateral of any or all Credit Parties as the Administrative Agent
shall from time to time request in its reasonable good faith credit judgment.

 

The delivery of each certificate and report or any
other information delivered pursuant to this Section 5.16 shall constitute
a representation and warranty by the Borrower that the statements and
information contained therein are true and correct in all material respects on
and as of such date.

 

Section 5.17                                      Borrowing Base
Verification.

 

Any of the Administrative Agent’s officers, employees
or agents shall have the right, at any time or times, upon reasonable prior
notice and during normal business hours, in the name of the Administrative
Agent, any designee of the Administrative Agent or the Borrower, to verify the
validity, amount or any other matter relating to Accounts or Inventory by mail,
telephone, electronic communication, personal inspection or otherwise (provided
that no Account Debtor may be contacted unless an Event of Default shall
have occurred and be continuing) and to conduct field audits of the financial
affairs and Collateral of the Credit Parties. The Borrower shall cooperate
fully with the Administrative Agent in an effort to facilitate and promptly conclude
any such verification process. The Credit Parties shall cooperate fully with
the Administrative Agent and its agents during all Collateral field audits,
which shall be at the expense of the Borrower and may be conducted
semi-annually or, following the occurrence and during the continuation of an
Event of Default, more frequently at the Administrative Agent’s reasonable request.

 

Section 5.18                                      Post-Closing
Collateral Matters.

 

To the extent not previously delivered as of the
Closing Date, the applicable Credit Parties shall use their commercially
reasonable efforts to obtain and deliver to the Administrative Agent, within
ten (10) days after the Closing Date (unless waived or extended by the
Administrative Agent in its discretion) a Mortgage Policy meeting the requirements of Section 4.1(e)(ii)(B).

 

ARTICLE VI

 

NEGATIVE COVENANTS

 

The Credit Parties hereby covenant and agree that on
the Closing Date, and thereafter for so long as this Agreement is in effect and
until the Commitments have terminated, no Note remains outstanding and unpaid
and the Credit Party Obligations (other than contingent indemnity obligations)
under the Credit Documents, together with interest, Commitment Fee and all
other amounts owing to the Administrative Agent or any Lender hereunder, are
paid in full:

 

Section 6.1                                             Indebtedness.

 

The Credit Parties will not, nor will they permit any
Subsidiary to, contract, create, incur, assume or permit to exist any
Indebtedness, except:

 

60

 

(a)                                  Indebtedness
arising or existing under this Agreement and the other Credit Documents;

 

(b)                                 Indebtedness
of the Borrower and its Subsidiaries existing as of the Closing Date as
referenced in the financial statements referenced in Section 3.1 (and set
out more specifically in Schedule 6.1(b)) hereto;

 

(c)                                  Indebtedness
and the Guaranty Obligations of the Parent and its Subsidiaries under the
Senior Floating Rate Notes and the Senior Notes in the amount outstanding on
the Closing Date;

 

(d)                                 Indebtedness
of the Borrower and its Subsidiaries incurred after the Closing Date consisting
of Capital Leases or Indebtedness incurred to provide all or a portion of the
purchase price or cost of installation, construction or improvement of an
asset, provided that (i) such Indebtedness when incurred shall not
exceed the purchase price or cost of construction of such asset; (ii) no
such Indebtedness shall be refinanced for a principal amount in excess of the
principal balance outstanding thereon at the time of such refinancing; and (iii) the
total amount of all such Indebtedness shall not exceed $5,000,000 at any time
outstanding;

 

(e)                                  Indebtedness
of the Parent owed to a Subsidiary of the Parent and Indebtedness of any
Subsidiary of the Parent owed to the Parent or another Subsidiary of the Parent
for so long as such Indebtedness is held by the Parent or a Subsidiary of the
Parent; provided, however, that any event that results in any
such Indebtedness being held by a Person other than the Parent or a Subsidiary
shall constitute the incurrence of Indebtedness not constituting Permitted
Indebtedness by the issuer of such Indebtedness pursuant to this clause (e); provided
further that (i) Indebtedness of Foreign Subsidiaries to the Parent
and/or its Domestic Subsidiaries shall comply with Section 6.7, (ii) no
more than $5,000,000 in the aggregate of Indebtedness pursuant to this clause (e) may be
outstanding to all Foreign Subsidiaries at any one time, (iii) any
Indebtedness in the form of a loan or advance shall be evidenced by the
Subordinated Intercompany Notes and, in the case of a loan or advance by a
Credit Party, pledged by such Credit Party as Collateral pursuant to the
Security Documents; and (iv) any Indebtedness of the Parent owed to the
Borrower or any Subsidiary of the Borrower would have been permitted by Section 6.10
as if such Indebtedness had been a Restricted Payment from the Borrower to the
Parent;

 

(f)                                    Indebtedness
and obligations owing under Secured Hedging Agreements and other Hedging
Agreements entered into in the ordinary course of business in order to manage
existing or anticipated interest rate, exchange rate or commodity price risks
and not for speculative purposes;

 

(g)                                 Indebtedness
in respect of netting services, overdraft protections and otherwise in
connection with deposit accounts and Indebtedness arising from the honoring by
a bank or other financial institution of a check, draft or similar instrument
inadvertently (except in the case of daylight overdrafts) drawn against
insufficient funds in the ordinary course of business; provided, however,
that such Indebtedness is extinguished within five Business Days of incurrence;

 

(h)                                 Indebtedness
and obligations of the Borrower and its Subsidiaries owing under documentary
letters of credit for the purchase of goods or other merchandise (but not under
standby, direct pay or other letters of credit except for the Letters of Credit
hereunder) generally;

 

(i)                                     Refinancing
by the Borrower or any Subsidiary of Indebtedness incurred in accordance with
clause (b) or this clause (i) of this Section 6.1, in each case
that does not: (x) result in an increase in the aggregate principal amount of
Indebtedness of such Person as of the date of such proposed Refinancing (plus
the amount of any premium reasonably required to be paid and plus the amount of
reasonable expenses incurred by the Borrower or any Subsidiary in connection
with such Refinancing); or (y) create Indebtedness with (1) a Weighted
Average Life to Maturity that is less than the Weighted Average Life to
Maturity of the Indebtedness being Refinanced or (2) a final maturity
earlier than the final maturity of the Indebtedness being Refinanced; provided
that (I) if such Indebtedness being refinanced is Indebtedness solely of the
Borrower, then such refinancing Indebtedness shall be Indebtedness solely of
the Borrower, (II) if such Indebtedness being refinanced is Indebtedness solely
of a Guarantor, then such refinancing Indebtedness shall be Indebtedness solely
of the Borrower or a Guarantor and (III) if such Indebtedness being

 

61

 

refinanced is
subordinate or junior to the Credit Party Obligations, then such Refinancing
Indebtedness shall be subordinate to the Credit Party Obligations at least to
the same extent and in the same manner as the Indebtedness being refinanced;

 

(j)                                     Guaranty
Obligations in respect of Indebtedness of a Credit Party to the extent such
Indebtedness is permitted to exist or be incurred pursuant to this Section 6.1;

 

(k)                                  Indebtedness
of the Borrower or any of its Subsidiaries in respect of bid, payment and
performance bonds, bankers’ acceptances, workers’ compensation claims,
unemployment insurance, health, disability and other employee benefits or
property, casualty or liability insurance, surety or appeal bonds, or guarantees
of the foregoing types of Indebtedness referred to in this clause (k) and other
obligations of a like nature, payment obligations in connection with
self-insurance or similar obligations, bank overdrafts and the financing of
insurance premiums in the ordinary course of business and any letter of credit
issued in connection with the foregoing, and in any such case any reimbursement
obligation in connection therewith;

 

(l)                                     Indebtedness
arising from agreements of the Parent or a Subsidiary to provide for customary
indemnification, adjustment of purchase price or similar obligations, earn-outs
or other similar obligations, in each case, incurred in connection with the
acquisition or disposition of any business, assets or a Subsidiary of the
Borrower, or the assets or Capital Stock of a Person that is or becomes a
Subsidiary of the Borrower in accordance with the terms of this Agreement,
other than guarantees of Indebtedness of any Person acquiring all or any
portion of such business, assets or subsidiary for the purpose of financing
such acquisition; and

 

(m)                               additional
Indebtedness (including Acquired Indebtedness) of the Parent and the
Subsidiaries in an aggregate principal amount not to exceed $20,000,000 at any
one time outstanding.

 

Section 6.2                                             Liens.

 

The Credit Parties will not, nor will they permit any
Subsidiary to, contract, create, incur, assume or permit to exist any Lien with
respect to any of its property or assets of any kind (whether real or personal,
tangible or intangible), whether now owned or hereafter acquired, except for
Permitted Liens.

 

Section 6.3                                             Nature of
Business.

 

The Credit Parties will not, nor will they permit any
Subsidiary to, alter the character of its business in any material respect from
that conducted as of the Closing Date and any business substantially similar,
related, ancillary or incidental thereto.

 

Section 6.4                                             Consolidation,
Merger, Sale or Purchase of Assets, Acquisitions, etc.

 

The Credit Parties will not, nor will they permit any
Subsidiary to,

 

(a)                                  dissolve,
liquidate or wind up its affairs, sell, transfer, lease or otherwise dispose of
its property or assets or agree to do so at a future time except the following,
without duplication, shall be expressly permitted:

 

(i)                  Specified Sales;

 

(ii)               the sale, lease,
conveyance, disposition or other transfer of products, services, inventory or
accounts receivable in the ordinary course of business and disposals or
replacements of damaged, worn-out or obsolete assets or assets no longer useful
in the business;

 

(iii)            the sale, lease or
transfer of property or assets (at fair value) between the Borrower and any
Guarantor (other than the Parent);

 

62

 

(iv)           the sale, lease or
transfer of property or assets from a Credit Party other than the Borrower to
another Credit Party (other than the Parent);

 

(v)              the termination of
any Hedging Agreement permitted pursuant to Section 6.1(f);

 

(vi)              a transfer of
assets, by means of trade-in, of equipment owned by it and used or previously
used in the ordinary course of business, so long as such equipment is replaced,
substantially concurrently, by like-kind equipment;

 

(vii)           any issuance of Capital
Stock of Foreign Subsidiaries to foreign nationals as required by foreign law
and in the ordinary course of business;

 

(viii)        the licensing or
sublicensing of intellectual property or other general intangibles (such as
Intellectual Property, technology, know-how and processes) to the extent that
such license does not prohibit the licensor from using the intellectual
property and in the ordinary course of business and licenses, leases or
subleases of other property in the ordinary course of business;

 

(ix)                a transfer of
property or assets that is a surrender or waiver of contract rights or the
settlement, release or surrender of contract, tort or other claims of any kind,
in each case in the ordinary course of business;

 

(x)                   any sale of
Capital Stock permitted by Section 6.7; and

 

(xi)                transactions
during the term of this Agreement for which the Borrower or its Subsidiaries
receive aggregate consideration of less than $3.0 million, in each case in the
ordinary course of business,

 

provided
that in each case (x) at least 75% of the consideration received therefor
(other than with respect to any sale, lease or transfer pursuant to clause (iii) through
(x) above) by the Credit Parties or any such Subsidiary is in the form of
cash or Cash Equivalents or extinguishment or assumption of unsubordinated Indebtedness,
and (y) no Event of Default then exists or shall result from such sale,
transfer or other disposition of assets; provided, further, that
with respect to sales of assets permitted hereunder to unrelated third parties
only, the Administrative Agent shall be entitled, without the consent of the
Required Lenders, to release its Liens relating to the particular assets sold;
or

 

(b)                                 purchase,
lease or otherwise acquire (in a single transaction or a series of related
transactions) the Capital Stock, property or assets of any Person (other than
Permitted Investments, Permitted Acquisitions, making capital expenditures and
purchases or other acquisitions of inventory, leases, materials, property and
equipment in the ordinary course of business, except as otherwise limited or
prohibited herein) or enter into any transaction of merger or consolidation
(other than to the extent constituting a Permitted Acquisition); or

 

(c)                                  form or
enter into a joint venture, partnership or other similar arrangement, whether
in corporate, partnership or other legal form, unless the aggregate amount
outstanding at any one time of all such investments and all obligations
(including, without limitation, Indebtedness, contingent liabilities and
capital calls) arising from such investments does not exceed $5.0 million; provided
that no such joint venture, partnership, or other similar arrangements may be
formed to circumvent the requirements of Section 6.13.

