Document:

Exhibit 10.f

 

Execution Version

 

 

 

CREDIT AGREEMENT

 

dated as of April 16,
2009

 

among

 

CONTINENTAL MATERIALS CORPORATION,

as the Company,

 

THE VARIOUS FINANCIAL INSTITUTIONS PARTY HERETO,

as Lenders,

 

and

 

THE PRIVATEBANK AND TRUST COMPANY,

as Administrative Agent and Arranger

 

 

 

 

	
  SECTION 1

  	
   

  	
  DEFINITIONS

  	
   

  	
  1

  
	
  1.1

  	
   

  	
  Definitions

  	
   

  	
  1

  
	
  1.2

  	
   

  	
  Other Interpretive Provisions

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2

  	
   

  	
  COMMITMENTS OF THE LENDERS; BORROWING, CONVERSION
  AND LETTER OF CREDIT PROCEDURES

  	
   

  	
  23

  
	
  2.1

  	
   

  	
  Commitments

  	
   

  	
  23

  
	
   

  	
   

  	
  2.1.1

  	
  Revolving Loan Commitment

  	
   

  	
  23

  
	
   

  	
   

  	
  2.1.2

  	
  Term Loan Commitment

  	
   

  	
  23

  
	
   

  	
   

  	
  2.1.3

  	
  L/C Commitment

  	
   

  	
  23

  
	
  2.2

  	
   

  	
  Loan Procedures

  	
   

  	
  24

  
	
   

  	
   

  	
  2.2.1

  	
  Various Types of Loans

  	
   

  	
  24

  
	
   

  	
   

  	
  2.2.2

  	
  Borrowing Procedures

  	
   

  	
  24

  
	
   

  	
   

  	
  2.2.3

  	
  Conversion and Continuation Procedures

  	
   

  	
  24

  
	
  2.3

  	
   

  	
  Letter of Credit Procedures

  	
   

  	
  25

  
	
   

  	
   

  	
  2.3.1

  	
  L/C Applications

  	
   

  	
  25

  
	
   

  	
   

  	
  2.3.2

  	
  Participations in Letters of Credit

  	
   

  	
  26

  
	
   

  	
   

  	
  2.3.3

  	
  Reimbursement Obligations

  	
   

  	
  26

  
	
   

  	
   

  	
  2.3.4

  	
  Funding by Lenders to Issuing Lender

  	
   

  	
  27

  
	
  2.4

  	
   

  	
  Commitments Several

  	
   

  	
  28

  
	
  2.5

  	
   

  	
  Certain Conditions

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3

  	
   

  	
  EVIDENCING OF LOANS

  	
   

  	
  28

  
	
  3.1

  	
   

  	
  Notes

  	
   

  	
  28

  
	
  3.2

  	
   

  	
  Recordkeeping

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 4

  	
   

  	
  INTEREST

  	
   

  	
  29

  
	
  4.1

  	
   

  	
  Interest Rates

  	
   

  	
  29

  
	
  4.2

  	
   

  	
  Interest Payment Dates

  	
   

  	
  29

  
	
  4.3

  	
   

  	
  Setting and Notice of LIBOR Rates

  	
   

  	
  29

  
	
  4.4

  	
   

  	
  Computation of Interest

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5

  	
   

  	
  FEES

  	
   

  	
  29

  
	
  5.1

  	
   

  	
  Non-Use Fee

  	
   

  	
  29

  
	
  5.2

  	
   

  	
  Letter of Credit Fees

  	
   

  	
  30

  
	
  5.3

  	
   

  	
  Administrative Agent’s Fees

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6

  	
   

  	
  REDUCTION OR TERMINATION OF THE REVOLVING
  COMMITMENT; PREPAYMENTS

  	
   

  	
  30

  
	
  6.1

  	
   

  	
  Reduction or Termination of the Revolving Commitment

  	
   

  	
  30

  
	
   

  	
   

  	
  6.1.1

  	
  Voluntary Reduction or Termination of the Revolving
  Commitment

  	
   

  	
  30

  
	
   

  	
   

  	
  6.1.2

  	
  All Reductions of the Revolving Commitment

  	
   

  	
  31

  
	
  6.2

  	
   

  	
  Prepayments

  	
   

  	
  31

  
	
   

  	
   

  	
  6.2.1

  	
  Voluntary Prepayments

  	
   

  	
  31

  
	
  6.3

  	
   

  	
  Manner of Prepayments

  	
   

  	
  32

  

 

 

	
   

  	
   

  	
  6.3.1

  	
  All Prepayments

  	
   

  	
  32

  
	
  6.4

  	
   

  	
  Repayments

  	
   

  	
  32

  
	
   

  	
   

  	
  6.4.1

  	
  Revolving Loans

  	
   

  	
  32

  
	
   

  	
   

  	
  6.4.2

  	
  Term Loan

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 7

  	
   

  	
  MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES

  	
   

  	
  33

  
	
  7.1

  	
   

  	
  Making of Payments

  	
   

  	
  33

  
	
  7.2

  	
   

  	
  Application of Certain Payments

  	
   

  	
  33

  
	
  7.3

  	
   

  	
  Due Date Extension

  	
   

  	
  33

  
	
  7.4

  	
   

  	
  Setoff

  	
   

  	
  33

  
	
  7.5

  	
   

  	
  Proration of Payments

  	
   

  	
  34

  
	
  7.6

  	
   

  	
  Taxes

  	
   

  	
  34

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 8

  	
   

  	
  INCREASED COSTS; SPECIAL PROVISIONS FOR LIBOR LOANS

  	
   

  	
  36

  
	
  8.1

  	
   

  	
  Increased Costs

  	
   

  	
  36

  
	
  8.2

  	
   

  	
  Basis for Determining Interest Rate Inadequate or
  Unfair

  	
   

  	
  37

  
	
  8.3

  	
   

  	
  Changes in Law Rendering LIBOR Loans Unlawful

  	
   

  	
  37

  
	
  8.4

  	
   

  	
  Funding Losses

  	
   

  	
  37

  
	
  8.5

  	
   

  	
  Right of Lenders to Fund through Other Offices

  	
   

  	
  38

  
	
  8.6

  	
   

  	
  Discretion of Lenders as to Manner of Funding

  	
   

  	
  38

  
	
  8.7

  	
   

  	
  Mitigation of Circumstances; Replacement of Lenders

  	
   

  	
  38

  
	
  8.8

  	
   

  	
  Conclusiveness of Statements; Survival of Provisions

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 9

  	
   

  	
  REPRESENTATIONS AND WARRANTIES

  	
   

  	
  38

  
	
  9.1

  	
   

  	
  Organization

  	
   

  	
  38

  
	
  9.2

  	
   

  	
  Authorization; No Conflict

  	
   

  	
  39

  
	
  9.3

  	
   

  	
  Validity and Binding Nature

  	
   

  	
  39

  
	
  9.4

  	
   

  	
  Financial Condition

  	
   

  	
  39

  
	
  9.5

  	
   

  	
  No Material Adverse Change

  	
   

  	
  40

  
	
  9.6

  	
   

  	
  Litigation and Contingent Liabilities

  	
   

  	
  40

  
	
  9.7

  	
   

  	
  Ownership of Properties; Liens

  	
   

  	
  40

  
	
  9.8

  	
   

  	
  Equity Ownership; Subsidiaries

  	
   

  	
  40

  
	
  9.9

  	
   

  	
  Pension Plans

  	
   

  	
  40

  
	
  9.10

  	
   

  	
  Investment Company Act

  	
   

  	
  41

  
	
  9.11

  	
   

  	
  Intentionally Omitted

  	
   

  	
  41

  
	
  9.12

  	
   

  	
  Regulation U

  	
   

  	
  41

  
	
  9.13

  	
   

  	
  Taxes

  	
   

  	
  41

  
	
  9.14

  	
   

  	
  Solvency, etc.

  	
   

  	
  41

  
	
  9.15

  	
   

  	
  Environmental Matters

  	
   

  	
  42

  
	
  9.16

  	
   

  	
  Insurance

  	
   

  	
  42

  
	
  9.17

  	
   

  	
  Real Property

  	
   

  	
  42

  
	
  9.18

  	
   

  	
  Information

  	
   

  	
  42

  
	
  9.19

  	
   

  	
  Intellectual Property

  	
   

  	
  43

  
	
  9.20

  	
   

  	
  Burdensome Obligations

  	
   

  	
  43

  

 

ii

 

	
  9.21

  	
   

  	
  Labor Matters

  	
   

  	
  43

  
	
  9.22

  	
   

  	
  No Default

  	
   

  	
  43

  
	
  9.23

  	
   

  	
  Inactive Subsidiaries

  	
   

  	
  43

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 10

  	
   

  	
  AFFIRMATIVE COVENANTS

  	
   

  	
  43

  
	
  10.1

  	
   

  	
  Reports, Certificates and Other Information

  	
   

  	
  43

  
	
   

  	
   

  	
  10.1.1

  	
  Annual Report

  	
   

  	
  43

  
	
   

  	
   

  	
  10.1.2

  	
  Interim Reports

  	
   

  	
  44

  
	
   

  	
   

  	
  10.1.3

  	
  Compliance Certificates

  	
   

  	
  44

  
	
   

  	
   

  	
  10.1.4

  	
  Reports to the SEC and to Shareholders

  	
   

  	
  45

  
	
   

  	
   

  	
  10.1.5

  	
  Notice of Default, Litigation and ERISA Matters

  	
   

  	
  45

  
	
   

  	
   

  	
  10.1.6

  	
  Borrowing Base Certificates and Additional Monthly
  Reports

  	
   

  	
  45

  
	
   

  	
   

  	
  10.1.7

  	
  Management Reports

  	
   

  	
  46

  
	
   

  	
   

  	
  10.1.8

  	
  Projections

  	
   

  	
  46

  
	
   

  	
   

  	
  10.1.9

  	
  Subordinated Debt Notices

  	
   

  	
  46

  
	
   

  	
   

  	
  10.1.10

  	
  Other Information

  	
   

  	
  46

  
	
  10.2

  	
   

  	
  Books, Records and Inspections

  	
   

  	
  46

  
	
  10.3

  	
   

  	
  Maintenance of Property; Insurance

  	
   

  	
  47

  
	
  10.4

  	
   

  	
  Compliance with Laws, Material Contracts; Payment of
  Taxes and Liabilities

  	
   

  	
  48

  
	
  10.5

  	
   

  	
  Maintenance of Existence, etc.

  	
   

  	
  48

  
	
  10.6

  	
   

  	
  Use of Proceeds

  	
   

  	
  48

  
	
  10.7

  	
   

  	
  Employee Benefit Plans

  	
   

  	
  48

  
	
  10.8

  	
   

  	
  Environmental Matters

  	
   

  	
  48

  
	
  10.9

  	
   

  	
  Further Assurances

  	
   

  	
  49

  
	
  10.10

  	
   

  	
  Deposit Accounts

  	
   

  	
  49

  
	
  10.11

  	
   

  	
  Interest Rate Protection

  	
   

  	
  49

  
	
  10.12

  	
   

  	
  Rocky Mountain Transaction

  	
   

  	
  50

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11

  	
   

  	
  NEGATIVE COVENANTS

  	
   

  	
  50

  
	
  11.1

  	
   

  	
  Debt

  	
   

  	
  50

  
	
  11.2

  	
   

  	
  Liens

  	
   

  	
  50

  
	
  11.3

  	
   

  	
  Intentionally Omitted

  	
   

  	
  50

  
	
  11.4

  	
   

  	
  Restricted Payments

  	
   

  	
  50

  
	
  11.5

  	
   

  	
  Mergers, Consolidations, Sales

  	
   

  	
  51

  
	
  11.6

  	
   

  	
  Modification of Organizational Documents

  	
   

  	
  51

  
	
  11.7

  	
   

  	
  Transactions with Affiliates

  	
   

  	
  51

  
	
  11.8

  	
   

  	
  Unconditional Purchase Obligations

  	
   

  	
  51

  
	
  11.9

  	
   

  	
  Inconsistent Agreements

  	
   

  	
  52

  
	
  11.10

  	
   

  	
  Business Activities; Issuance of Equity

  	
   

  	
  52

  
	
  11.11

  	
   

  	
  Investments

  	
   

  	
  52

  
	
  11.12

  	
   

  	
  Restriction of Amendments to Certain Documents

  	
   

  	
  53

  
	
  11.13

  	
   

  	
  Financial Covenants

  	
   

  	
  53

  
	
   

  	
   

  	
  11.13.1

  	
  Minimum Adjusted EBITDA

  	
   

  	
  53

  
	
   

  	
   

  	
  11.13.2

  	
  Minimum Fixed Charge Coverage Ratio

  	
   

  	
  54

  
	
   

  	
   

  	
  11.13.3

  	
  Minimum Tangible Net Worth

  	
   

  	
  54

  
							

 

iii

 

	
   

  	
   

  	
  11.13.4

  	
  Maximum Adjusted Total Cash Flow Leverage

  	
   

  	
  54

  
	
   

  	
   

  	
  11.13.5

  	
  Capital Expenditures

  	
   

  	
  54

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 12

  	
   

  	
  EFFECTIVENESS; CONDITIONS OF LENDING, ETC

  	
   

  	
  54

  
	
  12.1

  	
   

  	
  Initial Credit Extension

  	
   

  	
  54

  
	
   

  	
   

  	
  12.1.1

  	
  Notes

  	
   

  	
  55

  
	
   

  	
   

  	
  12.1.2

  	
  Authorization Documents

  	
   

  	
  55

  
	
   

  	
   

  	
  12.1.3

  	
  Consents, etc.