 

Section 6.5                                             Advances,
Investments and Loans.

 

The Credit Parties will not, nor will they permit any
Subsidiary to, lend money or extend credit or make advances to any Person, or
purchase or acquire any stock, obligations or securities of, or any other
interest in, or make any capital contribution to, any Person except for
Permitted Investments; provided that no such joint venture, partnership
or other similar arrangement may be entered into to circumvent the
requirements of Section 6.13.

 

63

 

Section 6.6                                             Transactions
with Affiliates.

 

Except as permitted in subsection (iv) of
the definition of Permitted Investments and in the Management Agreement and as
set forth on Schedule 6.6, the Credit Parties will not, nor will
they permit any Subsidiary to, enter into any transaction or series of
transactions, whether or not in the ordinary course of business, with any
officer, director, shareholder or Affiliate other than on terms and conditions
substantially as favorable to the Credit Parties as would be obtainable in a
comparable arm’s-length transaction with a Person other than an officer,
director, shareholder or Affiliate; provided that the foregoing shall
not prohibit:

 

(a)                                  reasonable
fees and compensation paid to and indemnity provided on behalf of, our
officers, directors or employees or those of any Subsidiary as determined in
good faith by the Borrower’s Board of Directors;

 

(b)                                                                                 transactions
exclusively between or among the Borrower and any of its Subsidiaries or
exclusively between or among such Subsidiaries (including any Person that
becomes a Subsidiary as a result of such transaction), provided that
such transactions are not otherwise prohibited by this Agreement;

 

(c)                                  up
to $1,500,000 per year payable to the AEA Group pursuant to the first paragraph
of Section 2 of the Management Agreement (as in effect on the Closing
Date) and related expenses to the extent permitted under Section 6.13;

 

(d)                                                                                 any
agreement or instrument as in effect as of the Closing Date that is as set
forth on Schedule 6.6, or any amendment or replacement thereof or
any transaction contemplated thereby (including pursuant to any amendment or
replacement thereof), so long as any such amendment or replacement agreement or
instrument is, in the good faith judgment of the board of directors of the
Borrower, not more disadvantageous to the Lenders, taken as a whole, than the
original agreement or instrument as in effect on the Closing Date;

 

(e)                                  Restricted
Payments and investments pursuant to clauses (1), (2), (4), (12), (17) and (18)
of the definition of “Permitted Investments”, in each case not prohibited by Section 6.10;

 

(f)                                    any
employment or compensation arrangement or agreement, employee benefit plan or
arrangement, officer or director indemnification agreement or any similar
arrangement or other compensation arrangement entered into by the Borrower or
any of its Subsidiaries in the ordinary course of business and payments,
issuance of securities or awards pursuant thereto;

 

(g)                                    any
issuance of Capital Stock of the Borrower for cash;

 

(h)                                    the
grant of stock options, restricted stock, stock appreciation rights, phantom
stock awards or similar rights to employees and directors as approved by the
board of directors;

 

(i)                                        any
redemption of Capital Stock held by current or former employees or directors at
the time of their death, disability, termination of employment or departure from
the board of directors for not in excess of fair market value or as otherwise
contractually required pursuant to contractual arrangements entered into in
compliance with this Section 6.6 and Section 6.10(d)(iv);

 

(j)                                        any
merger, consolidation or reorganization of the Borrower with a Guarantor solely
for the purposes of reorganizing to facilitate an initial public offering of
securities of the Borrower or any direct or indirect parent entity of the
Borrower and which has no adverse consequences to the Lenders or the
Administrative Agent or the exercise of their rights or remedies under any of
the Credit Documents;

 

(k)                                     compliance
by any Credit Party with the terms of any Credit Document or any amendment
hereto;

 

64

 

(l)                                        transactions
pursuant to any customary registration rights agreement with the stockholders
of the Borrower or any direct or indirect parent entity of the Borrower; and

 

(m)                                  ordinary
course transactions (including the payment of customary fees and expenses) with
investment banks, commercial banks and other financial institutions in
connection with investment banking, commercial banking and other financial
advisory services.

 

Section 6.7                                             Ownership
of Subsidiaries; Restrictions.

 

The Credit Parties will not, nor will they permit any
Subsidiary to, create, form or acquire any Subsidiaries, except for
Domestic Subsidiaries which are joined as Additional Credit Parties in
accordance with the terms hereof and Foreign Subsidiaries to the extent that, after
giving effect to the formation or acquisition of such Foreign Subsidiary as of
the last day of the fiscal quarter most recently ended, Domestic Subsidiaries
account for (A) at least 80% of the consolidated assets of the Borrower
and its Subsidiaries as of the last day of the fiscal quarter recently ended
and (B) at least 80% of the consolidated revenues of the Borrower and its
Subsidiaries for the last four full fiscal quarters most recently ended. The
Credit Parties will not sell, transfer, pledge or otherwise dispose of any
Capital Stock or other equity interests in any of their Subsidiaries, nor will
they permit any of their Subsidiaries to issue, sell, transfer, pledge or
otherwise dispose of any of their Capital Stock or other equity interests, except
in a transaction permitted by Section 6.4(a)(iii) or (iv) or Section 6.4(b).

 

Section 6.8                                             Fiscal
Year; Organizational Documents; Material Contracts.

 

The Parent will not permit any of its Subsidiaries to,
(a) change their fiscal year or accounting policies except in accordance
with GAAP or (b) without providing 10 days’ notice to the Administrative
Agent and executing such agreements and taking such actions as the
Administrative Agent may require in order to ensure the perfection and
priority of the Liens granted under the Security Documents, and subject to any
restriction set forth in this Agreement (including, without limitation, Section 6.4)
or in any other Credit Document on ability of the Parent or its Subsidiaries to
take any such action, (i) alter its corporate existence or, in one
transaction or a series of transactions, merge into or consolidate with
any other entity, or sell all or substantially all of its assets, (ii) change
its state of incorporation or organization, (iii) the location where it
maintains its books and records, (iv) incorporate or organize in more than
one state or (v) change its registered corporate name. The Borrower will
not, and will not permit any of its Subsidiaries to, amend, modify or change
their articles of incorporation, certificate of designation (or corporate
charter or other similar organizational document) operating agreement or bylaws
(or other similar document) in any material respect without the prior written
consent of the Administrative Agent. The Borrower will not, and will not permit
any of its Subsidiaries to, without the prior written consent of the
Administrative Agent and the Required Lenders, (A) amend, modify, cancel
or terminate or fail to renew or extend or permit the amendment, modification,
cancellation or termination of any of the Material Contracts (other than in the
ordinary course of business), except such amendments, modifications,
cancellations or terminations that are not materially adverse to the Credit
Parties taken as a whole or (B) amend, modify, waive or extend or permit
the amendment, modification, waiver or extension of any Subordinated Debt or of
any documentation governing or evidencing such Subordinated Debt in a manner
that is materially adverse to the rights or interests of the Lenders or (1) increases
the interest rate on or fees related to or the principal amount of such
Subordinated Debt; (2) changes the dates upon which payments of principal
or interest are due on such Subordinated Debt other than to extend such dates; (3) changes
any default or event of default other than to delete or make less restrictive
any default provision therein) or add or make more restrictive any covenant
with respect to such Subordinated Debt; (4) changes the redemption or
prepayment provisions of such Subordinated Debt other than to extend the dates
therefor or reduce the premiums payable in connection therewith; (5) changes
the subordination provisions thereof (or the subordination terms of any
guaranty thereof); (6) changes or amends any other term if such change or
amendment would materially increase the obligations of the obligor or confer
additional material rights on the holder of such Subordinated Debt in a manner
adverse to any Credit Party or Lenders; or (7) increases the portion of
interest payable in cash with respect to any such Subordinated Debt .

 

Section 6.9                                             Limitation
on Restricted Actions.

 

Except for the Senior Floating Rate Notes, the Senior
Notes and any other notes issued under the Notes Documents with terms taken as
a whole substantially the same in all material respects or more favorable to
the Lenders than the terms of the Senior Floating Rate Notes and/or the Senior
Notes, the Credit Parties will not, nor

 

65

 

will they permit any Subsidiary to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective
any encumbrance or restriction on the ability of any such Person to (a) pay
dividends or make any other distributions to any Credit Party on its Capital Stock
or with respect to any other interest or participation in, or measured by, its
profits, (b) pay any Indebtedness or other obligation owed to any Credit
Party, (c) make loans or advances to any Credit Party, (d) sell,
lease or transfer any of its properties or assets to any Credit Party, or (e) act
as a Guarantor and pledge its assets pursuant to the Credit Documents or any
renewals, refinancings, exchanges, refundings or extension thereof, except (in
respect of any of the matters referred to in clauses (a)-(d) above) for
such encumbrances or restrictions existing under or by reason of (i) this
Agreement and the other Credit Documents; (ii) applicable law, rule,
regulation or order including of any regulatory body; (iii) any document
or instrument governing Indebtedness incurred pursuant to Section 6.1(d); provided
that any such restriction contained therein relates only to the asset or assets
constructed or acquired in connection therewith; (iv) any Permitted Lien
or any document or instrument governing any Permitted Lien; provided
that any such restriction contained therein relates only to the asset or assets
subject to such Permitted Lien; (v) customary provisions restricting
assignments or subletting in (x) any lease governing a leasehold interest of any
Subsidiary or (y) any contracts and licenses (including, without limitation,
those relating to intellectual property), in each case entered into in the
ordinary course of business; (vi) any instrument governing Acquired
Indebtedness or Capital Stock of a Person acquired by the Parent or any of its
Subsidiaries, which encumbrance or restriction was in existence at the time of
such acquisition (but not created in contemplation thereof or to provide all or
any portion of the funds or credit support utilized to consummate such acquisition)
and is not applicable to any Person, or the properties or assets of any Person,
other than the Person or the properties or assets of the Person so acquired
(including, but not limited to, such Person’s direct and indirect Subsidiaries),
provided that any such encumbrance or restriction contained therein
relates only to such Acquired Indebtedness or Capital Stock and that any such
encumbrances or restrictions, individually or in the aggregate, shall not
materially affect any Credit Party’s ability to pay principal, interest, fees
or any other Obligations under this Agreement, the Notes Documents or any other
material Indebtedness of such Credit Party; (vii) restrictions in
agreements existing on the Closing Date (other than the Notes Documents) and
set forth on Schedule 3.27 to the extent and in the manner such
agreements are in effect on the Closing Date, provided that any such
restriction contained therein relates only to such agreements and that any such
restrictions, individually or in the aggregate, shall not materially affect any
Credit Party’s ability to pay principal, interest, fees or any other
Obligations under this Agreement, the Notes Documents or any other material
Indebtedness of such Credit Party; (viii) restrictions imposed by any
agreement to sell assets or Capital Stock permitted hereunder to any Person pending
the closing of such sale; (ix) encumbrance pursuant to the subordination
provisions of any Indebtedness permitted to be incurred by Section 6.1(e),
(x) joint venture agreements, partnership agreements, limited liability company
organizational governance documents, asset sale and stock sale agreements,
sale-leaseback agreements, stock sale agreements and other similar agreements, provided
that any such restriction contained therein relates only to such joint venture,
partnership, limited liability company, asset sale, stock sale, sale-leaseback
or stock sale and that any such restrictions, individually or in the aggregate,
shall not be more restrictive than those contained in this Agreement and shall
not materially affect any Credit Party’s ability to pay principal, interest,
fees or any other Obligations under this Agreement, the Notes Documents or any
other material Indebtedness of such Credit Party; (xi) Indebtedness of Foreign
Subsidiaries or loan or related agreements entered into in connection with the
incurrence of industrial revenue or similar bonds, in each case permitted to be
incurred hereunder, provided that any such restriction contained therein
relates only to such Indebtedness or bonds and that any such restrictions, individually
or in the aggregate, shall not be more restrictive than those contained in this
Agreement and shall not materially affect any Credit Party’s ability to pay
principal, interest, fees or any other Obligations under this Agreement, the
Notes Documents or any other material Indebtedness of such Credit Party; (xii)
restrictions on cash or other deposits or net worth imposed by customers or
suppliers under contracts entered into in the ordinary course of business;
(xiii) customary restrictions on real property interests set forth in easements
and similar arrangements of the Borrower or any Subsidiary; and (xiv) an
agreement governing Indebtedness incurred to refinance the Indebtedness issued,
assumed or incurred pursuant to an agreement referred to in clauses (i), (vi) and
(vii) above and any amendments, restatements, modifications, renewals,
supplements, refundings, replacements or refinancings of the contracts,
instruments or obligations referred to in clauses (i) through (xiv) above;
provided, however, that the provisions relating to such
encumbrance or restriction contained in any such Indebtedness, amendments,
restatements, modifications, renewals, supplements, refundings, replacements or
refinancings are no less favorable to the Borrower in any material respect as
determined by the board of directors of the Borrower in its reasonable and good
faith judgment than the provisions relating to such encumbrance or restriction
contained in agreements prior to such amendment, restatement, modification,
renewal, supplement, refunding, replacement or refinancing.

 

66

 

Section 6.10                                      Restricted
Payments.

 

The Credit Parties will not, nor will they permit any
Subsidiary to, directly or indirectly, declare, order, make or set apart any
sum for or pay any Restricted Payment, except, without duplication, (a) to
make dividends payable solely in the same class of Capital Stock of such
Person, (b) to make dividends or other distributions payable to any Credit
Party other than the Parent (directly or indirectly through Subsidiaries), (c) to
make interest payments under the Senior Notes so long as no Default or Event of
Default has occurred under this Agreement and is continuing and (d) the
Borrower may pay or make (or make dividends or distributions to the Parent
such that the Parent may pay or make) (i) such amounts as are
permitted under Section 6.13, (ii) distributions to the Parent to any
direct or indirect parent entity of the Parent to fund (A) accounting,
legal, administrative and other general corporate and overhead expenses,
franchise or similar taxes and other fees required to maintain the Parent’s or
such parent entity’s corporate existence and to provide for other operating
costs, including customary salary, bonus and other benefits payable to, and indemnities
provided on behalf of, officers and employees of any such parent entity, in
each case related to the existence or operation of the Parent or any of its
Subsidiaries (B) reasonable directors fees and to reimburse reasonable
out-of-pocket expenses of the board of directors of the Parent and any direct
or indirect parent entity of the Parent, in each case in an amount not more
than the portion of such fees and expenses as are reasonably and in good faith
allocable to the operation of the Parent and its Subsidiaries and (C) fees
and expenses, as incurred, of an offering of the Parent’s or the Borrower’s
securities or indebtedness that is not consummated, or of a registered public
offering or of an acquisition which is not consummated, (iii) Permitted
Tax Distributions, and (iv) provided that no Default or Event of
Default has occurred and is continuing at such time or would be directly or
indirectly caused as a result thereof on an actual or pro forma basis after
giving effect to such payments, distributions for the purchase, repurchase,
redemption, retirement or other acquisition for value by the Parent of Capital
Stock of the Parent or options or warrants to purchase Capital Stock of the
Parent, stock appreciation rights or any similar equity interest in the Parent
and any distribution, loan or advance to any direct or indirect parent entity
of the Parent for the purchase, repurchase, redemption, retirement or other
acquisition for value of Capital Stock of any such direct or indirect parent
entity of the Parent, in each case, from any current or former director,
officer or employee of the Parent or any of its Subsidiaries or any direct or
indirect parent entity of the Parent or the authorized representatives or
permitted transferees of such director, officer or employee upon the death,
disability, retirement or termination of employment of such director, officer
or employee in an aggregate amount, in each case in an amount not more than the
portion of such fees and expenses as are reasonably and in good faith allocable
to the operation of the Parent and its Subsidiaries in respect of all items
referred to in this clause (iv) not to exceed (x) $5,000,000 in
any fiscal year if the Senior Secured Leverage ratio at the time of and on a
pro forma basis after giving effect to such payments is less than 1.0 and
(y) otherwise $3,000,000 in any fiscal year (and any portion of such
$5,000,000 or $3,000,000, as the case may be, not used in any year may be
carried forward to the next succeeding (but no other) years); provided further that cancellation of Indebtedness owing to the
Parent from members of management of the Parent or any direct or indirect
parent entity of the Parent or any Subsidiary in connection with a repurchase
of Capital Stock of the Parent or any direct or indirect parent entity of the
Parent will not be deemed to constitute a Restricted Payment for purposes of
this Section 6.10 or any other provision hereof.

 

Section 6.11                                      No Further
Negative Pledges.

 

The Credit Parties will not, nor will they permit any
Subsidiary to, enter into, assume or become subject to any agreement
prohibiting or otherwise restricting the creation or assumption of any Lien
upon any of their properties or assets, whether now owned or hereafter
acquired, or requiring the grant of any security for such obligation if
security is given for some other obligation, except (a) pursuant to this
Agreement and the other Credit Documents; (b) pursuant to any document or
instrument governing Indebtedness incurred pursuant to Section 6.1(c), provided
that any such restriction contained therein relates only to the asset or assets
constructed or acquired in connection therewith; (c) pursuant to the Notes
Documents as in effect on the date hereof and (d) in connection with any
Permitted Lien or any document or instrument governing any Permitted Lien; provided
that any such restriction contained therein relates only to the asset or assets
subject to such Permitted Lien.

 

Section 6.12                                      Parent Holding
Company.

 

Other than any Guaranties under the Notes Documents
and as otherwise provided in Sections 6.1(e), (l) and (m), the Parent shall not
incur any Indebtedness nor grant any Liens upon any of its properties or assets
nor engage in any operations, business or activity other than holding 100% of
the Capital Stock of the Borrower and each of any

 

67

 

administrative, management or other activities incidental
to such holdings, pledging its interests therein to the Administrative Agent on
behalf of the Lenders, executing the Security Agreement and Pledge Agreement in
favor of the Administrative Agent on behalf of the Lenders, complying with the
terms of the Credit Documents and guaranteeing the Credit Party Obligations as
provided herein.

 

Section 6.13                                      Management Fees.

 

The Credit Parties shall not, nor shall they permit
any of their Subsidiaries, directly or indirectly, to pay any management,
consulting or similar fees to any Affiliate or to any manager, director,
officer or employee of the Credit Parties or any of their Subsidiaries except
that, so long as no payment Default shall have occurred and be continuing, the
Credit Parties may pay (i) up to $1,500,000 per year to the AEA Group
pursuant to the first paragraph of Section 2 of the Management Agreement
(as in effect on the Closing Date) and (ii) up to $1,500,000 per year
otherwise payable to the AEA Group pursuant to such Management Agreement.

 

Section 6.14                                      Embargoed Person.

 

No funds or properties of the Credit Parties that are
used to repay the Loans shall constitute property of, or be beneficially owned
directly or indirectly by, any person subject to sanctions or trade
restrictions under United States law (an “Embargoed Person”) that is
identified on (1) the “List of Specially Designated Nationals and Blocked
Persons” maintained by OFAC and/or on any other similar list maintained by OFAC
pursuant to any authorizing statute including, but not limited to, the
International Emergency Economic Powers Act, 50 U.S.C. §§ 1701 et seq.,
The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any
Executive Order or Requirement of Law promulgated thereunder, with the result
that the investment in the Credit Parties (whether directly or indirectly) is
prohibited by a Requirement of Law, or the Loans made by the Lenders would be
in violation of a Requirement of Law, or (2) the Executive Order, any
related enabling legislation or any other similar Executive Orders or (b) any
Embargoed Person to have any direct or indirect interest, of any nature
whatsoever in the Credit Parties, with the result that the investment in the
Credit Parties (whether directly or indirectly) is prohibited by a Requirement
of Law or the Loans are in violation of a Requirement of Law.

 

ARTICLE VII

 

EVENTS OF DEFAULT

 

Section 7.1                                             Events of
Default.

 

An Event of Default shall exist upon the occurrence of
any of the following specified events (each, an “Event of Default”):

 

(a)                                  The
Borrower shall fail (i) to pay any principal on any Note when due in
accordance with the terms thereof or hereof or (ii) to reimburse the
Issuing Lender for any LOC Obligations when due in accordance with the terms
hereof or to pay any interest on any Note or any fee or other amount payable
hereunder when due in accordance with the terms thereof or hereof and such
failure in the case of the foregoing clause (ii) continues for three (3) Business
Days (or any Guarantor shall fail to pay on the Guaranty in respect of any of
the foregoing or in respect of any other Guaranty Obligations thereunder within
the grace periods, if any, provided herein); or

 

(b)                                 Any
representation or warranty made or deemed made herein, in the Security
Documents or in any of the other Credit Documents or which is contained in any
certificate, document or financial or other statement furnished at any time
under or in connection with this Agreement shall prove to have been incorrect,
false or misleading in any material respect on or as of the date made or deemed
made; or

 

(c)                                  (i) Any
Credit Party shall fail to perform, comply with or observe any term, covenant
or agreement applicable to it contained in Section 5.2, 5.5, 5.7(a), 5.9
or Article VI hereof; or (ii) any Credit Party shall fail to comply
with any term, covenant or agreement applicable to it contained in Section 5.1(a),
(b) or (c), and such breach or failure to comply is not cured within
fifteen (15) days of its occurrence; or

 

68

 

(iii) any
Credit Party shall fail to comply with any other covenant contained in this
Agreement or the other Credit Documents or any other agreement, document or
instrument among any Credit Party, the Administrative Agent and the Lenders or
executed by any Credit Party in favor of the Administrative Agent or the
Lenders (other than as described in Section 7.1(a), 7.1(c)(i) or
7.1(c)(ii) above), and in the event such breach or failure to comply is
capable of cure, is not cured within the time described therein, or to the extent
not prescribed therein, within thirty (30) days of its occurrence; or

 