  	
   

  	
  55

  
	
   

  	
   

  	
  12.1.4

  	
  Borrowing Request and Letter of Direction

  	
   

  	
  55

  
	
   

  	
   

  	
  12.1.5

  	
  Guaranty and Collateral Agreement

  	
   

  	
  55

  
	
   

  	
   

  	
  12.1.6

  	
  Perfection Certificate

  	
   

  	
  55

  
	
   

  	
   

  	
  12.1.7

  	
  Mortgages

  	
   

  	
  55

  
	
   

  	
   

  	
  12.1.8

  	
  Williams Furnace Mortgaged Property

  	
   

  	
  55

  
	
   

  	
   

  	
  12.1.9

  	
  Draft 2008 Financial Statements

  	
   

  	
  57

  
	
   

  	
   

  	
  12.1.10

  	
  Opinions of Counsel

  	
   

  	
  57

  
	
   

  	
   

  	
  12.1.11

  	
  Insurance

  	
   

  	
  57

  
	
   

  	
   

  	
  12.1.12

  	
  Intentionally Omitted

  	
   

  	
  57

  
	
   

  	
   

  	
  12.1.13

  	
  Payment of Fees

  	
   

  	
  57

  
	
   

  	
   

  	
  12.1.16

  	
  Field Audit Report

  	
   

  	
  58

  
	
   

  	
   

  	
  12.1.17

  	
  Search Results; Lien Terminations

  	
   

  	
  58

  
	
   

  	
   

  	
  12.1.18

  	
  Filings, Registrations and Recordings

  	
   

  	
  58

  
	
   

  	
   

  	
  12.1.19

  	
  Borrowing Base Certificate

  	
   

  	
  58

  
	
   

  	
   

  	
  12.1.20

  	
  Closing Certificate

  	
   

  	
  58

  
	
   

  	
   

  	
  12.1.21

  	
  Other

  	
   

  	
  58

  
	
  12.2

  	
   

  	
  Conditions

  	
   

  	
  58

  
	
   

  	
   

  	
  12.2.1

  	
  Compliance with Warranties, No Default, etc.

  	
   

  	
  58

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 13

  	
   

  	
  EVENTS OF DEFAULT AND THEIR EFFECT

  	
   

  	
  59

  
	
  13.1

  	
   

  	
  Events of Default

  	
   

  	
  59

  
	
   

  	
   

  	
  13.1.1

  	
  Non-Payment of the Loans, etc.

  	
   

  	
  59

  
	
   

  	
   

  	
  13.1.2

  	
  Cross-Default

  	
   

  	
  59

  
	
   

  	
   

  	
  13.1.3

  	
  Bankruptcy, Insolvency, etc.

  	
   

  	
  59

  
	
   

  	
   

  	
  13.1.4

  	
  Non-Compliance with Loan Documents

  	
   

  	
  59

  
	
   

  	
   

  	
  13.1.5

  	
  Representations; Warranties

  	
   

  	
  60

  
	
   

  	
   

  	
  13.1.6

  	
  Pension Plans

  	
   

  	
  60

  
	
   

  	
   

  	
  13.1.7

  	
  Litigation

  	
   

  	
  60

  
	
   

  	
   

  	
  13.1.8

  	
  Invalidity of Collateral Documents, etc.

  	
   

  	
  60

  
	
   

  	
   

  	
  13.1.9

  	
  Invalidity of Subordination Provisions, etc.

  	
   

  	
  60

  
	
   

  	
   

  	
  13.1.10

  	
  Change of Control

  	
   

  	
  61

  
	
   

  	
   

  	
  13.1.11

  	
  Material Adverse Effect. The occurrence of any event
  having a Material Adverse Effect

  	
   

  	
  61

  
	
  13.2

  	
   

  	
  Effect of Event of Default

  	
   

  	
  61

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 14

  	
   

  	
  THE AGENT

  	
   

  	
  61

  
	
  14.1

  	
   

  	
  Appointment and Authorization

  	
   

  	
  61

  
	
  14.2

  	
   

  	
  Issuing Lender

  	
   

  	
  62

  

 

iv

 

	
  14.3

  	
   

  	
  Delegation of Duties

  	
   

  	
  62

  
	
  14.4

  	
   

  	
  Exculpation of Administrative Agent

  	
   

  	
  62

  
	
  14.5

  	
   

  	
  Reliance by Administrative Agent

  	
   

  	
  62

  
	
  14.6

  	
   

  	
  Notice of Default

  	
   

  	
  63

  
	
  14.7

  	
   

  	
  Credit Decision

  	
   

  	
  63

  
	
  14.8

  	
   

  	
  Indemnification

  	
   

  	
  64

  
	
  14.9

  	
   

  	
  Administrative Agent in Individual Capacity

  	
   

  	
  64

  
	
  14.10

  	
   

  	
  Successor Administrative Agent

  	
   

  	
  64

  
	
  14.11

  	
   

  	
  Collateral Matters

  	
   

  	
  65

  
	
  14.12

  	
   

  	
  Administrative Agent May File Proofs of Claim

  	
   

  	
  65

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 15

  	
   

  	
  GENERAL

  	
   

  	
  66

  
	
  15.1

  	
   

  	
  Waiver; Amendments

  	
   

  	
  66

  
	
  15.2

  	
   

  	
  Confirmations

  	
   

  	
  67

  
	
  15.3

  	
   

  	
  Notices

  	
   

  	
  67

  
	
  15.4

  	
   

  	
  Computations

  	
   

  	
  67

  
	
  15.5

  	
   

  	
  Costs, Expenses and Taxes

  	
   

  	
  67

  
	
  15.6

  	
   

  	
  Assignments; Participations

  	
   

  	
  68

  
	
   

  	
   

  	
  15.6.1

  	
  Assignments

  	
   

  	
  68

  
	
   

  	
   

  	
  15.6.2

  	
  Participations

  	
   

  	
  69

  
	
  15.7

  	
   

  	
  Register

  	
   

  	
  69

  
	
  15.8

  	
   

  	
  GOVERNING LAW

  	
   

  	
  69

  
	
  15.9

  	
   

  	
  Confidentiality

  	
   

  	
  70

  
	
  15.10

  	
   

  	
  Severability

  	
   

  	
  70

  
	
  15.11

  	
   

  	
  Nature of Remedies

  	
   

  	
  70

  
	
  15.12

  	
   

  	
  Entire Agreement

  	
   

  	
  71

  
	
  15.13

  	
   

  	
  Counterparts

  	
   

  	
  71

  
	
  15.14

  	
   

  	
  Successors and Assigns

  	
   

  	
  71

  
	
  15.15

  	
   

  	
  Captions

  	
   

  	
  71

  
	
  15.16

  	
   

  	
  Customer Identification - USA Patriot Act Notice

  	
   

  	
  71

  
	
  15.17

  	
   

  	
  INDEMNIFICATION BY THE COMPANY

  	
   

  	
  71

  
	
  15.18

  	
   

  	
  Nonliability of Lenders

  	
   

  	
  72

  
	
  15.19

  	
   

  	
  FORUM SELECTION AND CONSENT TO JURISDICTION

  	
   

  	
  73

  
	
  15.20

  	
   

  	
  WAIVER OF JURY TRIAL

  	
   

  	
  73

  

 

v

 

ANNEXES

 

	
  ANNEX A

  	
  Lenders and Pro Rata
  Shares

  
	
  ANNEX B

  	
  Addresses for Notices

  
	
  ANNEX C

  	
  Applicable Margin

  

 

SCHEDULES

 

	
  SCHEDULE 9.6

  	
  Litigation and
  Contingent Liabilities

  
	
  SCHEDULE 9.8

  	
  Equity Ownership and
  Subsidiaries

  
	
  SCHEDULE 9.16

  	
  Insurance

  
	
  SCHEDULE 9.17

  	
  Real Property

  
	
  SCHEDULE 9.21

  	
  Labor Matters

  
	
  SCHEDULE 11.1

  	
  Existing Debt

  
	
  SCHEDULE 11.2

  	
  Existing Liens

  
	
  SCHEDULE 11.11

  	
  Investments

  
	
  SCHEDULE 12.1

  	
  Debt to be Repaid

  

 

EXHIBITS

 

	
  EXHIBIT A

  	
  Form of Note
  (Section 3.1)

  
	
  EXHIBIT B

  	
  Form of Compliance
  Certificate (Section 10.1.3)

  
	
  EXHIBIT C

  	
  Form of Borrowing
  Base Certificate (Section 1.1)

  
	
  EXHIBIT D

  	
  Form of Assignment
  Agreement (Section 15.6.1)

  
	
  EXHIBIT E

  	
  Form of Notice of
  Borrowing (Section 2.2.2)

  
	
  EXHIBIT F

  	
  Form of Notice of
  Conversion/Continuation (Section 2.2.3)

  

 

 

CREDIT AGREEMENT

 

THIS CREDIT AGREEMENT
dated as of April 16, 2009 (this “Agreement”) is entered into among
CONTINENTAL MATERIALS CORPORATION, a Delaware corporation (the “Company”),
the financial institutions that are or may from time to time become parties
hereto (together with their respective successors and assigns, the “Lenders”)
and THE PRIVATEBANK AND TRUST COMPANY, an Illinois state chartered
bank (in its
individual capacity, “PVBT”), as administrative agent for the Lenders
and as arranger.

 

The Lenders have agreed
to make available to the Company a term loan and a revolving credit facility
(which includes letters of credit) upon the terms and conditions set forth
herein.

 

In consideration of the
mutual agreements herein contained, the parties hereto agree as follows:

 

SECTION 1            DEFINITIONS.

 

1.1           Definitions.  When used herein the following terms shall
have the following meanings:

 

Account Debtor is defined in the Guaranty and
Collateral Agreement.

 

Account or Accounts is defined in the UCC.

 

Acquisition means any transaction or series of
related transactions for the purpose of or resulting, directly or indirectly,
in (a) the acquisition of all or substantially all of the assets of a Person,
or of all or substantially all of any business or division of a Person, (b) the
acquisition of in excess of 50% of the Capital Securities of any Person, or
otherwise causing any Person to become a Subsidiary, or (c) a merger or
consolidation or any other combination with another Person (other than a Person
that is already a Subsidiary).

 

Adjusted EBITDA means EBITDA for the applicable
Computation Period plus any gains from Asset Dispositions, any
extraordinary gains and any gains from discontinued operations (in each case,
any gains shall be net of all costs and expenses incurred in connection
therewith and such gains shall only be included to the extent such gains were
subtracted in the calculation of EBITDA).

 

Adjusted Total Cash Flow
Leverage Ratio means,
as of the last day of any Fiscal Quarter, the ratio of (a) Total Debt as
of such day (excluding, for purposes of the calculation of this financial
covenant only, any Funded Debt resulting from Revolving Loans made on the
Closing Date to provide cash collateral in replacement of, or as collateral
for, the Existing LCs, but only for so long as such cash collateral is
outstanding) to (b) Adjusted EBITDA for the Computation Period ending on
such day.  For the sake of clarity, this
calculation shall be used to determine financial covenant compliance (not for
the determination of the pricing of the Obligations).

 

 

Administrative Agent means PVBT in its capacity as
administrative agent for the Lenders hereunder and any successor thereto in
such capacity.

 

Affected Loan - see Section 8.3.

 

Affiliate of any Person means (a) any other
Person which, directly or indirectly, controls or is controlled by or is under
common control with such Person, (b) any officer or director of such
Person and (c) with respect to any Lender, any entity administered or
managed by such Lender or an Affiliate or investment advisor thereof and which
is engaged in making, purchasing, holding or otherwise investing in commercial
loans.  A Person shall be deemed to be “controlled
by” any other Person if such Person possesses, directly or indirectly, power to
vote 5% or more of the securities (on a fully diluted basis) having ordinary
voting power for the election of directors or managers or power to direct or
cause the direction of the management and policies of such Person whether by
contract or otherwise.  Unless expressly
stated otherwise herein, neither the Administrative Agent nor any Lender shall
be deemed an Affiliate of any Loan Party.

 

Agent Fee Letter  means the Fee Letter dated
as of February 3, 2009 (effective February 19, 2009) between the
Company and the Agent, as the same may be amended, restated or supplemented
from time to time.

 

Agreement - see the Preamble.

 

Applicable Margin - see Annex
C hereto.

 

Asset Disposition means the sale, lease, assignment or
other transfer for value (each, a “Disposition”) by any Loan Party to
any Person (other than a Loan Party) of any asset or right of such Loan Party
(including, the loss, destruction or damage of any thereof or any actual or threatened
(in writing to any Loan Party) condemnation, confiscation, requisition, seizure
or taking thereof) other than (a) the Disposition of any asset which is to
be replaced, and is in fact replaced, within ninety (90) days with another
asset performing the same or a similar function, and (b) the sale or lease
of inventory in the ordinary course of business.

 

Assignee - see Section 15.6.1.

 

Assignment Agreement - see Section 15.6.1.

 

Attorney Costs means, with respect to any Person, all
reasonable fees and charges of any counsel to such Person, the reasonable
allocable cost of internal legal services of such Person, all reasonable
disbursements of such internal counsel and all court costs and similar legal
expenses.

 

Bank Product Agreements means those certain cash management
service agreements entered into from time to time between any Loan Party and a
Lender or its Affiliates in connection with any of the Bank Products.

 

Bank Product Obligations means all obligations, liabilities,
contingent reimbursement obligations, fees, and expenses owing by the Loan
Parties to any Lender or its Affiliates pursuant to or evidenced by the Bank
Product Agreements and irrespective of whether for the payment of 

 

2

 

money, whether
direct or indirect, absolute or contingent, due or to become due, now existing
or hereafter arising, and including all such amounts that a Loan Party is
obligated to reimburse to the Administrative Agent or any Lender as a result of
the Administrative Agent or such Lender purchasing participations or executing
indemnities or reimbursement obligations with respect to the Bank Products
provided to the Loan Parties pursuant to the Bank Product Agreements.

 

Bank Products means any service or facility extended
to any Loan Party by any Lender or its Affiliates including:  (a) credit cards, (b) credit card
processing services, (c) debit cards, (d) purchase cards, (e) ACH
transactions, (f) cash management, including controlled disbursement,
accounts or services, or (g) Hedging Agreements.

 

Base Rate means at any time the greater of (a) the
Federal Funds Rate plus 0.5% and (b) the Prime Rate.

 

Base Rate Loan means any Loan which bears interest at
or by reference to the Base Rate.

 

Base Rate Margin - see the definition of Applicable
Margin.

 

Borrowing Base means an amount equal to the total of (a) 80%
of the unpaid amount (net of such reserves and allowances as the Administrative
Agent deems necessary in its reasonable discretion) of all Eligible Accounts, plus
(b) the lesser of (i) 50% of the value of all Eligible Inventory
valued at the lower of cost (determined on a first in-first out or average
basis, as the case may be, consistent with past practice) or market value (net
of such reserves and allowances as the Administrative Agent deems necessary in
its reasonable discretion, including, without limitation, reserves in respect
of slow-moving Inventory noted in any field audit report), and (ii) $10,000,000, minus
(c) the Term Loan Reserve.  Notwithstanding anything to the contrary
contained herein, the availability provided by (x) the Dating Program
Accounts shall not exceed $5,000,000 in the aggregate, and (y) the foreign
Accounts covered by foreign account receivable insurance shall not exceed
$250,000 in the aggregate.

 

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

 

Business Day means any day on which PVBT is open for
commercial banking business in Chicago, Illinois and, in the case of a Business
Day which relates to a LIBOR Loan, on which dealings are carried on in the
London interbank eurodollar market.

 

Capital Expenditures means all expenditures which, in
accordance with GAAP, would be required to be capitalized and shown on the
consolidated balance sheet of the Company, including expenditures in respect of
Capital Leases, but excluding expenditures made in connection with the
replacement, substitution or restoration of assets to the extent financed (a) from
insurance proceeds (or other similar recoveries) paid on account of the loss of
or damage to the assets being replaced or restored or (b) with awards of
compensation arising from the taking by eminent domain or condemnation of the
assets being replaced.

 

Capital Lease means, with respect to any Person, any
lease of (or other agreement conveying the right to use) any real or personal
property by such Person that, in conformity with GAAP, is accounted for as a
capital lease on the balance sheet of such Person.

 

3

 

Capital Securities means, with respect to any Person, all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of such Person’s capital, whether now outstanding
or issued or acquired after the Closing Date, including common shares,
preferred shares, membership interests in a limited liability company, limited
or general partnership interests in a partnership, interests in a Trust,
interests in other unincorporated organizations or any other equivalent of such
ownership interest.

 

Cash Collateralize means to deliver cash collateral to the
Administrative Agent, to be held as cash collateral for outstanding Letters of
Credit in an amount equal to 102% of the outstanding undrawn face amount of
such Letters of Credit, pursuant to documentation reasonably satisfactory to
the Administrative Agent.  Derivatives of
such term have corresponding meanings.

 

Cash Equivalent
Investment means,
at any time, (a) any evidence of Debt, maturing not more than one year
after such time, issued or guaranteed by the United States Government or any
agency thereof, (b) commercial paper, maturing not more than one year from
the date of issue, or corporate demand notes, in each case (unless issued by a
Lender or its holding company) rated at least A-l by Standard & Poor’s
Ratings Services, a division of The McGraw-Hill Companies, Inc. or P-l by
Moody’s Investors Service, Inc., (c) any certificate of deposit, time
deposit or banker’s acceptance, maturing not more than one year after such
time, or any overnight Federal Funds transaction that is issued or sold by any
Lender or its holding company (or by a commercial banking institution that is a
member of the Federal Reserve System and has a combined capital and surplus and
undivided profits of not less than $500,000,000), (d) any repurchase
agreement entered into with any Lender (or commercial banking institution of
the nature referred to in clause (c)) which (i) is secured by a
fully perfected security interest in any obligation of the type described in
any of clauses (a) through (c) above and (ii) has
a market value at the time such repurchase agreement is entered into of not
less than 100% of the repurchase obligation of such Lender (or other commercial
banking institution) thereunder, (e) money market accounts or mutual funds
which invest exclusively in assets satisfying the foregoing requirements, and (f) other
short term liquid investments approved in writing by the Administrative Agent.

 

Change of Control means the occurrence of any of the
following events: (a) a transfer of or accumulation of a majority of the
outstanding voting stock of the Company shall be acquired, directly or
indirectly, by any Person (including any group acting together), who own on the
date hereof less than 10% of such voting stock, or (b) the Company shall
cease to, directly or indirectly, own and control 100% of each class of the
outstanding Capital Securities of each Subsidiary.

 

Closing Date - see Section 12.1.

 

Code means the Internal Revenue Code of 1986.

 

Collateral as such term is defined in the Guaranty
and Collateral Agreement of even date herewith executed by the Loan Parties.

 

4

 

Collateral Access
Agreement means
an agreement in form and substance reasonably satisfactory to the
Administrative Agent pursuant to which a mortgagee or lessor of real property
on which Collateral is stored or otherwise located, or a warehouseman,
processor or other bailee of Inventory or other property owned by any Loan Party,
acknowledges the Liens of the Administrative Agent and waives any Liens held by
such Person on such property, and, in the case of any such agreement with a
mortgagee or lessor, permits the Administrative Agent reasonable access to and
use of such real property following the occurrence and during the continuance
of an Event of Default to assemble, complete and sell any Collateral stored or
otherwise located thereon.

 

Collateral Documents means, collectively, the Guaranty and
Collateral Agreement, each Mortgage, each Environmental Indemnity Agreement,
each Collateral Access Agreement, each Perfection Certificate, each control
agreement and any other agreement or instrument pursuant to which the Company,
any Subsidiary or any other Person grants or purports to grant collateral to
the Administrative Agent for the benefit of the Lenders or otherwise relates to
such collateral.

 

Commitment means, as to any Lender, such Lender’s
commitment to make Loans, and to issue or participate in Letters of Credit,
under this Agreement.  The initial amount
of each Lender’s commitment to make Loans is set forth on Annex A.

 

Company - see the Preamble.

 

Compliance Certificate means a Compliance Certificate in
substantially the form of Exhibit B.

 

Computation Period means each period of four consecutive
Fiscal Quarters ending on the last day of a Fiscal Quarter.

 

Consolidated Net Income means, with respect to the Company and
its Subsidiaries for any period, the net income (or loss) of the Company and
its Subsidiaries for such period

 

Contingent Liability means, with respect to any Person, each
obligation and liability of such Person and all such obligations and
liabilities of such Person incurred pursuant to any agreement, undertaking or
arrangement by which such Person:  (a) guarantees,
endorses or otherwise becomes or is contingently liable upon (by direct or
indirect agreement, contingent or otherwise, to provide funds for payment, to
supply funds to, or otherwise to invest in, a debtor, or otherwise to assure a
creditor against loss) the indebtedness, dividend, obligation or other
liability of any other Person in any manner (other than by endorsement of
instruments in the course of collection), including any indebtedness, dividend
or other obligation which may be issued or incurred at some future time; (b) guarantees
the payment of dividends or other distributions upon the Capital Securities of
any other Person; (c) undertakes or agrees (whether contingently or
otherwise):  (i) to purchase,
repurchase, or otherwise acquire any indebtedness, obligation or liability of
any other Person or any property or assets constituting security therefor, (ii) to
advance or provide funds for the payment or discharge of any indebtedness,
obligation or liability of any other Person (whether in the form of loans,
advances, stock purchases, capital contributions or otherwise), or to maintain
solvency, assets, level of income, working capital or other financial condition
of any other Person, or (iii) to make payment to any other Person other 

 

5

 

than for value
received; (d) agrees to lease property or to purchase securities, property
or services from such other Person with the purpose or intent of assuring the
owner of such indebtedness or obligation of the ability of such other Person to
make payment of the indebtedness or obligation; (e) to induce the issuance
of, or in connection with the issuance of, any letter of credit for the benefit
of such other Person; or (f) undertakes or agrees otherwise to assure a
creditor against loss.  The amount of any
Contingent Liability shall (subject to any limitation set forth herein) be
deemed to be the outstanding principal amount (or maximum permitted principal
amount, if larger) of the indebtedness, obligation or other liability
guaranteed or supported thereby.

 

Controlled Group means all members of a controlled group
of corporations, all members of a controlled group of trades or businesses
(whether or not incorporated) under common control and all members of an affiliated
service group which, together with the Company or any of its Subsidiaries, are
treated as a single employer under Section 414 of the Code or Section 4001
of ERISA.