(d)                                 The
Borrower or any of its Subsidiaries shall (i) default in any payment of
principal of or interest on any Indebtedness (other than the Notes) in a
principal amount outstanding of at least $7,000,000 in the aggregate for the
Borrower and any of its Subsidiaries beyond the applicable period of grace (not
to exceed thirty (30) days), if any, provided in the instrument or agreement
under which such Indebtedness was created; or (ii) default in the
observance or performance of any other agreement or condition relating to any
Indebtedness in a principal amount outstanding of at least $7,000,000 in the
aggregate for the Borrower and its Subsidiaries or contained in any instrument
or agreement evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such Indebtedness
or beneficiary or beneficiaries of such Indebtedness (or a trustee or agent on
behalf of such holder or holders or beneficiary or beneficiaries) to cause,
with the giving of notice if required, such Indebtedness to become due prior to
its stated maturity; or (iii) breach or default under Secured Hedging
Agreements in an aggregate amount of $7,000,000 beyond any applicable grace periods;
or

 

(e)                                  (i) The
Borrower or any of its Significant Subsidiaries, or one or more Subsidiaries
that in the aggregate would constitute a Significant Subsidiary, shall commence
any case, proceeding or other action (A) under any existing or future law
of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts, or (B) seeking
appointment of a receiver, trustee, custodian, conservator or other similar
official for it or for all or any substantial part of its assets, or any
of the Credit Parties or their Subsidiaries shall make a general assignment for
the benefit of its creditors; or (ii) there shall be commenced against the
Borrower or any of its Significant Subsidiaries, or one or more Subsidiaries
that in the aggregate would constitute a Significant Subsidiary, any case,
proceeding or other action of a nature referred to in clause (i) above
which (A) results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of 60 days; or (iii) there shall be commenced
against the Borrower or any of its Significant Subsidiaries, or one or more
Subsidiaries that in the aggregate would constitute a Significant Subsidiary,
any case, proceeding or other action seeking issuance of a warrant of
attachment, execution, distraint or similar process against all or any substantial
part of their assets which results in the entry of an order for any such
relief which shall not have been vacated, discharged, or stayed or bonded
pending appeal within 60 days from the entry thereof; or (iv) any of the
Credit Parties or their Subsidiaries shall take any action in furtherance of,
or indicating its consent to, approval of, or acquiescence in, any of the acts
set forth in clause (i), (ii), or (iii) above; or (v) the Borrower or
any of its Significant Subsidiaries, or one or more Subsidiaries that in the
aggregate would constitute a Significant Subsidiary, shall generally not, or
shall be unable to, or shall admit in writing their inability to, pay its debts
as they become due; or

 

(f)                                    One
or more judgments or decrees shall be entered against the Borrower or any of
its Significant Subsidiaries, or one or more Subsidiaries that in the aggregate
would constitute a Significant Subsidiary, involving individually or in the
aggregate a liability (to the extent not covered by insurance) of $7,000,000 or
more and all such judgments or decrees shall not have been paid and satisfied,
vacated, discharged, stayed or bonded pending appeal within thirty (30) days
from the entry thereof or any injunction, temporary restraining order or
similar decree shall be issued against the Borrower or any of its Significant
Subsidiaries, or one or more Subsidiaries that in the aggregate would
constitute a Significant Subsidiary, that could result in a Material Adverse
Effect; or

 

(g)                                 (i) Any
Person shall engage in any “prohibited transaction” (as defined in Section 406
of ERISA or Section 4975 of the Code) involving any Plan, (ii) any “accumulated
funding deficiency” (as defined in Section 302 of ERISA), whether or not
waived, shall exist with respect to any Plan or any Lien in

 

69

 

favor of the PBGC
or a Plan (other than a Permitted Lien) shall arise on the assets of the
Borrower or any Commonly Controlled Entity, (iii) a Reportable Event shall
occur with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to terminate, any
Single Employer Plan, which Reportable Event or commencement of proceedings or
appointment of a Trustee is, in the reasonable opinion of the Required Lenders,
likely to result in the termination of such Plan for purposes of Title IV of
ERISA, (iv) any Single Employer Plan shall terminate for purposes of Title
IV of ERISA, (v) any Credit Party, any of its Subsidiaries or any Commonly
Controlled Entity shall, or in the reasonable opinion of the Required Lenders
is likely to, incur any liability in connection with a withdrawal from, or the
Insolvency or Reorganization of, any Multiemployer Plan or (vi) any other
similar event or condition shall occur or exist with respect to a Plan; and in
each case in clauses (i) through (vi) above, such event or condition,
together with all other such events or conditions, if any, could have a
Material Adverse Effect; or

 

(h)                                 There
shall occur a Change of Control; or

 

(i)                                     The
Guaranty or any provision thereof for any reason shall cease to be in full
force and effect or any Guarantor or any Person acting by or on behalf of any
Guarantor shall deny or disaffirm any Guarantor’s obligations under the
Guaranty; or

 

(j)                                     Any
other Credit Document shall fail to be in full force and effect or any Credit
Party shall so assert; or any other Credit Document shall fail to give the
Administrative Agent and/or the Lenders and any Hedging Agreement Provider the
security interests, liens, rights, powers and privileges purported to be
created thereby (except as such documents may be terminated or no longer
in force and effect in accordance with the terms thereof, other than those
indemnities and provisions which by their terms shall survive); or any Lien in
favor of the Administrative Agent shall fail to be a First Priority perfected
Lien (subject to Permitted Liens) on a material portion of the Collateral or
any Credit Party shall seek to have any such Lien declared invalid, unperfected
or subordinated except as and to the extent permitted by the Credit Documents;

 

Section 7.2                                             Acceleration;
Remedies.

 

Upon the occurrence of an Event of Default, then, and
in any such event, (a) if such event is an Event of Default specified in Section 7.1(e) above,
automatically the Commitments shall immediately terminate and the Loans (with
accrued interest thereon), and all other amounts under the Credit Documents
(including, without limitation, the maximum amount of all contingent
liabilities under Letters of Credit) shall immediately become due and payable,
and (b) if such event is any other Event of Default, any or all of the
following actions may be taken:  (i) with
the written consent of the Required Lenders, the Administrative Agent may, or
upon the written request of the Required Lenders, the Administrative Agent
shall, declare the Commitments to be terminated forthwith, whereupon the
Commitments shall immediately terminate; (ii) the Administrative Agent
may, or upon the written request of the Required Lenders, the Administrative
Agent shall, declare the Loans (with accrued interest thereon) and all other
amounts owing under this Credit Agreement and the Notes to be due and payable
forthwith and direct the Borrower to pay to the Administrative Agent cash
collateral as security for the LOC Obligations for subsequent drawings under
then outstanding Letters of Credit in an amount equal to the maximum amount of
which may be drawn under Letters of Credit then outstanding, whereupon the
same shall immediately become due and payable; and/or (iii) with the
written consent of the Required Lenders, the Administrative Agent may, or upon
the written request of the Required Lenders, the Administrative Agent shall,
exercise such other rights and remedies as provided under the Credit Documents
and under applicable law.

 

ARTICLE VIII

 

THE AGENT

 

Section 8.1                                             Appointment.

 

Each Lender hereby irrevocably designates and appoints
Wachovia as the Administrative Agent of such Lender under this Agreement, and
each such Lender irrevocably authorizes Wachovia, as the Administrative Agent

 

70

 

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

 

Section 8.2                                             Delegation
of Duties.

 

The Administrative Agent may execute any of its
duties under this Agreement by or through agents or attorneys-in-fact and shall
be entitled to advice of counsel concerning all matters pertaining to such
duties. The Administrative Agent shall not be responsible for the negligence or
misconduct of any agents or attorneys-in-fact selected by it with reasonable
care. Without limiting the foregoing, the Administrative Agent may appoint
one of its affiliates as its agent to perform its the functions of the
Administrative Agent hereunder relating to the advancing of funds to the
Borrower and distribution of funds to the Lenders and to perform such
other related functions of the Administrative Agent hereunder as are reasonably
incidental to such functions.

 

Section 8.3                                             Exculpatory
Provisions.

 

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

 

Section 8.4                                             Reliance
by Administrative Agent.

 

The Administrative Agent shall be entitled to rely,
and shall be fully protected in relying, upon any Note, writing, resolution,
notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy,
telex or teletype message, statement, order or other document or conversation
believed by it in good faith to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons and upon advice and statements of
legal counsel (including, without limitation, counsel to the Borrower),
independent accountants and other experts selected by the Administrative Agent.
The Administrative Agent may deem and treat the payee of any Note as the
owner thereof for all purposes unless (a) a written notice of, assignment,
negotiation or transfer thereof shall have been filed with the Administrative
Agent and (b) the Administrative Agent shall have received the written
agreement of such assignee to be bound hereby as fully and to the same extent
as if such assignee were an original Lender party hereto, in each case in form satisfactory
to the Administrative Agent. The Administrative Agent shall be fully justified
in failing or refusing to take any action under this Agreement unless it shall
first receive such advice or concurrence of the Required Lenders as it deems
appropriate or it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. The Administrative
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under any of the Credit Documents in accordance with a request of the
Required Lenders or all of the Lenders, as may be required under this
Agreement, and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Lenders and all future holders of the
Notes.

 

Section 8.5                                             Notice of
Default.

 

The Administrative Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Administrative Agent has received notice from a Lender or
the Borrower 

 

71

 

referring to this Agreement, describing such Default
or Event of Default and stating that such notice is a “notice of default”. In
the event that the Administrative Agent receives such a notice, the
Administrative Agent shall give prompt notice thereof to the Lenders. The
Administrative 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 the Administrative Agent shall have
received such directions, the Administrative 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 good
faith in the best interests of the Lenders except to the extent that this
Agreement expressly requires that such action be taken, or not taken, only with
the consent or upon the authorization of the Required Lenders, or all of the
Lenders, as the case may be.

 

Section 8.6                                             Non-Reliance
on Administrative Agent and Other Lenders.

 

Each Lender expressly acknowledges that neither the
Administrative Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates has made any representation or warranty to it
and that no act by the Administrative Agent hereinafter taken, including any review
of the affairs of the Borrower, shall be deemed to constitute any
representation or warranty by the Administrative Agent to any Lender. Each
Lender represents to the Administrative Agent that it has, independently and
without reliance upon the Administrative Agent or any other Lender, and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Borrower and made its
own decision to make its Loans hereunder and enter into this Agreement. Each
Lender also represents that it will, independently and without reliance upon
the Administrative Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement, and to make such investigation as it deems necessary to inform itself
as to the business, operations, property, financial and other condition and
creditworthiness of the Borrower. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the Administrative
Agent hereunder, the Administrative Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of the Borrower which may come
into the possession of the Administrative Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates.

 

Section 8.7                                             Indemnification.

 

The Lenders agree to indemnify the Administrative
Agent in its capacity hereunder (to the extent not reimbursed by the Borrower
and without limiting the obligation of the Borrower to do so), ratably
according to their respective Commitment Percentages in effect on the date on
which indemnification is sought under this Section, from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind whatsoever which may at
any time (including, without limitation, at any time following the payment of
the Notes) be imposed on, incurred by or asserted against the Administrative
Agent in any way relating to or arising out of any Credit Document or any
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the
Administrative Agent under or in connection with any of the foregoing; provided,
however, that no Lender shall be liable for the payment of any portion
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements to the extent resulting from
the Administrative Agent’s gross negligence or willful misconduct, as
determined by a court of competent jurisdiction. The agreements in this Section 8.7
shall survive the termination of this Agreement and payment of the Notes and
all other amounts payable hereunder.

 

Section 8.8                                             Administrative
Agent in Its Individual Capacity.