 

Dating Program means the extended terms program made
available to the customers of Williams Furnace and Phoenix Manufacturing,
permitting such customers to place orders and receive product during the period
from (i) with respect to Williams Furnace, April 1 to August 31
of a particular year, which program requires such customers to pay one hundred
percent (100%) of the invoiced amount by October 10 of such year and (ii) with
respect to Phoenix Manufacturing, October 1 of a particular year to April 30
of the immediately succeeding year (the “following year”), which program
requires such customers to pay fifty percent (50.0%) of the invoiced amount by June 10
of the following year, and the remaining invoiced amount by July 10 of the
following year, such programs to be on the terms and conditions in place on the
date hereof or such other terms and conditions that are reasonably satisfactory
to the Administrative Agent.

 

Dating Program Accounts means the Accounts owing to Williams
Furnace or Phoenix Manufacturing pursuant to the Dating Program.

 

Debt of any Person means, without
duplication, (a) all indebtedness of such Person for borrowed money,
whether or not evidenced by bonds, debentures, notes or similar instruments, (b) all
obligations of such Person as lessee under Capital Leases which have been or
should be recorded as liabilities on a balance sheet of such Person in
accordance with GAAP, (c) all obligations of such Person to pay the
deferred purchase price of property or services (excluding trade accounts
payable in the ordinary course of business), (d) all indebtedness secured
by a Lien on the property of such Person, whether or not such indebtedness
shall have been assumed by such Person; provided that if such Person has
not assumed or otherwise become liable for such indebtedness, such indebtedness
shall be measured at the fair market value of such property securing such
indebtedness at the time of determination, (e) all obligations, contingent
or otherwise, with respect to the face amount of all letters of credit (whether
or not drawn), bankers’ acceptances and similar obligations issued for the
account of such Person (including the Letters of Credit), (f) all Hedging
Obligations of such Person, (g) all Contingent Liabilities of such Person,
(h) all Debt of any partnership of which such Person is a general partner
and (i) any Capital Securities or other equity instrument, whether or not
mandatorily redeemable, that under GAAP is characterized as debt, whether
pursuant to financial accounting standards board issuance No. 150 or
otherwise.

 

6

 

Debt to be Repaid means Debt listed on Schedule 12.1.

 

Designated Proceeds - see Section 6.2.2(a).

 

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

 

Draft 2008 Financial
Statements means
the draft audited, consolidated financial statements of the Company and its
Subsidiaries for the 2008 Fiscal Year, which draft is dated on or about April 14,
2009.

 

Drennen Road Transaction means the transactions consummated
pursuant to that certain Possession and Use Agreement dated as of December 17,
2008 (the “Possession and Use Agreement”) by and between the Company and
the City of Colorado Springs (the “City”) pursuant to which the Company
made an irrevocable grant of possession to the City for certain of the Company’s
property located on Drennen Road, Colorado Springs, Colorado (as such property
is more fully described in the Possession and Use Agreement) for an initial
purchase price of $2,113,600.00 and certain other amounts to be paid at a later
date, the amount of which is currently being negotiated between the Company and
the City.  If such negotiations do not
produce an agreed upon amount within one-hundred eighty (180) days following
the date of the Possession and Use Agreement, the City will initiate eminent
domain proceedings.

 

EBITDA means, for any Computation Period, the sum of the following with respect
to the Company and its Subsidiaries each as determined in accordance with GAAP:

 

(a)           Consolidated
Net Income, plus

 

(b)           federal,
state and other income taxes deducted in the determination of Consolidated Net
Income, plus

 

(c)           Interest
Expense deducted in the determination of Consolidated Net Income, plus

 

(d)           depreciation,
depletion and amortization expense deducted in the determination of
Consolidated Net Income, plus

 

(e)           any other non-cash charges and any
extraordinary charges deducted in the determination of Consolidated Net Income,
including any asset impairment charges and write downs of goodwill (provided,
however, except for non-cash charges arising in Fiscal Year 2008 and 2009
relating to Rocky Mountain and other non-cash charges up to $1,000,000 in any
twelve month period (collectively, the “permitted non-cash charges”),
all non-cash charges (other than the permitted non-cash charges) arising after
the date hereof shall be reasonably acceptable to the Administrative Agent), minus

 

(f)            any gains from Asset Dispositions,
any extraordinary gains and any gains from discontinued operations included in
the determination of Consolidated Net Income.

 

Eligible Account shall mean an
Account owing to any Loan Party which meets each of the following requirements:

 

7

 

(a)           it arises from the sale or lease of
goods or the rendering of services which have been fully performed by such Loan
Party; and if it arises from the sale or lease of goods, (i) such goods
comply with such Account Debtor’s specifications (if any) and have been
delivered to such Account Debtor and (ii) the applicable Loan Party has
possession of, or if requested by the Administrative Agent, has delivered to
Administrative Agent, delivery receipts evidencing such delivery;

 

(b)           it (x) is subject to a
perfected, first-priority Lien in favor of the Administrative Agent for the
benefit of the Lenders, and (y) is not subject to any other assignment,
claim or Lien, in each case, other than Permitted Liens;

 

(c)           it is a valid, legally enforceable
and unconditional obligation of the Account Debtor with respect thereto, and is
not subject to the fulfillment of any condition whatsoever or any counterclaim,
credit, allowance, discount, rebate or adjustment by the Account Debtor with
respect thereto, or to any claim by such Account Debtor denying liability
thereunder in whole or in part and the Account Debtor has not refused to accept
and/or has not returned or offered to return any of the goods or services which
are the subject of such Account;

 

(d)           there is no bankruptcy, insolvency or
liquidation proceeding pending by or against the Account Debtor with respect
thereto;

 

(e)           the Account Debtor with respect
thereto is a resident or citizen of, and is located within, the United States,
unless the sale of goods or services giving rise to such Account is on letter
of credit, banker’s acceptance, other credit support terms reasonably
satisfactory to the Administrative Agent, or, in the case of foreign Accounts
owed to Williams Furnace or Phoenix Manufacturing, any such Account covered by
foreign account receivable insurance in at least the amount of such Account (in
the case of each such foreign Account, the amount of such Account for purposes
of the Borrowing Base calculation shall be equal to ninety-five percent (95%)
of the original amount of such Account minus $25,000 representing the
applicable deductible);

 

(f)            it is not an Account arising from a “sale
on approval,” “sale or return,” “consignment” or “bill and hold” or subject to
any other repurchase or return agreement;

 

(g)           it is not an Account with respect to
which possession and/or control of the goods sold giving rise thereto is held,
maintained or retained by any Loan Party (or by any agent or custodian of any
Loan Party) for the account of or subject to further and/or future direction
from the Account Debtor with respect thereto;

 

(h)           it arises in the ordinary course of
business of the applicable Loan Party;

 

(i)            if the Account Debtor is the United
States or any department, agency or instrumentality thereof, the applicable
Loan Party has assigned its right to payment of such Account to the
Administrative Agent for the benefit of the Lenders pursuant to the Assignment
of Claims Act of 1940, and evidence (reasonably satisfactory to the
Administrative Agent) of such assignment has been delivered to the
Administrative Agent;

 

(j)            if the Account is evidenced by
chattel paper or an instrument, the originals of such chattel paper or
instrument shall have been endorsed and/or assigned and delivered to the 

 

8

 

Administrative Agent or, in the case of electronic
chattel paper, shall be in the control of the Administrative Agent, in each
case in a manner satisfactory to the Administrative Agent;

 

(k)           such Account is evidenced by an
invoice delivered to the related Account Debtor and is not more than (i) sixty
(60) days past the due date thereof as reflected in the original invoice
therefor, or (ii) one-hundred (120) days past the original invoice date
therefor (provided, however, the requirements set forth in this clause (k) shall
not apply to the Dating Program Accounts to the extent the applicable Account
Debtors are in compliance with the terms and conditions of the Dating Program
with respect to the applicable Dating Program Accounts and a Senior Officer
certifies in the applicable Borrowing Base Certificate that to his or her
knowledge such Account Debtors are in compliance with the Dating Program);

 

(l)            it is not an Account with respect to
an Account Debtor that is located in any jurisdiction which has adopted a
statute or other requirement with respect to which any Person that obtains
business from within such jurisdiction must file a notice of business
activities report or make any other required filings in a timely manner in
order to enforce its claims in such jurisdiction’s courts unless (x) such
notice of business activities report has been duly and timely filed or the
applicable Loan Party is exempt from filing such report and has provided the
Administrative Agent with satisfactory evidence of such exemption or (y) the
failure to make such filings may be cured retroactively by the applicable Loan
Party for a nominal fee;

 

(m)          the Account Debtor with respect
thereto is not a Loan Party or an Affiliate of any Loan Party;

 

(n)           it is not owed by an Account Debtor
with respect to which twenty-five percent (25%) or more of the aggregate amount
of outstanding Accounts owed at such time by such Account Debtor is classified
as ineligible under clause (k) of this definition; and

 

(o)           if the aggregate amount of all
Accounts owed by the Account Debtor thereon exceeds twenty-five percent (25%)
of the aggregate amount of all Accounts at such time, then all Accounts owed by
such Account Debtor in excess of such amount shall be deemed ineligible.

 

An Account which is at any
time an Eligible Account, but which subsequently fails to meet any of the
foregoing requirements, shall forthwith cease to be an Eligible Account;
provided, however, if such Account then meets each of the foregoing
requirements it shall again be deemed an Eligible Account.

 

Eligible Inventory shall mean
Inventory of any Loan Party which meets each of the following requirements:

 

(a)           it (x) is subject to a
perfected, first-priority Lien in favor of the Administrative Agent for the
benefit of the Lenders and (y) is not subject to any other assignment,
claim or Lien, in each case, other than Permitted Liens;

 

(b)           it is salable and not slow-moving,
obsolete or discontinued;

 

9

 

(c)           it is in the possession and
control of the
applicable Loan Party and it is stored and held at locations owned by the
applicable Loan Party or, if any such location is not so owned, the
Administrative Agent is in possession of a Collateral Access Agreement with
respect thereto;

 

(d)           it is not Inventory produced in
violation of the Fair Labor Standards Act and subject to the “hot goods”
provisions contained in Title 29 U.S.C. §215;

 

(e)           it is not subject to any agreement or
license which would restrict the Administrative Agent’s ability to sell or
otherwise dispose of such Inventory;

 

(f)            it is located in the United States
or in any territory or possession of the United States that has adopted Article 9
of the UCC;

 

(g)           it is not “in transit” to the
applicable Loan Party or held by the applicable Loan Party on consignment;

 

(h)           it is not “work-in-progress”
Inventory;

 

(i)            it is not supply items or packaging;

 

(j)            it is not identified to any purchase
order or contract to the extent progress or advance payments are received with
respect to such Inventory;

 

(k)           it does not breach any of the
representations, warranties or covenants pertaining to Inventory set forth in
the Loan Documents; and

 

(l)            the Administrative Agent shall not
have determined in the exercise of its reasonable credit judgment that it is
unacceptable due to age, type, category, quality, quantity and/or any other
reason whatsoever.

Inventory which is at any
time Eligible Inventory but which subsequently fails to meet any of the
foregoing requirements shall forthwith cease to be Eligible Inventory;
provided, however, if such Inventory then meets each of the foregoing requirements
it shall again be deemed Eligible Inventory.

 

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

 

Environmental Indemnity
Agreement means
the Hazardous Substance Remediation and Indemnification Agreement dated as of
the date hereof executed and delivered by the Company in favor of the
Administrative Agent, in form and substance satisfactory to the Administrative
Agent and as amended, restated or supplemented from time to time.

 

Environmental Laws means all present or future federal,
state or local laws, statutes, common law duties, rules, regulations,
ordinances and codes, together with all administrative or judicial orders,
consent agreements, directed duties, requests, licenses, authorizations and
permits of, and agreements with, any governmental authority, in each case
relating to any matter 

 

10

 

arising out of or
relating to public health and safety, or pollution or protection of the
environment or workplace, including any of the foregoing relating to the
presence, use, production, generation, handling, transport, treatment, storage,
disposal, distribution, discharge, emission, release, threatened release,
control or cleanup of any Hazardous Substance.

 

ERISA means the Employee Retirement Income
Security Act of 1974.

 

Event of Default means any of the events described in Section 13.1.

 

Excess Cash Flow means, for any period, the remainder of (a) Adjusted EBITDA for such period, minus  (b) the sum, without duplication, of (i) scheduled repayments of principal of the Term
Loan made during such period, plus  (ii) voluntary
prepayments of the Term Loan pursuant to Section 6.2.1 during such
period, plus  (iii) mandatory prepayments of the
Term Loan made pursuant to Section 6.2.2 during such period to the
extent the amount of such mandatory prepayment was included in Adjusted EBITDA
for such period, plus (iv) cash payments made in such period
with respect to Capital Expenditures, plus  (v) all
income taxes paid in cash by the Loan Parties during such period, plus  (vi) cash Interest Expense of the Loan Parties during
such period.

 

Excluded Taxes means taxes based upon, or measured by,
the Lender’s or Administrative Agent’s (or a branch of the Lender’s or
Administrative Agent’s) overall net income, overall net receipts, or overall
net profits (including franchise taxes imposed in lieu of such taxes), but only
to the extent such taxes are imposed by a taxing authority (a) in a
jurisdiction in which such Lender or Administrative Agent is organized, (b) in
a jurisdiction which the Lender’s or Administrative Agent’s principal office is
located, or (c) in a jurisdiction in which such Lender’s or Administrative
Agent’s lending office (or branch) in respect of which payments under this
Agreement are made is located.

 

Existing
LCs shall mean (a) that certain outstanding letter
of credit issued by the Company’s prior lender to St. Paul Fire and Marine
Insurance Co. in the amount of $4,490,000, which shall be cancelled on or prior
to the Closing Date and replaced with proceeds of a Revolving Loan, and (b) that
certain outstanding letter of credit issued by the Company’s prior lender to
the Colorado Department of Revenue, Motor Vehicle Business Group in the amount
of $20,000, which shall remain outstanding on the Closing Date and be cash
collateralized with proceeds of a Revolving Loan.

 

Federal Funds Rate means, for any day, a fluctuating
interest rate equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day
(or, if such day is not a Business Day, for the next preceding Business Day) by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day which is a Business Day, the average of the quotations for such day on
such transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by the Administrative Agent.  The Administrative Agent’s determination of
such rate shall be binding and conclusive absent manifest error.

 

Final 2008 Financial
Statements - see Section 9.4.

 

11

 

Fiscal Quarter means a fiscal quarter of a Fiscal Year.

 

Fiscal Year means the fiscal year of the Company and
its Subsidiaries, which period shall be the 12-month period ending on the
Saturday closest to December 31 of each year.  References to a Fiscal Year with a number
corresponding to any calendar year (e.g., “Fiscal Year 2009”) refer to
the Fiscal Year ending on the Saturday closest to December 31 of such
calendar year.

 

Fixed Charge Coverage
Ratio means, for
any Computation Period, the ratio of (a) the total for such period of
Adjusted EBITDA minus the sum of income taxes paid in cash by the Loan
Parties and all unfinanced Capital Expenditures to (b) the sum for
such period of (i) Interest Expense plus (ii) required
payments of principal of Funded Debt (including the Term Loan but excluding the
Revolving Loans).

 

FRB means the Board of Governors of the
Federal Reserve System or any successor thereto.

 

Funded Debt means, as to any Person, all Debt of
such Person that matures more than one year from the date of its creation (or
is renewable or extendible, at the option of such Person, to a date more than
one year from such date).

 

GAAP means generally accepted accounting
principles set forth from time to time in the opinions and pronouncements of
the Accounting Principles Board and the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board (or agencies with similar functions of comparable stature and
authority within the U.S. accounting profession) and the Securities and
Exchange Commission, which are applicable to the circumstances as of the date
of determination.

 

Group - see Section 2.2.1.

 

Guaranty and Collateral
Agreement means
the Guaranty and Collateral Agreement dated as of the date hereof executed and
delivered by the Loan Parties, together with any joinders thereto and any other
guaranty and collateral agreement executed by a Loan Party, in each case in
form and substance satisfactory to the Administrative Agent and as amended,
restated or supplemented from time to time.

 

Hazardous Substances means (a) any petroleum or
petroleum products, radioactive materials, asbestos in any form that is or
could become friable, urea formaldehyde foam insulation, dielectric fluid
containing levels of polychlorinated biphenyls, radon gas and mold; (b) any
chemicals, materials, pollutant or substances defined as or included in the
definition of “hazardous substances”, “hazardous waste”, “hazardous materials”,
“extremely hazardous substances”, “restricted hazardous waste”, “toxic
substances”, “toxic pollutants”, “contaminants”, “pollutants” or words of
similar import, under any applicable Environmental Law; and (c) any other
chemical, material or substance, the exposure to, or release of which is
prohibited, limited or regulated by any governmental authority or for which any
duty or standard of care is imposed pursuant to, any Environmental Law.

 

12

 

Hedging Agreement means any interest rate, currency or
commodity swap agreement, cap agreement or collar agreement, and any other
agreement or arrangement designed to protect a Person against fluctuations in
interest rates, currency exchange rates or commodity prices.

 

Hedging Obligation means, with respect to any Person, any
liability of such Person under any Hedging Agreement.  The amount of any Person’s obligation in
respect of any Hedging Obligation shall be deemed to be the incremental
obligation that would be reflected in the financial statements of such Person
in accordance with GAAP.

 

Hedging
Obligation Amount means $300,000 in the event the Company enters into
a Hedging Agreement under Section 10.11 hereof covering fifty
percent (50%) or more of the Term Loan Commitment (provided, that if the
Company enters into a Hedging Agreement with respect to a lesser percentage of
the Term Loan Commitment, the reserve amount shall be reduced on a
proportionate basis).

 

Inactive Subsidiaries means, collectively, Continental Copper, Inc.,
an Arizona corporation and Wholly-Owned Subsidiary of the Company, and
Continental Catalina, Inc., an Arizona corporation and Wholly-Owned
Subsidiary of Continental Copper, Inc.

 

Indemnified Liabilities - see Section 15.17.

 

Interest Expense means for any period the consolidated
interest expense of the Company and its Subsidiaries for such period (including
all imputed interest on Capital Leases).

 

Interest Period means, as to any LIBOR Loan, the period
commencing on the date such Loan is borrowed or continued as, or converted
into, a LIBOR Loan and ending on the date one, two, three or six months
thereafter as selected by the Company pursuant to Section 2.2.2 or 2.2.3,
as the case may be; provided that:

 

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

 

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

 

(c)           the
Company may not select any Interest Period for a Revolving  Loan which would extend beyond the scheduled
Termination Date; and

 

(d)           the
Company may not select any Interest Period for any portion of the Term Loan if,
after giving effect to such selection, the aggregate principal amount of the
Term Loan having Interest Periods ending after any date on which an installment
of the Term Loan is scheduled to be repaid would exceed the

 

13

 

aggregate principal
amount of the Term Loan scheduled to be outstanding after giving effect to such
repayment.

 

Inventory is defined in the Guaranty and
Collateral Agreement.

 

Investment means, with respect to any Person, any
investment in another Person, whether by acquisition of any debt or Capital
Security, by making any loan or advance, by becoming obligated with respect to
a Contingent Liability in respect of obligations of such other Person (other
than travel and similar advances to employees in the ordinary course of
business) or by making an Acquisition.

 

Issuing Lender means any Lender selected by the
Required Lenders after the date hereof, and their successors and assigns in
such capacity.

 

L/C Application means, with respect to any request for
the issuance of a Letter of Credit, a letter of credit application in the form
being used by the Issuing Lender at the time of such request for the type of
letter of credit requested.

 

L/C Fee Rate - see the definition of Applicable
Margin.

 

Lender - see the Preamble.  References to the “Lenders” shall include the
Issuing Lender; for purposes of clarification only, to the extent that PVBT (or
any successor Issuing Lender) may have any rights or obligations in addition to
those of the other Lenders due to its status as Issuing Lender, its status as
such will be specifically referenced.  In
addition to the foregoing, for the purpose of identifying the Persons entitled
to share in the Collateral and the proceeds thereof under, and in accordance
with the provisions of, this Agreement and the Collateral Documents, the term “Lender”
shall include Affiliates of a Lender providing a Bank Product.

 

Lender Party - see Section 15.17.

 

Letter of Credit - see Section 2.1.3.

 

LIBOR Loan means any Loan which bears interest at a
rate determined by reference to the LIBOR Rate.

 

LIBOR Margin - see the definition of Applicable
Margin.

 

LIBOR Office means with respect to any Lender the
office or offices of such Lender which shall be making or maintaining the LIBOR
Loans of such Lender hereunder.  A LIBOR
Office of any Lender may be, at the option of such Lender, either a domestic or
foreign office.

 

LIBOR Rate  means a rate of interest
equal to (a) the per annum rate of interest at which United States dollar
deposits for a period equal to the relevant Interest Period are offered in the
London Interbank Eurodollar market at 11:00 a.m. (London time) two
Business Days prior to the commencement of such Interest Period (or three
Business Days prior to the commencement of such Interest Period if banks in
London, England were not open and dealing in offshore United States dollars on
such second preceding Business Day), as displayed in the Bloomberg
Financial Markets system (or other authoritative source selected by
the Administrative Agent in its sole 

 

14

 

discretion), divided by (b) a number determined by
subtracting from 1.00 the then stated maximum reserve percentage for
determining reserves to be maintained by member banks of the Federal Reserve
System for Eurocurrency funding or liabilities as defined in Regulation D (or
any successor category of liabilities under Regulation D), or as the LIBOR Rate
is otherwise determined by the Administrative Agent in its sole and absolute
discretion.  The Administrative Agent’s
determination of the LIBOR Rate shall be conclusive, absent manifest error and
shall remain fixed during such Interest Period. 
Notwithstanding
anything to the contrary contained herein, for purposes of calculating the rate
of interest in this Agreement and any Note, in no event shall the LIBOR Rate be
below two percent (2.0%).

 

Lien means, with respect to any Person, any
interest granted by such Person in any real or personal property, asset or
other right owned or being purchased or acquired by such Person (including an
interest in respect of a Capital Lease) which secures payment or performance of
any obligation and shall include any mortgage, lien, encumbrance, title
retention lien, charge or other security interest of any kind, whether arising
by contract, as a matter of law, by judicial process or otherwise.

 

Loan Documents means this Agreement, the Notes, the
Letters of Credit, the Master Letter of Credit Agreement, the L/C Applications,
the Agent Fee Letter, the Collateral Documents, the Subordination Agreements
(if any) and all documents, instruments and agreements delivered in connection
with the foregoing.

 

Loan Party means the Company and each Subsidiary
(including, without limitation, each Guarantor referenced in the Guaranty and
Collateral Agreement).

 

Loan or Loans means, as the context may require,
Revolving Loans and the Term Loan.

 

Mandatory Prepayment
Event - see Section 6.2.2(a).

 

Margin Stock means any “margin stock” as defined in
Regulation U.

 

Master Letter of Credit
Agreement means,
at any time, with respect to the issuance of Letters of Credit, a master letter
of credit agreement or reimbursement agreement in the form, if any, being used
by the Issuing Lender at such time.

 

Material Adverse Effect means (a) a material adverse change
in, or a material adverse effect upon, the financial condition, operations,
assets, business or properties of the Loan Parties taken as a whole, (b) a
material impairment of the ability of any Loan Party to perform any of the
Obligations under any Loan Document or (c) a material adverse effect upon
any substantial portion of the collateral under the Collateral Documents or
upon the legality, validity, binding effect or enforceability against any Loan
Party of any Loan Document.

 

Mining Royalty Agreement means that certain Fee Sand and Gravel
Lease, dated as of October 21, 1996, by and between Valco Inc. and the
Company, as amended, restated or modified from time to time.

 

Mortgage means a mortgage, deed of trust,
leasehold mortgage or similar instrument granting the Administrative Agent a
Lien on real property of any Loan Party.

 

15

 

Mortgaged Property means the following real property
locations (and the buildings and other structures located thereon) as more
fully described in the applicable Mortgage: 
(i) parcel(s) of land located in Colton, California owned by
Williams Furnace, (ii) parcel(s) of land located in Colorado Springs,
Colorado owned by McKinney Door and Hardware, Inc., and (iii) parcel(s) of
land located in Colorado Springs, Colorado owned by Transit Mix Concrete Co.

 

Multiemployer Pension
Plan means a
multiemployer plan, as defined in Section 4001(a)(3) of ERISA, to
which the Company or any other member of the Controlled Group may have any
liability.