 

The Administrative Agent and its affiliates may make
loans to, accept deposits from and generally engage in any kind of business
with the Borrower as though the Administrative Agent were not the
Administrative Agent hereunder. With respect to its Loans made or renewed by it
and any Note issued to it, the Administrative Agent shall have the same rights
and powers under this Agreement as any Lender and may exercise the same as
though it were not the Administrative Agent, and the terms “Lender” and “Lenders”
shall include the Administrative Agent in its individual capacity.

 

72

 

Section 8.9                                             Successor
Administrative Agent.

 

The Administrative Agent may resign as
Administrative Agent upon 30 days’ prior notice to the Borrower and the Lenders.
If the Administrative Agent shall resign as Administrative Agent under this
Agreement and the Notes, then the Required Lenders shall appoint from among the
Lenders a successor agent for the Lenders, which successor agent shall be
approved by the Borrower with such approval not to be unreasonably withheld (provided,
however, if an Event of Default shall exist at such time, no approval of
the Borrower shall be required hereunder), whereupon such successor agent shall
succeed to the rights, powers and duties of the Administrative Agent, and the
term “Administrative Agent” shall mean such successor agent effective upon such
appointment and approval, and the former Agent’s rights, powers and duties as
Administrative Agent shall be terminated, without any other or further act or
deed on the part of such former Administrative Agent or any of the parties
to this Agreement or any holders of the Notes. If no successor Administrative
Agent has accepted appointment as Administrative Agent within thirty (30) days
after the retiring Administrative Agent’s giving notice of resignation, the
retiring Administrative Agent shall have the right, on behalf of the Lenders,
to appoint a successor administrative agent, which successor shall be approved
by the Borrower’s (such approval not to be unreasonably withheld) so long as no
Event of Default has occurred and is continuing. If no successor administrative
agent has accepted appointment as Administrative Agent within sixty (60) days
after the retiring Administrative Agent’s giving notice of resignation, the
retiring Administrative Agent’s resignation shall nevertheless become effective
and the Lenders shall perform all duties of the Administrative Agent
hereunder until such time, if any, as the Required Lenders appoint a successor
administrative agent as provided for above, subject to the Borrower’s approval
so long as no Event of Default has occurred and is continuing. After any
retiring Agent’s resignation as Administrative Agent, the provisions of this Section 8.9
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Administrative Agent under this Agreement.

 

Section 8.10                                      Other Agents.

 

None of the Lenders or other Persons identified on the
facing page or signature pages of this Agreement as a “syndication
agent”, “documentation agent”, “co-agent”, “book manager”, “book runner”, “lead
manager”, “arranger”, “lead arranger” or “co-arranger” shall have any right
(except as expressly set forth herein), power, obligation, liability,
responsibility or duty under this Agreement other than, in the case of such
Lenders, those applicable to all Lenders as such. Without limiting the
foregoing, none of the Lenders or other Persons so identified shall have or be
deemed to have any fiduciary relationship with any Lender. Each Lender acknowledges
that it has not relied, and will not rely, on any of the Lenders or other
Persons so identified in deciding to enter into this Credit Agreement or in taking
or not taking action hereunder.

 

ARTICLE IX

 

MISCELLANEOUS

 

Section 9.1                                             Amendments,
Waivers and Release of Collateral.

 

(a)                                  Neither
this Agreement, nor any of the Notes, nor any of the other Credit Documents,
nor any terms hereof or thereof may be amended, supplemented, waived or
modified (whether by consent or otherwise) except in accordance with the
provisions of this Section nor may be released except as specifically
provided herein or in the Security Documents or in accordance with the
provisions of this Section 9.1. The Required Lenders may, or, with the
written consent of the Required Lenders, the Administrative Agent may, from
time to time, (a) enter into with the Borrower written amendments,
supplements or modifications (whether by consent or otherwise) hereto and to
the other Credit Documents for the purpose of adding any provisions to this
Agreement or the other Credit Documents or changing in any manner the rights of
the Lenders or of the Borrower hereunder or thereunder or (b) waive, on
such terms and conditions as the Required Lenders may specify in such
instrument, any of the obligations of the Credit Parties under this Agreement
or the other Credit Documents or any Default or Event of Default and its consequences;
provided, however, that no such waiver and no such amendment,
waiver, supplement, modification or release shall:

 

(i)                  reduce or
forgive the principal amount or extend the scheduled date of maturity of any
Loan or Note or any installment thereon, or reduce or forgive the stated rate
of any interest or fee payable

 

73

 

hereunder (except in
connection with a waiver of interest at the increased post-default rate set
forth in Section 2.8 which shall be determined by a vote of the Required
Lenders) or extend the scheduled date of any payment thereof or increase the
amount or extend the expiration date of any Lender’s Commitment, in each case
without the written consent of each Lender directly affected thereby; or

 

(ii)               amend, modify or
waive any provision of this Section 9.1 or change the percentage specified
in the definition of Required Lenders, without the written consent of all the
Lenders; or

 

(iii)            amend, modify or waive
any provision of Article VIII without the written consent of the then
Administrative Agent; or

 

(iv)           amend, modify or waive
any provision of this Agreement to permit the Borrower to select Interest
Periods with a duration longer than six months without the consent of each
Lender directly affected thereby; or

 

(v)              release all or
substantially all of the Guarantors from their obligations under the Guaranty,
without the written consent of all of the Lenders and Hedging Agreement
Providers; or

 

(vi)           release all or
substantially all of the Collateral, without the written consent of all of the
Lenders and Hedging Agreement Providers; or

 

(vii)        amend, modify or waive any
provision of the Credit Documents requiring consent, approval or request of the
Required Lenders or all Lenders, without the written consent of all of the
Required Lenders or Lenders as appropriate; and provided, further,
that no amendment, waiver or consent affecting the rights or duties of the
Administrative Agent, the Issuing Lender or the Swingline Lender under any
Credit Document shall in any event be effective, unless in writing and signed
by the Administrative Agent, the Issuing Lender and/or the Swingline Lender, as
applicable, in addition to the Lenders required hereinabove to take such
action;

 

(viii)     amend or modify the
definition of Credit Party Obligations to delete or exclude any obligation or
liability described therein without the written consent of each Lender and each
Hedging Agreement Provider directly affected thereby;

 

(ix)             amend, modify or
waive the order in which Credit Party Obligations are paid pursuant to Section 2.11(b) without
the written consent of each Lender and each Hedging Agreement Provider directly
affected thereby; or

 

(x)                amend, modify or
waive the definition “Borrowing Base” (or any provision of this Agreement that
would result in an increase in the Borrowing Base), clause (xviii) of the
definition “Permitted Liens” or Section 5.9, 6.1(d) or 6.4, in each
case including all related definitions.

 

Any such waiver, any such amendment, supplement or
modification and any such release shall apply equally to each of the Lenders
and shall be binding upon the Borrower, the other Credit Parties, the Lenders,
the Issuing Lender, the Swingline Lender, the Administrative Agent and all
future holders of the Notes. In the case of any waiver, the Borrower, the other
Credit Parties, the Lenders, the Issuing Lender, the Swingline Lender and the
Administrative Agent shall be restored to their former position and rights hereunder
and under the outstanding Loans and Notes and other Credit Documents, and any
Default or Event of Default waived shall be deemed to be cured and not
continuing; but no such waiver shall extend to any subsequent or other Default
or Event of Default, or impair any right consequent thereon.

 

Notwithstanding any of the foregoing to the contrary,
the consent of the Borrower shall not be required for any amendment, modification
or waiver of the provisions of Article VIII (other than the provisions of Section 8.9);
provided, however, that the Administrative Agent will provide
written notice to the Borrower of any such amendment, modification or waiver. In
addition, the Borrower and the Lenders hereby authorize the Administrative
Agent to modify this Agreement by unilaterally amending or supplementing Schedule 2.1(a) and
Section 9.2 from time to

 

74

 

time in the manner requested by the Borrower, the
Administrative Agent or any Lender in order to reflect any assignments or
transfers of the Loans as provided for hereunder; provided, however,
that the Administrative Agent shall promptly deliver a copy of any such
modification to the Borrower and each Lender.

 

Notwithstanding the fact that the consent of all the
Lenders is required in certain circumstances as set forth above, each Lender is
entitled to vote as such Lender sees fit on any bankruptcy reorganization plan
that affects the Loans, and each Lender acknowledges that the provisions of Section 1126(c) of
the Bankruptcy Code supersedes the unanimous consent provisions set forth
herein.

 

(b)                                 If,
at any time there are three or more Lenders under this Agreement and, in
connection with any proposed change, waiver, discharge or termination of the
provisions of this Agreement as contemplated by Section 9.1(a), the
consent of the Required Lenders is obtained but the consent of one or more of
such other Lenders whose consent is required is not obtained, then Borrower
shall have the right to replace all, but not less than all, of such
non-consenting Lender or Lenders (so long as all non-consenting Lenders are so
replaced) with one or more persons pursuant to Section 2.15(b) so
long as at the time of such replacement each such new Lender consents to the
proposed change, waiver, discharge or termination.

 

Section 9.2                                             Notices.

 

Except as otherwise provided in Article II, all
notices, requests and demands to or upon the respective parties hereto to be
effective shall be in writing (including by telecopy), and, unless otherwise
expressly provided herein, shall be deemed to have been duly given or made (a) when
delivered by hand, (b) when transmitted via telecopy (or other facsimile
device) to the number set out herein, (c) the next weekday following the
day on which the same has been delivered prepaid to a reputable national
overnight air courier service, or (d) the third Business Day following the
day on which the same is sent by certified or registered mail, postage prepaid,
in each case, addressed as follows in the case of the Borrower, the other
Credit Parties and the Administrative Agent, and as set forth on Schedule 9.2
in the case of the Lenders, or to such other address as may be hereafter
notified by the respective parties hereto and any future holders of the Notes:

 

	
  The
  Borrower and the other

  Credit Parties:

  	
   

  	
  Compression Polymers
  Holding II Corporation

  801 Corey Street

  Moosic, Pennsylvania 18507

  Attention: Mr. Jim Kiesling

  Telecopier: (570) 346-5080

  Telephone: (570) 346-8797

  
	
   

  	
   

  	
   

  
	
  The
  Administrative Agent:

  	
   

  	
  Wachovia Bank, National Association,

  as Administrative Agent 

  Charlotte Plaza

  201 South College Street, CP-8

  Charlotte, North Carolina 28288-0680

  Attention: Syndication Agency Services

  Telecopier: (704) 383-0288

  Telephone: (704) 383-3721

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  with a copy to:

   

  Wachovia Bank,
  National Association

  One Wachovia Center, DC-5

  Charlotte, North Carolina 28288-0737

  Attention: Mrs. Shannan Townsend

  Telecopier: (704) 383-6647

  Telephone: (704) 383-9850

  

 

75

 

Section 9.3                                             No Waiver;
Cumulative Remedies.

 

No failure to exercise and no delay in exercising, on
the part of the Administrative Agent or any Lender, any right, remedy,
power or privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege. The rights, remedies, powers and privileges
herein provided are cumulative and not exclusive of any rights, remedies,
powers and privileges provided by law.

 

Section 9.4                                             Survival
of Representations and Warranties.

 

All representations and warranties made hereunder and
in any document, certificate or statement delivered pursuant hereto or in
connection herewith shall survive the execution and delivery of this Agreement
and the Notes and the making of the Loans; provided that all such
representations and warranties shall terminate on the date upon which the
Commitments have been terminated and all amounts owing hereunder and under any
Notes have been paid in full.

 

Section 9.5                                             Payment of
Expenses and Taxes.