 

Net Cash Proceeds means:

 

(a)                                  with respect to any Asset Disposition,
the aggregate cash proceeds (including cash proceeds received pursuant to
policies of insurance or by way of deferred payment of principal pursuant to a
note, installment receivable or otherwise, but only as and when received)
received by any Loan Party pursuant to such Asset Disposition net of (i) the
direct costs relating to such sale, transfer or other disposition (including
sales commissions and legal, accounting and investment banking fees), (ii) taxes
paid or reasonably estimated by the Company to be payable as a result thereof
(after taking into account any available tax credits or deductions and any tax
sharing arrangements) and (iii) amounts required to be applied to the
repayment of any Debt secured by a Lien on the asset subject to such Asset
Disposition (other than the Loans);

 

(b)                                 with respect to any issuance of Capital
Securities, the aggregate cash proceeds received by any Loan Party pursuant to
such issuance, net of the direct costs relating to such issuance (including
sales and underwriters’ commissions); and

 

(c)                                  with respect to any issuance of Debt, the
aggregate cash proceeds received by any Loan Party pursuant to such issuance,
net of the direct costs of such issuance (including up-front, underwriters’ and
placement fees).

 

Net Worth means, as of any date, the sum of the
capital stock and additional paid-in capital plus retained earnings (or
minus accumulated deficit) calculated in conformity with GAAP.

 

Non-U.S. Participant - see Section 7.6(d).

 

Non-Use Fee Rate - see the definition of Applicable
Margin.

 

Note means a promissory note substantially in
the form of Exhibit A.

 

Notice of Borrowing - see Section 2.2.2.

 

Notice of
Conversion/Continuation - see Section 2.2.3.

 

Obligations means all obligations (monetary
(including post-petition interest, allowed or not) or otherwise) of any Loan
Party under this Agreement and any other Loan Document 

 

16

 

including Attorney
Costs and any reimbursement obligations of each Loan Party in respect of
Letters of Credit and surety bonds, all Hedging Obligations permitted hereunder
which are owed to any Lender or its Affiliate or Administrative Agent, and all
Bank Products Obligations, all in each case howsoever created, arising or
evidenced, whether direct or indirect, absolute or contingent, now or hereafter
existing, or due or to become due.

 

PBGC means the Pension Benefit Guaranty
Corporation and any entity succeeding to any or all of its functions under
ERISA.

 

Participant - see Section 15.6.2.

 

Pension Plan means a “pension plan”, as such term is
defined in Section 3(2) of ERISA, which is subject to Title IV of
ERISA or the minimum funding standards of ERISA (other than a Multiemployer
Pension Plan), and as to which the Company or any member of the Controlled
Group may have any liability, including any liability by reason of having been
a substantial employer within the meaning of Section 4063 of ERISA at any
time during the preceding five years, or by reason of being deemed to be a
contributing sponsor under Section 4069 of ERISA.

 

Perfection Certificate means a perfection certificate executed
and delivered to the Administrative Agent by a Loan Party.

 

Permitted Lien means (i) Liens for Taxes,
assessments or other governmental charges not at the time delinquent or
thereafter payable without penalty or being contested in good faith by
appropriate proceedings and, in each case, for which it maintains adequate
reserves in accordance with GAAP and in respect of which no Lien senior to the
Liens of the Administrative Agent has been filed; (ii) Liens arising in
the ordinary course of business (such as (a) Liens of carriers,
warehousemen, mechanics and materialmen and other similar Liens imposed by law,
and (b) Liens in the form of deposits or pledges incurred in connection
with worker’s compensation, unemployment compensation and other types of social
security (excluding Liens arising under ERISA) or in connection with surety
bonds, bids, performance bonds and similar obligations) for sums not overdue or
being contested in good faith by appropriate proceedings and not involving any
advances or borrowed money or the deferred purchase price of property or
services, which do not in the aggregate materially detract from the value of
the property or assets of any Loan Party or materially impair the use thereof
in the operation of any Loan Party’s business and, in each case, for which it
maintains adequate reserves in accordance with GAAP and in respect of which no
Lien senior to the Liens of the Administrative Agent has been filed; (iii) Liens
described on Schedule 11.2 as of the Closing Date; (iv) attachments,
appeal bonds, judgments and other similar Liens, for sums not exceeding Two
Hundred Fifty Thousand and 00/100 Dollars ($250,000.00) arising in connection
with court proceedings, provided the execution or other enforcement of
such Liens is effectively stayed and the claims secured thereby are being
actively contested in good faith and by appropriate proceedings and to the
extent such judgments or awards do not constitute an Event of Default under Section 13.1.7
hereof; (v) easements, rights of way, restrictions, minor defects or
irregularities in title (including leasehold title) and other similar Liens not
interfering in any material respect with the ordinary conduct of the business
of any Loan Party; (vi) subject to the limitation set forth in Section 11.1(v),
Liens arising in connection with capitalized leases (and attaching only to the
property being leased) and Liens that constitute purchase money security
interests on any property securing Indebtedness 

 

17

 

incurred for the purpose of financing all or any part of the cost of
acquiring such property, provided that any such Lien attaches to such
property within twenty (20) days of the acquisition thereof and attaches solely
to the property so acquired; (vii) Liens granted to the Administrative
Agent for the benefit of the Lenders hereunder and under the other Loan
Documents; (viii) customary
rights of set-off in favor of banks existing solely with respect to cash and
cash equivalents on deposit in one or more accounts maintained by any Loan
Party and not in violation of this Agreement (to the extent arising in the
ordinary course of business and not in connection with any financing); (ix) the
filing of UCC financing statements solely as a precautionary measure in
connection with operating leases permitted under this Agreement; (x) Liens
on premium refunds and insurance proceeds granted in favor of insurance
companies (or their financing affiliates) in connection with the financing of
insurance premiums; and (xi) extensions, renewals or replacements of any Lien
referred to in clauses (i) through (x) of this definition, provided
that the principal amount of the Debt secured thereby is not increased and that
any such extension, renewal or replacement is limited to the assets originally
encumbered thereby.

 

Person means any natural person, corporation,
partnership, trust, limited liability company, association, governmental
authority or unit, or any other entity, whether acting in an individual,
fiduciary or other capacity.

 

Phoenix
Manufacturing means Phoenix Manufacturing, Inc., an Arizona
corporation and a Loan Party.

 

Prime Rate means, for any day, the rate of interest
in effect for such day as publicly announced from time to time by the
Administrative Agent as its prime rate (whether or not such rate is actually
charged by the Administrative Agent), which is not intended to be the
Administrative Agent’s lowest or most favorable rate of interest at any one
time.  Any change in the Prime Rate
announced by the Administrative Agent shall take effect at the opening of
business on the day specified in the public announcement of such change; provided
that the Administrative Agent shall not be obligated to give notice of any
change in the Prime Rate. 
Notwithstanding anything to the contrary contained herein, for purposes
of calculating the rate of interest in this Agreement and any Note, in no event
shall the Prime Rate be below four percent (4.0%).

 

Pro
Rata Share means:

 

(a)                                  with respect to a Lender’s obligation to
make Revolving Loans, participate in Letters of Credit, reimburse the Issuing
Lender, and receive payments of principal, interest, fees, costs, and expenses
with respect thereto, (x) prior to the Revolving Commitment being
terminated or reduced to zero, the percentage obtained by dividing (i) such
Lender’s Revolving Commitment, by (ii) the aggregate Revolving Commitment
of all Lenders and (y) from and after the time the Revolving Commitment
has been terminated or reduced to zero, the percentage obtained by dividing (i) the
aggregate unpaid principal amount of such Lender’s Revolving Outstandings by (ii) the
aggregate unpaid principal amount of all Revolving Outstandings;

 

18

 

(b)                                 with respect to a Lender’s obligation to
make the Term Loan and receive payments of interest, fees, and principal with
respect thereto, (x) prior to the making of the Term Loan, the percentage
obtained by dividing (i) such Lender’s Term Loan Commitment, by (ii) the
aggregate amount of all Lenders’ Term Loan Commitments, and (y) from and
after the making of the Term Loan, the percentage obtained by dividing (i) the
principal amount of such Lender’s Term Loan by (ii) the aggregate
principal amount of the Term Loan; and

 

(c)                                  with respect to all other matters as to a
particular Lender, the percentage obtained by dividing (i) such Lender’s
Revolving Commitment plus such Lender’s Term Loan Commitment, by (ii) the
aggregate amount of the Revolving Commitment of all Lenders plus the
Term Loan Commitment of all Lenders; provided that in the event the
Commitments have been terminated or reduced to zero, Pro Rata Share shall be
the percentage obtained by dividing (A) the principal amount of such
Lender’s Revolving Outstandings plus the unpaid principal amount of such
Lender’s Term Loan by (B) the principal amount of all outstanding
Revolving Outstandings plus the unpaid principal amount of all Term
Loans of all Lenders.

 

PVBT - see the Preamble.

 

Regulation D means Regulation D of the FRB.

 

Regulation U means Regulation U of the FRB.

 

Reportable Event means a reportable event as defined in Section 4043
of ERISA and the regulations issued thereunder as to which the PBGC has not
waived the notification requirement  of Section 4043(a),
or the failure of a Pension Plan to meet the minimum funding standards of Section 412
of the Code (without regard to whether the Pension Plan is a plan described in Section 4021(a)(2) of
ERISA) or under Section 302 of ERISA.

 

Required Lenders means, at any time, Lenders having Pro Rata Shares (as determined
pursuant to clause (c) of the definition of “Pro Rata Shares”) aggregating
at least sixty-six and two-thirds percent (66.67%); provided that if at
any time there are two or fewer Lenders, “Required Lenders” shall mean all
Lenders.

 

Revolving Commitment means $20,000,000, as reduced from time
to time pursuant to Section 6.1.

 

Revolving Loan - see Section 2.1.1.

 

Revolving Loan
Availability
means the lesser of (i) the Revolving Commitment and (ii) the
Borrowing Base.

 

Revolving Outstandings means, at any time, the sum of (a) the
aggregate principal amount of all outstanding Revolving Loans, plus (b) the
Stated Amount of all Letters of Credit, plus (c) the Hedging
Obligation Amount.

 

19

 

Rocky Mountain means Rocky Mountain Ready Mix Concrete, Inc.,
a Colorado corporation and a Subsidiary of the Company.

 

Rocky Mountain
Transaction means
the sale of substantially all of the assets of Rocky Mountain or the sale of
all of the Capital Securities owned by the Company in Rocky Mountain.

 

SEC means the Securities and Exchange
Commission or any other governmental authority succeeding to any of the
principal functions thereof.

 

Senior Officer means, with respect to any Loan Party,
any of the chief executive officer, the chief financial officer, the chief
operating officer, the corporate secretary, the controller or the treasurer of
such Loan Party.

 

Stated Amount means, with respect to any Letter of
Credit at any date of determination, (a) the maximum aggregate amount
available for drawing thereunder under any and all circumstances plus (b) the
aggregate amount of all unreimbursed payments and disbursements under such
Letter of Credit to the extent such unreimbursed amounts have not been
converted into Revolving Loans.

 

Subordinated Debt means any unsecured Debt of the Company
which has subordination terms, covenants, pricing and other terms which have
been approved in writing by the Required Lenders.

 

Subordinated Debt
Documents means
all documents and instruments relating to the Subordinated Debt and all
amendments and modifications thereof approved by the Administrative Agent.

 

Subordination Agreements means all subordination agreements
executed by a holder of Subordinated Debt in favor of the Administrative Agent
and the Lenders from time to time after the Closing Date in form and substance
and on terms and conditions satisfactory to Administrative Agent.

 

Subsidiary means, with respect to any Person, a
corporation, partnership, limited liability company or other entity of which
such Person owns, directly or indirectly, such number of outstanding Capital
Securities as have more than 50% of the ordinary voting power for the election
of directors or other managers of such corporation, partnership, limited
liability company or other entity. 
Unless the context otherwise requires, each reference to Subsidiaries
herein shall be a reference to Subsidiaries of the Company.