 

The Borrower agrees (a) to pay or reimburse the
Administrative Agent for all its reasonable and documented out-of-pocket costs
and expenses (including the reasonable fees and disbursements of one special
counsel and no more than one local counsel in jurisdictions determined by the
Administrative Agent to be advisable or necessary) incurred in connection with
the development, preparation, negotiation, printing and execution of, and any
amendment, waiver, supplement or modification to, this Agreement and the other
Credit Documents and any other documents prepared in connection herewith or
therewith, and the consummation and administration of the transactions
contemplated hereby and thereby, together with the reasonable fees and
disbursements of counsel to the Administrative Agent, (b) to pay or
reimburse each Lender and the Administrative Agent for all its documented costs
and expenses incurred in connection with the enforcement or preservation of any
rights under this Agreement, the Notes and any such other documents, including,
without limitation, the reasonable fees and disbursements of counsel to the
Administrative Agent and to the Lenders, (c) on demand, to pay, indemnify,
and hold each Lender and the Administrative Agent harmless from, any and all
recording and filing fees and any and all liabilities with respect to, or
resulting from any delay in paying, stamp, excise and other similar taxes, if
any, which may be payable or determined to be payable in connection with
the execution and delivery of, or consummation or administration of any of the
transactions contemplated by, or any amendment, supplement or modification of,
or any waiver or consent under or in respect of, the Credit Documents and any
such other documents, and (d) to pay, indemnify, and hold each Lender and
the Administrative Agent and their Affiliates and their respective officers,
directors, employees, agents, trustees, advisors and attorneys-in-fact (all of
the foregoing, collectively, the “indemnitees”) harmless from and
against, any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of the Credit Documents and any such other
documents and the use, or proposed use; of proceeds of the Loans (all of the
foregoing, collectively, the “indemnified liabilities”); provided,
however, that the Borrower shall not have any obligation hereunder to
any indemnitee with respect to indemnified liabilities arising from the gross
negligence, willful misconduct or bad faith of such indemnitee or such
indemnitee’s officers, directors, employees, agents, trustees, advisors and
attorneys-in-fact, as determined by a court of competent jurisdiction. The
agreements in this Section 9.5 shall survive repayment of the Loans, Notes
and all other amounts payable hereunder.

 

Section 9.6                                             Successors
and Assigns; Participations; Purchasing Lenders.

 

(a)                                     This
Agreement shall be binding upon and inure to the benefit of the Borrower, the
Lenders, the Administrative Agent, all future holders of the Notes and their
respective successors and assigns, except that the Borrower and the Guarantors may not
assign or transfer any of their rights or obligations under this Agreement or
the other Credit Documents without the prior written consent of each Lender.

 

(b)                                    Any
Lender may, in the ordinary course of its business and in accordance with
applicable law, at any time sell to one or more banks or other entities (“Participants”)
participating interests in any Loan owing to such Lender, any Note held by such
Lender, any Commitment of such Lender, or any other

 

76

 

interest of such Lender
hereunder. In the event of any such sale by a Lender of participating interests
to a Participant, such Lender’s obligations under this Agreement to the other
parties to this Agreement shall remain unchanged, such Lender shall remain
solely responsible for the performance thereof, such Lender shall remain the
holder of any such Note for all purposes under this Agreement, and the Borrower
and the Administrative Agent shall continue to deal solely and directly with
such Lender in connection with such Lender’s rights and obligations under this
Agreement. No Lender shall transfer or grant any participation under which the
Participant shall have rights to approve any amendment to or waiver of this
Agreement or any other Credit Document except to the extent such amendment or
waiver would (i) extend the scheduled maturity of any Loan or Note or any
installment thereon in which such Participant is participating, or reduce the
stated rate or extend the time of payment of interest or fees thereon (except
in connection with a waiver of interest at the increased post-default rate set
forth in Section 2.8 which shall be determined by a vote of the Required
Lenders) or reduce the principal amount thereof, or increase the amount of the
Participant’s participation over the amount thereof then in effect (it being
understood that (A) a waiver of any Default or Event of Default shall not
constitute a change in the terms of such participation and (B) an increase
in any Commitment or Loan shall be permitted without consent of any participant
if the Participant’s participation is not increased as a result thereof), (ii) release
all or substantially all of the Guarantors from their obligations under the
Guaranty, (iii) release all or substantially all of the Collateral, or (iv) consent
to the assignment or transfer by the Borrower of any of its rights and
obligations under this Agreement. In the case of any such participation, the
Participant shall not have any rights under this Agreement or any of the other
Credit Documents (the Participant’s rights against such Lender in respect of
such participation to be those set forth in the agreement executed by such
Lender in favor of the Participant relating thereto) and all amounts payable by
the Borrower hereunder shall be determined as if such Lender had not sold such
participation; provided that each Participant shall be entitled to the
benefits of Sections 2.14, 2.15, 2.16, 2.17 and 9.5 (subject to the
requirements of those sections) with respect to its participation in the
Commitments and the Loans outstanding from time to time; provided  further,
that no Participant shall be entitled to receive any greater amount pursuant to
such Sections than the transferor Lender would have been entitled to receive in
respect of the amount of the participation transferred by such transferor
Lender to such Participant had no such transfer occurred.

 

(c)                                     Any
Lender may, in the ordinary course of its business and in accordance with
applicable law, at any time, sell or assign to any Lender or any Affiliate or
Related Fund thereof with the consent of the Administrative Agent (which
consent shall not be unreasonably withheld or delayed) and to one or more
additional banks or financial institutions or funds (“Purchasing Lenders”)
with the consent of the Administrative Agent and, so long as no Event of
Default has occurred and is continuing, the Borrower (in each case, which
consent shall not be unreasonably withheld, delayed or conditioned), all or any
part of its rights and obligations under this Agreement and the Notes in a
minimum amount of $5,000,000 with respect to its Revolving Commitment or its
Revolving Loans, pursuant to a Commitment Transfer Supplement, executed by such
Purchasing Lender, such transferor Lender and the Administrative Agent (and, in
the case of a Purchasing Lender that is not then a Lender or an Affiliate or
Related Fund thereof, so long as no Event of Default has occurred and is
continuing, the Borrower), and delivered to the Administrative Agent for its
acceptance and recording in the Register; provided, however, that
any sale or assignment to an existing Lender, or Affiliate or Related Fund
thereof shall not be subject to the minimum assignment amounts specified herein.
Upon such execution, delivery, acceptance and recording, from and after the
Transfer Effective Date specified in such Commitment Transfer Supplement, (x)
the 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 hereunder with a Commitment as set forth therein, and
(y) the transferor Lender thereunder shall, to the extent provided in such
Commitment Transfer Supplement, be released from its obligations under this
Agreement (and, in the case of a Commitment Transfer Supplement covering all or
the remaining portion of a transferor Lender’s rights and obligations under
this Agreement, such transferor Lender shall cease to be a party hereto). 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 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
Notes. On or prior to the Transfer Effective Date specified in such Commitment
Transfer Supplement, the Borrower, at its own expense, shall execute and
deliver to the Administrative Agent in exchange for the Notes delivered to the
Administrative Agent pursuant to such Commitment Transfer Supplement new Notes
to the order of such

 

77

 

Purchasing Lender in an
amount equal to the Commitment assumed by it pursuant to such Commitment
Transfer Supplement and, unless the transferor Lender has not retained a
Commitment hereunder, new Notes to the order of the transferor Lender in an
amount equal to the Commitment retained by it hereunder. Such new Notes shall
be dated the Closing Date and shall otherwise be in the form of the Notes
replaced thereby. The Notes surrendered by the transferor Lender shall be
returned by the Administrative Agent to the Borrower marked “canceled”.

 

(d)                                    The
Administrative Agent shall maintain at its address referred to in Section 9.2
a copy of each Commitment Transfer Supplement delivered to it and a register
(the “Register”) for the recordation of the names and addresses of the
Lenders and the Commitment of, and principal amount of the Loans owing to, each
Lender from time to time. The entries in the Register shall be conclusive, in the
absence of manifest error, and the Borrower, the Administrative Agent and the
Lenders may treat each Person whose name is recorded in the Register as
the owner of the Loan recorded therein for all purposes of this Agreement. The
Register shall be available for inspection by the Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.

 

(e)                                     Upon
its receipt of a duly executed Commitment Transfer Supplement, together with
payment to the Administrative Agent by the transferor Lender or the Purchasing
Lender, as agreed between them, of a registration and processing fee of
$3,500.00 for each Purchasing Lender (other than transfers to an Affiliate of
such Lender or a Related Fund) listed in such Commitment Transfer Supplement
and the Notes subject to such Commitment Transfer Supplement, the Administrative
Agent shall (i) accept such Commitment Transfer Supplement, (ii) record
the information contained therein in the Register and (iii) give prompt
notice of such acceptance and recordation to the Lenders and the Borrower.

 

(f)                                       The
Borrower authorizes each Lender to disclose to any Participant or Purchasing
Lender (each, a “Transferee”) and any prospective Transferee any and all
financial information in such Lender’s possession concerning the Borrower and
its Affiliates which has been delivered to such Lender by or on behalf of the
Borrower pursuant to this Agreement or which has been delivered to such Lender
by or on behalf of the Borrower in connection with such Lender’s credit
evaluation of the Borrower and its Affiliates prior to becoming a party to this
Agreement, in each case subject to Section 9.15.

 

(g)                                    At
the time of each assignment pursuant to this Section 9.6 to a Person which
is not already a Lender hereunder, the respective assignee Lender shall provide
to the Borrower and the Administrative Agent the appropriate Internal Revenue
Service Forms (and, if applicable, a Tax Exempt Certificate) described in Section 2.17.

 

(h)                                    Nothing
herein shall prohibit any Lender from pledging or assigning any of its rights
under this Credit Agreement (including, without limitation, any right to
payment of principal and interest under any Note) to secure obligations of such
Lender, including, without limitation, (i) any pledge or assignment to
secure obligations to a Federal Reserve Bank and (ii) in the case of any
Lender that is a fund or trust or entity that invests in commercial bank loans
in the ordinary course of business, any pledge or assignment to any holders of
obligations owed, or securities issued, by such Lender including to any trustee
for, or any other representative of, such holders; it being understood that the
requirements for assignments set forth in this Section 9.6 shall not apply
to any such pledge or assignment of a security interest, except with respect to
any foreclosure or similar action taken by such pledgee or assignee with
respect to such pledge or assignment; provided that no such pledge or
assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto and no such pledgee or assignee shall have any voting
rights under this Credit Agreement unless and until the requirements for
assignments set forth in this Section 9.6 are complied with in connection
with any foreclosure or similar action taken by such pledgee or assignee.

 

Section 9.7                                             Adjustments;
Set-off.

 

(a)                                     Each
Lender agrees that if any Lender (a “benefited Lender”) shall at any
time receive any payment of all or part of its Loans, or interest thereon,
or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or proceedings of the nature
referred to

 

78

 

in Section 7.1(e),
or otherwise) in a greater proportion than any such payment to or collateral
received by any other Lender, if any, in respect of such other Lender’s Loans,
or interest thereon, such benefited Lender shall purchase for cash from the
other Lenders a participating interest in such portion of each such other
Lender’s Loan, or shall provide such other Lenders 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 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. The Borrower agrees that each Lender so purchasing a portion
of another Lender’s Loans 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.

 

(b)                                    In
addition to any rights and remedies of the Lenders provided by law (including,
without limitation, other rights of set-off), each Lender shall have the right,
without prior notice to the Borrower, any such notice being expressly waived by
the Borrower to the extent permitted by applicable law, upon the occurrence of
any Event of Default, to setoff and appropriate and apply any and all deposits
(general or special, time or demand, provisional or final), in any currency,
and any other credits, indebtedness or claims, in any currency, in each case
whether direct or indirect, absolute or contingent, matured or unmatured, at
any time held or owing by such Lender or any branch or agency thereof to or for
the credit or the account of the Borrower, or any part thereof in such
amounts as such Lender may elect, against and on account of the
obligations and liabilities of the Borrower to such Lender hereunder and claims
of every nature and description of such Lender against the Borrower, in any
currency, whether arising hereunder, under the Notes, under any other Credit
Documents or any Secured Hedging Agreement provided by such Lender pursuant to
the terms of this Agreement, as such Lender may elect, whether or not such
Lender has made any demand for payment and although such obligations,
liabilities and claims may be contingent or unmatured. The aforesaid right
of set-off may be exercised by such Lender against the Borrower or against
any trustee in bankruptcy, debtor in possession, assignee for the benefit of
creditors, receiver or execution, judgment or attachment creditor of the
Borrower, or against anyone else claiming through or against the Borrower or
any such trustee in bankruptcy, debtor in possession, assignee for the benefit
of creditors, receiver, or execution, judgment or attachment creditor,
notwithstanding the fact that such right of set-off shall not have been
exercised by such Lender prior to the occurrence of any Event of Default. Each
Lender agrees promptly to notify the Borrower and the Administrative Agent
after any such set-off and application made by such Lender; provided, however,
that the failure to give such notice shall not affect the validity of such
set-off and application.

 

Section 9.8                                             Table of
Contents and Section Headings.

 

The table of contents and the Section and subsection headings
herein are intended for convenience only and shall be ignored in construing
this Agreement.

 

Section 9.9                                             Counterparts.

 

This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts, and all
of said counterparts taken together shall be deemed to constitute one and the
same instrument. A set of the copies of this Agreement signed by all the
parties shall be lodged with the Borrower and the Administrative Agent.

 

Section 9.10                                      Effectiveness.

 

This Agreement shall become effective on the date on
which all of the parties have signed a copy hereof (whether the same or
different copies) and shall have delivered the same to the Administrative Agent
pursuant to Section 9.2 or, in the case of the Lenders, shall have given
to the Administrative Agent written, telecopied or telex notice (actually received)
at such office that the same has been signed and mailed to it. Upon this
Agreement becoming effective, (a) the Existing Credit Agreement will be
deemed amended and restated in accordance with the terms of this Agreement and
this Agreement shall supersede in its entirety the Existing Credit Agreement, (b) all
Liens and security interests granted under the security documents executed in
connection with the Existing Credit

 

79

 

Agreement shall continue to be in full force and
effect in accordance with the terms of the Security Documents, (c) all
obligations of the Borrower to the Departing Lenders under the Existing Credit
Agreement shall be paid in full, (d) the Departing Lenders shall no longer
be parties to the Existing Credit Agreement, as amended and restated hereby,
shall be released from all of their respective obligations under the Existing
Credit Agreement and shall have no obligations under this Agreement, (e) the
Credit Parties shall have no further obligations to any Departing Lender (other
than contingent indemnity obligations that survive the termination of the
Existing Credit Agreement) under the Existing Credit Documents, (f) the
commitments of the Departing Lenders shall be modified and shall be reallocated
among the Lenders as set forth in Schedule 2.1(a) and all
Extensions of Credit made on the Closing Date shall be made in accordance with
the Commitments and Commitment Percentages set forth on such Schedule and (g) all
references in the Existing Credit Documents to the “Credit Agreement” shall be
deemed to refer to this Agreement.

 

Section 9.11                                      Severability.

 

Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.

 

Section 9.12                                      Integration.

 

This Agreement, the Notes and the Security Documents
represent the agreement of the Borrower, the Administrative Agent and the
Lenders with respect to the subject matter hereof, and there are no promises,
undertakings, representations or warranties by the Administrative Agent, the
Borrower or any Lender relative to the subject matter hereof not expressly set
forth or referred to herein or in the Notes. Upon execution of this Agreement
by each of the Credit Parties the parties hereto agree that the Sponsors shall
be relieved from any and all obligations under the Fee Letter and the
Commitment Letter dated as of April 28, 2005 addressed to Compression
Polymers Holding I LP, Parent and Borrower from the Administrative Agent,
Wachovia Investments Holdings, LLC and Wachovia Capital Markets, LLC as
amended, modified, restated, supplemented, extended, renewed or replaced from
time to time.

 

Section 9.13                                      Governing Law.

 

This Agreement and the Notes and the rights and
obligations of the parties under this Agreement and the Notes shall be governed
by, and construed and interpreted in accordance with, the law of the State of
New York, without giving effect to the conflict of laws principles thereof
which would require the application of laws of another state, except that the
Letters of Credit shall be governed by the UCP.

 

Section 9.14                                      Consent to
Jurisdiction and Service of Process.

 

All judicial proceedings brought with respect to this
Agreement, any Note or any of the other Credit Documents may be brought in
any state or federal court of competent jurisdiction in the State of New York,
in the Borough of Manhattan and, by execution and delivery of this Agreement,
each of the parties hereto accepts, for itself and in connection with its
properties, generally and unconditionally, the non-exclusive jurisdiction of
the aforesaid courts and irrevocably agrees to be bound by any final judgment
rendered thereby in connection with this Agreement from which no appeal has
been taken or is available. Each of the parties hereto irrevocably agrees that
all service of process in any such proceedings in any such court may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to it at its address
set forth in Section 9.2 or at such other address of which the
Administrative Agent shall have been notified pursuant thereto, such service
being hereby acknowledged by the each of the parties hereto to be effective and
binding service in every respect. Each of the Borrower, the other Credit
Parties, the Administrative Agent and the Lenders irrevocably waives any
objection, including, without limitation, any objection to the laying of venue
or based on the grounds of forum non conveniens which it may now or
hereafter have to the bringing of any such action or proceeding in any such
jurisdiction. Nothing herein shall affect the right to serve process in any
other manner permitted by law.

 

80

 

Section 9.15                                      Confidentiality.

 

The Administrative Agent and each of the Lenders
agrees that it will not disclose without the prior consent of the Borrower
(other than to its employees, Affiliates, auditors or counsel or to another
Lender, in each case, subject to the confidentiality restrictions of this Section 9.15)
any information with respect to the Borrower and its Subsidiaries which is
furnished pursuant to this Agreement, any other Credit Document or any
documents contemplated by or referred to herein or therein and which is
designated by the Borrower to the Lenders in writing as confidential or as to
which it is otherwise reasonably clear such information is not public, except
that any Lender may disclose any such information (a) as has become
generally available to the public other than by a breach of this Section 9.15,
(b) as may be required in any report, statement or testimony
submitted to any state or federal regulatory body having or claiming to have
jurisdiction over such Lender or to the Federal Reserve Board or the Federal Deposit
Insurance Corporation or the OCC or the NAIC or similar organizations (whether
in the United States or elsewhere) or their successors, (c) as may be
required in response to any summons or subpoena or any law, order, regulation
or ruling applicable to such Lender, (d) to any prospective Participant or
assignee in connection with any contemplated transfer pursuant to Section 9.6;
provided that such prospective transferee shall have been made aware of
this Section 9.15 and shall have agreed to be bound by its provisions as
if it were a party to this Agreement, (e) to any actual or prospective
counterparty (or its advisors) to any Hedging Agreement relating to a Credit
Party and its obligations; provided that such prospective counterparty
shall have agreed to be bound by the confidentiality provisions set forth in
this Section 9.15, (f) to Gold Sheets and other similar bank trade
publications; such information to consist of deal terms and other information
regarding the credit facilities evidenced by this Agreement customarily found
in such publications and (g) in connection with any suit, action or
proceeding for the purpose of defending itself, reducing its liability, or
protecting or exercising any of its claims, rights, remedies, or interests
under or in connection with the Credit Documents or any Secured Hedging
Agreement.

 

Section 9.16                                      Acknowledgments.

 

The Borrower and the other Credit Parties each hereby
acknowledges that:

 

(a)                                  it
has been advised by counsel in the negotiation, execution and delivery of each
Credit Document;

 

(b)                                 neither
the Administrative Agent nor any Lender has any fiduciary relationship with or
duty to any Credit Party arising out of or in connection with this Agreement
and the relationship between Administrative Agent and Lenders, on one hand, and
the Borrower and the other Credit Parties, on the other hand, in connection
herewith is solely that of debtor and creditor; and

 

(c)                                  no
joint venture exists among the Lenders or among the Borrower or the other
Credit Parties and the Lenders.

 

Section 9.17                                      Waivers of Jury
Trial; Waiver of Consequential Damages.

 

THE BORROWER, THE OTHER CREDIT PARTIES, THE AGENT AND
THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN. Each of the Credit Parties, the Administrative Agent and
the Lenders agree not to assert any claim against any other party to this
Credit Agreement or any of their respective directors, officers, employees,
attorneys, Affiliates or agents, on any theory of liability, for special,
indirect, consequential or punitive damages arising out of or otherwise relating
to any of the transactions contemplated herein.

 

Section 9.18                                      Patriot Act
Notice.

 

Each Lender and the Administrative Agent (for itself
and not on behalf of any other party) hereby notifies the Borrower that,
pursuant to the requirements of the USA Patriot Act, Title III of Pub. L.
107-56, signed into law October 26, 2001 (the “Patriot Act”), it is
required to obtain, verify and record information that identifies the Borrower,

 

81

 

which information includes the name and address of the
Borrower and other information that will allow such Lender or the
Administrative Agent, as applicable, to identify the Borrower in accordance
with the Patriot Act.

 

Section 9.19                                      Acknowledgement.

 

Each Credit Party hereby (i) expressly
acknowledges the terms of the Existing Credit Agreement, (ii) ratifies and
affirms after giving effect to this Credit Agreement its obligations under the
Credit Documents (including guarantees and security agreements) executed by
such Credit Party and (iii) after giving effect to this Agreement,
acknowledges renews and extends its continued liability under all such Credit
Documents and agrees such Credit Documents remain in full force and effect.

 

ARTICLE X

 

GUARANTY

 

Section 10.1                                      The Guaranty.

 

In order to induce the Lenders to enter into this
Agreement and any Hedging Agreement Provider to enter into any Secured Hedging
Agreement and to extend credit hereunder and in recognition of the direct
benefits to be received by the Guarantors from the Extensions of Credit hereunder
and any Secured Hedging Agreement, each of the Guarantors hereby agrees with
the Administrative Agent and the Lenders as follows:  such Guarantor hereby unconditionally and irrevocably
jointly and severally guarantees as primary obligor and not merely as surety
the full and prompt payment when due, whether upon maturity, by acceleration or
otherwise, of any and all indebtedness of the Borrower owed to the
Administrative Agent, the Lenders and the Hedging Agreement Providers. If any
or all of the indebtedness becomes due and payable hereunder or under any
Secured Hedging Agreement, each Guarantor unconditionally promises to pay such
indebtedness to the Administrative Agent, the Lenders, the Hedging Agreement
Providers, or their respective order, or demand, together with any and all
reasonable expenses which may be incurred by the Administrative Agent, the
Lenders or the Hedging Agreement Providers in collecting any of the Credit
Party Obligations. The word “indebtedness” is used in this Article X means
all Credit Party Obligations, arising in connection with this Agreement, the
other Credit Documents and any Secured Hedging Agreement, in each case,
heretofore, now, or hereafter made, incurred or created, whether voluntary or
involuntary, absolute or contingent, liquidated or unliquidated, determined or
undetermined, whether or not such indebtedness is from time to time reduced or
extinguished and thereafter increased or incurred, whether the Borrower and the
Guarantors may be liable individually or jointly with others, whether or
not recovery upon such indebtedness may be or hereafter become barred by
any statute of limitations, and whether or not such indebtedness may be or
hereafter become otherwise unenforceable.