 

Tangible Net Worth  means
the sum of the following with respect to the Company and its Subsidiaries:  (i) Net Worth plus Subordinated Debt, if
any; minus (ii) goodwill, patents, trademarks, service marks, trade
names, copyrights, prepaid expenses, deposits, deferred charges and all other
intangible assets and all items that are treated as intangible assets under
GAAP; minus (iii) all obligations owed to the Company or any of its
Subsidiaries by any Affiliate or any of its Subsidiaries; and minus (iv) all
loans owed by its officers, stockholders, Subsidiaries or employees.

 

20

 

Taxes means any and all present and future
taxes, duties, levies, imposts, deductions, assessments, charges or
withholdings, and any and all liabilities (including interest and penalties and
other additions to taxes) with respect to the foregoing, but excluding Excluded
Taxes.

 

Term Loan Commitment means $10,000,000.

 

Term Loan Maturity Date means the earlier of (a) April 16,
2012 or (b) the Termination Date.

 

Term Loan — see Section 2.1.2.

 

Term Loan Reserve means $5,000,000; provided that the Term
Loan Reserve shall be eliminated to the extent (and only to the extent) the
Williams Furnace Valuation equals or exceeds $5,000,000.

 

Termination Date means the earlier to occur of (a) April 16,
2012 or (b) such other date on which the Commitments terminate pursuant to
Section 6 or Section 13.

 

Termination Event means, with respect to a Pension Plan
that is subject to Title IV of ERISA, (a) a Reportable Event, (b) the
withdrawal of Company or any other member of the Controlled Group from such
Pension Plan during a plan year in which Company or any other member of the
Controlled Group was a “substantial employer” as defined in Section 4001(a)(2) of
ERISA or was deemed such under Section 4068(f) of ERISA, (c) the
termination of such Pension Plan, the filing of a notice of intent to terminate
the Pension Plan or the treatment of an amendment of such Pension Plan as a
termination under Section 4041 of ERISA, (d) the institution by the
PBGC of proceedings to terminate such Pension Plan or (e) any event or
condition that might constitute grounds under Section 4042 of ERISA for
the termination of, or appointment of a trustee to administer, such Pension
Plan.

 

Total Cash Flow Leverage
Ratio means, as
of the last day of any Fiscal Quarter, the ratio of (a) Total Debt as of
such day to (b) EBITDA for the Computation Period ending on such day.  For the sake of clarity, this calculation
shall be used to determine the pricing of the Obligations (not for the
determination of financial covenant compliance).

 

Total Debt means all Debt of the Company and its
Subsidiaries, determined on a consolidated basis, excluding (a) contingent
obligations in respect of Contingent Liabilities (except to the extent
constituting Contingent Liabilities in respect of Debt of a Person other than
any Loan Party), (b) Hedging Obligations, (c) Debt of the Company to
Subsidiaries and Debt of Subsidiaries to the Company or to other Subsidiaries,
and (d) contingent obligations in respect of undrawn letters of credit.

 

Total Plan Liability means, at any time, the present value of
all vested and unvested accrued benefits under all Pension Plans, determined as
of the then most recent valuation date for each Pension Plan, using PBGC
actuarial assumptions for single employer plan terminations.

 

Type - see Section 2.2.1.

 

UCC is defined in the Guaranty and
Collateral Agreement.

 

21

 

Unfunded Liability means the amount (if any) by which the
present value of all vested and unvested accrued benefits under all Pension
Plans exceeds the fair market value of all assets allocable to those benefits,
all determined as of the then most recent valuation date for each Pension Plan,
using PBGC actuarial assumptions for single employer plan terminations.

 

Unmatured Event of
Default means any
event that, if it continues uncured, will, with lapse of time or notice or
both, constitute an Event of Default.

 

Williams
Furnace means Williams Furnace Co., a Delaware corporation and a Loan Party.

 

Williams Furnace
Valuation means
an amount determined pursuant to the following formula:  (a) $7,000,000 multiplied by
seventy-five percent (75%), minus (b) the Williams Furnace
Remediation Expense.

 

Williams Furnace
Remediation Expense
means the aggregate estimated remediation expense reasonably determined by the
Administrative Agent in consultation with its environmental consultants and
agents after receipt of the Phase II results in respect of the Mortgaged
Property owned by Williams Furnace.

 

Withholding Certificate - see Section 7.6(d).

 

Wholly-Owned Subsidiary means, as to any Person, a Subsidiary
all of the Capital Securities of which (except directors’ qualifying Capital
Securities) are at the time directly or indirectly owned by such Person and/or
another Wholly-Owned Subsidiary of such Person.

 

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

 

(b)                                 Section,
Annex, Schedule and Exhibit references are to this
Agreement unless otherwise specified.

 

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

 

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

 

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

 

22

 

(f)                                    This
Agreement and the other Loan Documents may use several different limitations,
tests or measurements to regulate the same or similar matters.  All such limitations, tests and measurements
are cumulative and each shall be performed in accordance with its terms.

 

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

 

	
  SECTION 2

  	
  COMMITMENTS OF THE LENDERS; BORROWING, CONVERSION
  AND LETTER OF CREDIT PROCEDURES.

  

 

2.1                                 Commitments.  On and subject to the terms and conditions of
this Agreement, each of the Lenders, severally and for itself alone, agrees to
make loans to, and to issue or participate in letters of credit for the account
of, the Company as follows:

 

2.1.1            Revolving Loan Commitment.  Each Lender with a Revolving Loan Commitment
agrees to make loans on a revolving basis (“Revolving Loans”) from time
to time until the Termination Date in such Lender’s Pro Rata Share of such
aggregate amounts as the Company may request from all Lenders; provided that
the Revolving Outstandings will not at any time exceed Revolving Loan
Availability.

 

2.1.2            Term Loan Commitment.  Each Lender with a Term Loan Commitment
agrees to make a loan to the Company (collectively, the “Term Loan”) on
the Closing Date in such Lender’s Pro Rata Share of the Term Loan
Commitment.  The Commitments of the
Lenders to make Term Loans shall expire concurrently with the making of the
Term Loans on the Closing Date.

 

2.1.3            L/C Commitment.  Subject to Section 2.3.1, the
Issuing Lender agrees to issue letters of credit, in each case containing such
terms and conditions as are permitted by this Agreement and are reasonably
satisfactory to the Issuing Lender (each, a “Letter of Credit”), at the
request of and for the account of the Company or the other Loan Parties at the
direction of the Company from time to time before the scheduled Termination
Date and, as more fully set forth in Section 2.3.2, each Lender
agrees to purchase a participation in each such Letter of Credit; provided
that (a) the aggregate Stated Amount of all Letters of Credit shall not at
any time exceed $5,000,000 and (b) the Revolving Outstandings shall not at
any time exceed Revolving Loan Availability. 
The Company acknowledges and agrees that, notwithstanding anything to
the contrary contained herein, no Letters of Credit will be issued hereunder
until such time as an additional Lender becomes a party to the Loan Documents
and the Company enters into all required letter of credit agreements and
documents with such additional Lender; provided, however, in the event the
Company or any other Loan Party requires a Letter of Credit prior to the date
on which an additional Lender becomes a party to the Loan Documents, PVBT will
act as the initial Issuing Lender (to the extent the beneficiary will accept a
Letter of Credit issued by PVBT) once the Company enters into all required
letter of credit agreements and documents with PVBT.

 

23

 

2.2                                 Loan Procedures.

 

2.2.1            Various Types of Loans.  Each
Revolving Loan shall be, and the Term Loan may be divided into tranches which
are, either a Base Rate Loan or a LIBOR Loan (each a “type” of Loan), as
the Company shall specify in the related notice of borrowing or conversion
pursuant to Section 2.2.2 or 2.2.3.  LIBOR Loans having the same Interest Period
which expire on the same day are sometimes called a “Group” or
collectively “Groups”.  Base Rate
Loans and LIBOR Loans may be outstanding at the same time, provided that
not more than three (3) different Groups of LIBOR Loans shall be
outstanding with respect to the Revolving Commitment at any one time, and not
more than three (3) different Groups of LIBOR Loans shall be outstanding
with respect to the Term Loan Commitment at any one time.  All borrowings, conversions and repayments of
Loans shall be effected so that each Lender will have a ratable share
(according to its Pro Rata Share) of all types and Groups of Loans.

 

2.2.2            Borrowing Procedures.  The Company
shall give written notice (each such written notice, a “Notice of Borrowing”)
substantially in the form of Exhibit E or telephonic notice
(followed immediately by a Notice of Borrowing) to the Administrative Agent of
each proposed borrowing not later than (a) in the case of a Base Rate
borrowing, 11:00 A.M., Chicago time, on the proposed date of such
borrowing, and (b) in the case of a LIBOR borrowing, 11:00 A.M.,
Chicago time, at least three Business Days prior to the proposed date of such
borrowing.  Each such notice shall be
effective upon receipt by the Administrative Agent, shall be irrevocable, and
shall specify the date, amount and type of borrowing and, in the case of a
LIBOR borrowing, the initial Interest Period therefor.  Promptly upon receipt of such notice, the
Administrative Agent shall advise each Lender thereof.  Not later than 1:00 P.M., Chicago time,
on the date of a proposed borrowing, each Lender shall provide the
Administrative Agent at the office specified by the Administrative Agent with
immediately available funds covering such Lender’s Pro Rata Share of such
borrowing and, so long as the Administrative Agent has not received written
notice that the conditions precedent set forth in Section 12 with
respect to such borrowing have not been satisfied, the Administrative Agent
shall pay over the funds received by the Administrative Agent to the Company on
the requested borrowing date.  Each
borrowing shall be on a Business Day. 
Each Base Rate borrowing shall be in an aggregate amount of at least
$100,000 and an integral multiple of $100,000, and each LIBOR borrowing shall
be in an aggregate amount of at least $500,000 and an integral multiple of at
least $100,000.

 

2.2.3            Conversion and Continuation Procedures.  (a) 
Subject to Section 2.2.1, the Company may, upon irrevocable written
notice to the Administrative Agent in accordance with clause (b) below:

 

(A)                              elect, as of any Business Day, to convert
any Loans (or any part thereof in an aggregate amount not less than $500,000 or
a higher integral multiple of $100,000) into Loans of the other type; or

 

(B)                                elect, as of the last day of the
applicable Interest Period, to continue any LIBOR Loans having Interest Periods
expiring on such day (or any part thereof in an aggregate 

 

24

 

amount not less than $500,000 or a higher integral
multiple of $100,000) for a new Interest Period;

 

provided that after giving effect to any prepayment,
conversion or continuation, the aggregate principal amount of each Group of
LIBOR Loans shall be at least $500,000 and an integral multiple of $100,000.

 

(b)                                 The Company shall give written notice
(each such written notice, a “Notice of Conversion/Continuation”)
substantially in the form of Exhibit F or telephonic notice
(followed immediately by a Notice of Conversion/Continuation) to the
Administrative Agent of each proposed conversion or continuation not later than
(i) in the case of conversion into Base Rate Loans, 11:00 A.M.,
Chicago time, on the proposed date of such conversion and (ii) in the case
of conversion into or continuation of LIBOR Loans, 11:00 A.M., Chicago
time, at least three Business Days prior to the proposed date of such
conversion or continuation, specifying in each case:

 

(A)                              the proposed date of conversion or
continuation;

 

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

 

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

 

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

 

(c)                                  If upon the expiration of any Interest
Period applicable to LIBOR Loans, the Company has failed to select timely a new
Interest Period to be applicable to such LIBOR Loans, the Company shall be deemed
to have elected to convert such LIBOR Loans into Base Rate Loans effective on
the last day of such Interest Period.

 

(d)                                 The Administrative Agent will promptly
notify each Lender of its receipt of a notice of conversion or continuation
pursuant to this Section 2.2.3 or, if no timely notice is provided
by the Company, of the details of any automatic conversion.

 

(e)                                  Any conversion of a LIBOR Loan on a day
other than the last day of an Interest Period therefor shall be subject to Section 8.4.