 

Notwithstanding any provision to the contrary
contained herein or in any other of the Credit Documents, to the extent the
obligations of a Guarantor shall be adjudicated to be invalid or unenforceable
for any reason (including, without limitation, because of any applicable state
or federal law relating to fraudulent conveyances or transfers) then the
obligations of each such Guarantor hereunder shall be limited to the maximum
amount that is permissible under applicable law (whether federal or state and
including, without limitation, the Bankruptcy Code).

 

Section 10.2                                      Bankruptcy.

 

Additionally, each of the Guarantors unconditionally
and irrevocably guarantees jointly and severally the payment of any and all
indebtedness of the Borrower to the Lenders and any Hedging Agreement Provider
whether or not due or payable by the Borrower upon the occurrence of any of the
events specified in Section 7.1(e), and unconditionally promises to pay
such Credit Party Obligations to the Administrative Agent for the account of
the Lenders and to any such Hedging Agreement Provider, or order, on demand, in
lawful money of the United States. Each of the Guarantors further agrees that
to the extent that the Borrower or a Guarantor shall make a payment or a
transfer of an interest in any property to the Administrative Agent, any Lender
or any Hedging Agreement Provider, which payment or transfer or any part thereof
is subsequently invalidated, declared to be fraudulent or preferential, or
otherwise is avoided, and/or required to be repaid to the Borrower or a
Guarantor, the estate of the Borrower or a Guarantor, a trustee, receiver or
any other party under any bankruptcy law, state or federal law, common law or equitable

 

82

 

cause, then to the extent of such avoidance or
repayment, the obligation or part thereof intended to be satisfied shall
be revived and continued in full force and effect as if said payment had not
been made.

 

Section 10.3                                      Nature of
Liability.

 

The liability of each Guarantor hereunder is exclusive
and independent of any security for or other guaranty of the indebtedness of
the Borrower whether executed by any such Guarantor, any other guarantor or by
any other party, and no Guarantor’s liability hereunder shall be affected or
impaired by (a) any direction as to application of payment by the Borrower
or by any other party, or (b) any other continuing or other guaranty,
undertaking or maximum liability of a guarantor or of any other party as to the
indebtedness of the Borrower, or (c) any payment on or in reduction of any
such other guaranty or undertaking, or (d) any dissolution, termination or
increase, decrease or change in personnel by the Borrower or any other
Guarantor, or (e) any payment made to the Administrative Agent, the
Lenders or any Hedging Agreement Provider on the indebtedness which the
Administrative Agent, such Lenders or such Hedging Agreement Provider repay the
Borrower pursuant to court order in any bankruptcy, reorganization,
arrangement, moratorium or other debtor relief proceeding, and each of the
Guarantors waives any right to the deferral or modification of its obligations
hereunder by reason of any such proceeding.

 

Section 10.4                                      Independent
Obligation.

 

The obligations of each Guarantor hereunder are
independent of the obligations of any other guarantor or the Borrower, and a
separate action or actions may be brought and prosecuted against each
Guarantor whether or not action is brought against any other guarantor or the
Borrower and whether or not any other Guarantor or the Borrower is joined in
any such action or actions.

 

Section 10.5                                      Authorization.

 

Each of the Guarantors authorizes the Administrative
Agent, each Lender and each Hedging Agreement Provider without notice or demand
(except as shall be required by applicable statute and cannot be waived), and
without affecting or impairing its liability hereunder, from time to time to (a) renew,
compromise, extend, increase, accelerate or otherwise change the time for
payment of, or otherwise change the terms of the indebtedness or any part thereof
in accordance with this Agreement and any Secured Hedging Agreement, as
applicable, including any increase or decrease of the rate of interest thereon,
(b) take and hold security from any guarantor or any other party for the
payment of this Guaranty or the indebtedness and exchange, enforce waive and
release any such security, (c) apply such security and direct the order or
manner of sale thereof as the Administrative Agent and the Lenders in their
discretion may determine and (d) release or substitute any one or
more endorsers, guarantors, the Borrower or other obligors.

 

Section 10.6                                      Reliance.

 

It is not necessary for the Administrative Agent, the
Lenders or any Hedging Agreement Providers to inquire into the capacity or
powers of the Borrower or the officers, directors, members, partners or agents
acting or purporting to act on their behalf, and any indebtedness made or created
in reliance upon the professed exercise of such powers shall be guaranteed
hereunder.

 

Section 10.7                                      Waiver.

 

(a)                                     Each
of the Guarantors waives any right (except as shall be required by applicable
statute and cannot be waived) to require the Administrative Agent, any Lender
or any Hedging Agreement Provider to (i) proceed against the Borrower, any
other guarantor or any other party, (ii) proceed against or exhaust any
security held from the Borrower, any other guarantor or any other party, or (iii) pursue
any other remedy in the Administrative Agent’s, any Lender’s or any Hedging
Agreement Provider’s power whatsoever. Each of the Guarantors waives any
defense based on or arising out of any defense of the Borrower, any other
guarantor or any other party other than payment in full of the indebtedness,
including, without limitation, any defense based on or arising out of the
disability of the Borrower, any other guarantor or any other party, or the
unenforceability of the indebtedness or any part thereof from any cause,
or the cessation

 

83

 

from any cause of the liability
of the Borrower other than payment in full of the indebtedness. The
Administrative Agent or any of the Lenders may, at their election, foreclose on
any security held by the Administrative Agent or a Lender by one or more
judicial or nonjudicial sales, whether or not every aspect of any such sale is
commercially reasonable (to the extent such sale is permitted by applicable
law), or exercise any other right or remedy the Administrative Agent and any
Lender may have against the Borrower or any other party, or any security,
without affecting or impairing in any way the liability of any Guarantor
hereunder except to the extent the indebtedness has been paid. Each of the
Guarantors waives any defense arising out of any such election by the
Administrative Agent and each of the Lenders, even though such election
operates to impair or extinguish any right of reimbursement or subrogation or
other right or remedy of the Guarantors against the Borrower or any other party
or any security. Any Indebtedness of any Credit Party permitted pursuant to
clause (1) or (2) of the definition of Permitted Investments shall be
subordinated to such Credit Party’s Obligations in the manner set forth in the
Subordinated Intercompany Notes evidencing such Indebtedness.

 

(b)                                    Each
of the Guarantors waives all presentments, demands for performance, protests
and notices, including, without limitation, notices of nonperformance, notice
of protest, notices of dishonor, notices of acceptance of this Guaranty, and
notices of the existence, creation or incurring of new or additional
indebtedness. Each Guarantor assumes all responsibility for being and keeping
itself informed of the Borrower’s financial condition and assets, and of all
other circumstances bearing upon the risk of nonpayment of the indebtedness and
the nature, scope and extent of the risks which such Guarantor assumes and
incurs hereunder, and agrees that neither the Administrative Agent nor any
Lender shall have any duty to advise such Guarantor of information known to it
regarding such circumstances or risks.

 

(c)                                     Until
all of the indebtedness is paid in full in cash, each of the Guarantors hereby
agrees it will not exercise any rights of subrogation which it may at any
time otherwise have as a result of this Guaranty (whether contractual, under Section 509
of the U.S. Bankruptcy Code, or otherwise) to the claims of the Lenders or any
Hedging Agreement Provider against the Borrower or any other guarantor of the
indebtedness of the Borrower owing to the Lenders or such Hedging Agreement
Provider (collectively, the “Other Parties”) and all contractual,
statutory or common law rights of reimbursement, contribution or indemnity from
any Other Party which it may at any time otherwise have as a result of
this Guaranty until such time as the Credit Party Obligations (other than
contingent indemnity obligations) shall have been paid in full, none of the
Credit Documents or any Secured Hedging Agreement remains in effect and the
Commitments have been terminated. Each of the Guarantors hereby further agrees
not to exercise any right to enforce any other remedy which the Administrative
Agent, the Lenders or any Hedging Agreement Provider now have or may hereafter
have against any Other Party, any endorser or any other guarantor of all or any
part of the indebtedness of the Borrower and any benefit of, and any right
to participate in, any security or collateral given to or for the benefit of
the Lenders and/or any Hedging Agreement Provider to secure payment of the
indebtedness of the Borrower until such time as the Credit Party Obligations
(other than contingent indemnity obligations) shall have been paid in full, no
Credit Document or Secured Hedging Agreement remains in effect and the
Commitments have been terminated.

 

Section 10.8                                      Limitation on Enforcement.

 

The Lenders and the Hedging Agreement Providers agree
that this Guaranty may be enforced only by the action of the
Administrative Agent acting upon the instructions of the Required Lenders and
any such Hedging Agreement Provider (only with respect to obligations under the
applicable Secured Hedging Agreement) and that no Lender or Hedging Agreement
Provider shall have any right individually to seek to enforce or to enforce
this Guaranty, it being understood and agreed that such rights and remedies may be
exercised by the Administrative Agent for the benefit of the Lenders under the
terms of this Agreement and for the benefit of any Hedging Agreement Provider
under any Secured Hedging Agreement. The Lenders and the Hedging Agreement
Providers further agree that this Guaranty may not be enforced against any
director, officer, employee or stockholder of the Guarantors.

 

Section 10.9                                      Confirmation of
Payment.

 

The Administrative Agent and the Lenders will, upon
request after payment of the indebtedness and obligations which are the subject
of this Guaranty and termination of the Commitments relating thereto, confirm
to the

 

84

 

Borrower, the Guarantors or any other Person that the
such indebtedness and obligations have been paid and the Commitments relating
thereto terminated, subject to the provisions of Section 10.2.

 

85

 

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

 

	
  BORROWER:

  	
  COMPRESSION POLYMERS HOLDING CORPORATION,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JOHN CHALARIS

  	
   

  
	
   

  	
   

  	
  Name:

  	
  John Chalaris

  
	
   

  	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  PARENT:

  	
  COMPRESSION POLYMERS HOLDING II CORPORATION,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JOHN CHALARIS

  	
   

  
	
   

  	
   

  	
  Name:

  	
  John Chalaris

  
	
   

  	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  GUARANTORS:

  	
  CPCAPITOL ACQUISITION CORP.,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JOHN CHALARIS

  	
   

  
	
   

  	
   

  	
  Name:

  	
  John Chalaris

  
	
   

  	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  COMPRESSION POLYMERS CORP.,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JOHN CHALARIS

  	
   

  
	
   

  	
   

  	
  Name:

  	
  John Chalaris

  
	
   

  	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  VYCOM CORP.,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JOHN CHALARIS

  	
   

  
	
   

  	
   

  	
  Name:

  	
  John Chalaris

  
	
   

  	
   

  	
  Title:

  	
  Chief Financial Officer

  
								

 

86

 

	
  ADMINISTRATIVE
  AGENT

  	
   

  	
   

  
	
  AND LENDER:

  	
  WACHOVIA BANK,
  NATIONAL

  
	
   

  	
  ASSOCIATION, as Administrative Agent and

  
	
   

  	
  as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ SHANNAN TOWNSEND

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Shannan Townsend

  
	
   

  	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  LENDERS:

  	
  GENERAL ELECTRIC
  CAPITAL CORPORATION,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ SANDRA CLAGHORN

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Sandra Claghorn

  
	
   

  	
   

  	
  Title:

  	
  SVP

  
						

 

87

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