 

2.3                                 Letter of Credit Procedures.

 

2.3.1            L/C Applications.  The Company shall execute and
deliver to the Issuing Lender the Master Letter of Credit Agreement from time
to time in effect.  The Company shall
give notice to the Administrative Agent and the Issuing Lender of the proposed
issuance of each Letter of Credit on a Business Day which is at least three (3) Business
Days (or such lesser number of days as the Administrative Agent and the Issuing
Lender shall agree in any particular instance in their sole discretion) prior
to the proposed date of issuance of such Letter of Credit.  Each such notice shall be accompanied by an
L/C Application, duly executed by the Company and in all respects satisfactory
to the Administrative Agent and the 

 

25

 

Issuing Lender, together with such other documentation
as the Administrative Agent or the Issuing Lender may request in support
thereof, it being understood that each L/C Application shall specify, among
other things, the date on which the proposed Letter of Credit is to be issued,
the expiration date of such Letter of Credit (which shall not be later than the
scheduled Termination Date (unless such Letter of Credit is Cash
Collateralized)) and whether such Letter of Credit is to be transferable in
whole or in part.  Any Letter of Credit
outstanding after the scheduled Termination Date which is Cash Collateralized
for the benefit of the Issuing Lender shall be the sole responsibility of the Issuing
Lender.  So long as the Issuing Lender
has not received written notice that the conditions precedent set forth in Section 12
with respect to the issuance of such Letter of Credit have not been satisfied,
the Issuing Lender shall issue such Letter of Credit on the requested issuance
date.  The Issuing Lender shall promptly
advise the Administrative Agent of the issuance of each Letter of Credit and of
any amendment thereto, extension thereof or event or circumstance changing the
amount available for drawing thereunder. 
In the event of any inconsistency between the terms of the Master Letter
of Credit Agreement, any L/C Application and the terms of this Agreement, the
terms of this Agreement shall control.

 

2.3.2            Participations in Letters of Credit.  Concurrently
with the issuance of each Letter of Credit, the Issuing Lender shall be deemed
to have sold and transferred to each Lender with a Revolving Loan Commitment,
and each such Lender shall be deemed irrevocably and unconditionally to have
purchased and received from the Issuing Lender, without recourse or warranty,
an undivided interest and participation, to the extent of such Lender’s Pro
Rata Share, in such Letter of Credit and the Company’s reimbursement
obligations with respect thereto.  If the
Company does not pay any reimbursement obligation when due, the Company shall
be deemed to have immediately requested that the Lenders make a Revolving Loan
which is a Base Rate Loan in a principal amount equal to such reimbursement
obligations.  The Administrative Agent
shall promptly notify such Lenders of such deemed request and, without the
necessity of compliance with the requirements of Section 2.2.2, Section 12.2
or otherwise such Lender shall make available to the Administrative Agent its
Pro Rata Share of such Loan.  The
proceeds of such Loan shall be paid over by the Administrative Agent to the
Issuing Lender for the account of the Company in satisfaction of such
reimbursement obligations.  For the
purposes of this Agreement, the unparticipated portion of each Letter of Credit
shall be deemed to be the Issuing Lender’s “participation” therein.  The Issuing Lender hereby agrees, upon
request of the Administrative Agent or any Lender, to deliver to the
Administrative Agent or such Lender a list of all outstanding Letters of Credit
issued by the Issuing Lender, together with such information related thereto as
the Administrative Agent or such Lender may reasonably request.

 

2.3.3            Reimbursement Obligations.  (a) The
Company hereby unconditionally and irrevocably agrees to reimburse the Issuing Lender
for each payment or disbursement made by the Issuing Lender under any Letter of
Credit honoring any demand for payment made by the beneficiary thereunder, in
each case on the date that such payment or disbursement is made.  Any amount
not reimbursed on the date of such payment or disbursement shall bear interest
from the date of such payment or disbursement to the date that the Issuing
Lender is reimbursed by the Company therefor at a rate per annum equal to the
Base Rate from time to time in effect plus the Base Rate Margin from
time to time in effect (plus the default rate of 

 

26

 

interest set forth in Section 4.1
to the extent an Event of Default exists). 
If any reimbursement obligation is not paid on the day a payment or
disbursement is made by the Issuing Lender under a Letter of Credit, the
Company hereby authorizes and directs the Administrative Agent to increase the
principal balance of the Revolving Loan as a Base Rate Loan in an amount equal
to such payment or disbursement made by the Issuing Lender with respect to such
Letter of Credit, except that if Revolving Loans are not available at such time
as a result of the existence of an Event of Default or otherwise, the
reimbursement obligation (including all interest accrued thereon) shall be
payable on demand.  The Issuing Lender shall notify the
Company and the Administrative Agent whenever any demand for payment is made
under any Letter of Credit by the beneficiary thereunder; provided that
the failure of the Issuing Lender to so notify the Company or the
Administrative Agent shall not affect the rights of the Issuing Lender or the
Lenders in any manner whatsoever.

 

(b)                                 The Company’s reimbursement obligations
hereunder shall be irrevocable and unconditional under all circumstances,
including (a) any lack of validity or enforceability of any Letter of
Credit, this Agreement or any other Loan Document, (b) the existence of
any claim, set-off, defense or other right which any Loan Party may have at any
time against a beneficiary named in a Letter of Credit, any transferee of any
Letter of Credit (or any Person for whom any such transferee may be acting),
the Administrative Agent, the Issuing Lender, any Lender or any other Person,
whether in connection with any Letter of Credit, this Agreement, any other Loan
Document, the transactions contemplated herein or any unrelated transactions
(including any underlying transaction between any Loan Party and the
beneficiary named in any Letter of Credit), (c) the validity, sufficiency
or genuineness of any document which the Issuing Lender has determined complies
on its face with the terms of the applicable Letter of Credit, even if such
document should later prove to have been forged, fraudulent, invalid or insufficient
in any respect or any statement therein shall have been untrue or inaccurate in
any respect, or (d) the surrender or impairment of any security for the
performance or observance of any of the terms hereof.  Without limiting the foregoing, no action or
omission whatsoever by the Administrative Agent or any Lender (excluding any
Lender in its capacity as the Issuing Lender) under or in connection with any
Letter of Credit or any related matters shall result in any liability of the
Administrative Agent or any Lender to the Company, or relieve the Company of
any of its obligations hereunder to any such Person.

 

2.3.4            Funding by Lenders to Issuing Lender.  If the
Issuing Lender makes any payment or disbursement under any Letter of Credit and
(a) the Company has not reimbursed the Issuing Lender in full for such
payment or disbursement by 11:00 A.M., Chicago time, on the date of such
payment or disbursement, (b) a Revolving Loan may not be made in
accordance with Section 2.3.2 (as the result of the existence of an
Event of Default or otherwise) or (c) any reimbursement received by the
Issuing Lender from the Company is or must be returned or rescinded upon or
during any bankruptcy or reorganization of the Company or otherwise, each other
Lender with a Revolving Loan Commitment shall be obligated to pay to the
Administrative Agent for the account of the Issuing Lender, in full or partial
payment of the purchase price of its participation in such Letter of Credit,
its Pro Rata Share of such payment or disbursement (but no such payment shall
diminish the obligations of the Company under Section 2.3.3), and,
upon notice from the Issuing Lender, the Administrative Agent shall promptly
notify each other Lender thereof.  Each
other Lender irrevocably and unconditionally agrees to so pay to the
Administrative Agent in immediately 

 

27

 

available funds for the Issuing Lender’s account the
amount of such other Lender’s Pro Rata Share of such payment or
disbursement.  If and to the extent any
Lender shall not have made such amount available to the Administrative Agent by
2:00 P.M., Chicago time, on the Business Day on which such Lender receives
notice from the Administrative Agent of such payment or disbursement (it being
understood that any such notice received after noon, Chicago time, on any
Business Day shall be deemed to have been received on the next following
Business Day), such Lender agrees to pay interest on such amount to the
Administrative Agent for the Issuing Lender’s account forthwith on demand, for
each day from the date such amount was to have been delivered to the
Administrative Agent to the date such amount is paid, at a rate per annum equal
to (a) for the first three days after demand, the Federal Funds Rate from
time to time in effect and (b) thereafter, the Base Rate from time to time
in effect.  Any Lender’s failure to make
available to the Administrative Agent its Pro Rata Share of any such payment or
disbursement shall not relieve any other Lender of its obligation hereunder to
make available to the Administrative Agent such other Lender’s Pro Rata Share
of such payment, but no Lender shall be responsible for the failure of any
other Lender to make available to the Administrative Agent such other Lender’s
Pro Rata Share of any such payment or disbursement.

 

2.4                                 Commitments Several. 
The failure of any Lender to make a requested Loan on any date shall not
relieve any other Lender of its obligation (if any) to make a Loan on such
date, but no Lender shall be responsible for the failure of any other Lender to
make any Loan to be made by such other Lender.

 

2.5                                 Certain Conditions. 
Except as otherwise provided in Sections 2.2.2 and 2.3.4
of this Agreement, no Lender shall have an obligation to make any Loan, or to
permit the continuation of or any conversion into any LIBOR Loan, and the
Issuing Lender shall not have any obligation to issue any Letter of Credit, if
an Event of Default or Unmatured Event of Default exists.

 

SECTION 3                                   EVIDENCING OF LOANS.

 

3.1                                 Notes.  The Revolving
Loans of each Lender shall be evidenced by a Note, with appropriate insertions,
payable to the order of such Lender in a face principal amount equal to such
Lender’s Revolving Loan Commitment.  The
Term Loan of each Lender shall be evidenced by a Note, with appropriate
insertions, payable to the order of such Lender in a face principal amount
equal to such Lender’s Term Loan Commitment.

 

3.2                                 Recordkeeping. 
The Administrative Agent, on behalf of each Lender, shall record in its
records, the date and amount of each Loan made by each Lender, each repayment
or conversion thereof and, in the case of each LIBOR Loan, the dates on which
each Interest Period for such Loan shall begin and end.  The aggregate unpaid principal amount so
recorded shall be rebuttably presumptive evidence of the principal amount of
the Loans owing and unpaid.  The failure
to so record any such amount or any error in so recording any such amount shall
not, however, limit or otherwise affect the Obligations of the Company
hereunder or under any Note to repay the principal amount of the Loans
hereunder, together with all interest accruing thereon.

 

28

 

SECTION 4                                   INTEREST.

 

4.1                                 Interest Rates. 
The Company promises to pay interest on the unpaid principal amount of
each Loan for the period commencing on the date of such Loan until such Loan is
paid in full as follows:

 

(a)                                  at all times while such Loan is a Base
Rate Loan, at a rate per annum equal to the sum of the Base Rate from time to
time in effect plus the Base Rate Margin from time to time in effect;
and

 

(b)                                 at all times while such Loan is a LIBOR
Loan, at a rate per annum equal to the sum of the LIBOR Rate applicable to each
Interest Period for such Loan plus the LIBOR Margin from time to time in
effect;

 

provided that at any time an Event of Default exists, unless
the Required Lenders otherwise consent, the interest rate applicable to each
Loan shall automatically be increased by 2%; provided  further
that such increase may thereafter be rescinded by the Required Lenders,
notwithstanding Section 15.1.

 

4.2                                 Interest Payment Dates. 
Accrued interest on each Base Rate Loan shall be payable in arrears on
the last day of each calendar month and on the Termination Date.  Accrued interest on each LIBOR Loan shall be
payable on the last day of each Interest Period relating to such Loan (and, in
the case of a LIBOR Loan with an Interest Period in excess of three months, on
the three-month anniversary of the first day of such Interest Period), upon a
prepayment of such Loan, and at maturity. 
After the Termination Date, and at any time an Event of Default exists,
accrued interest on all Loans shall be payable on demand.

 

4.3                                 Setting and Notice of LIBOR Rates. 
The applicable LIBOR Rate for each Interest Period shall be determined
by the Administrative Agent, and notice thereof shall be given by the
Administrative Agent promptly to the Company and each Lender.  Each determination of the applicable LIBOR
Rate by the Administrative Agent shall be conclusive and binding upon the
parties hereto, in the absence of demonstrable error.  The Administrative Agent shall, upon written
request of the Company or any Lender, deliver to the Company or such Lender a
statement showing the computations used by the Administrative Agent in
determining any applicable LIBOR Rate hereunder.

 

4.4                                 Computation of Interest. 
Interest on LIBOR Loans shall be computed for the actual number of days
elapsed on the basis of a year of 360 days. 
Interest on Base Rate Loans shall be computed for the actual number of
days elapsed on the basis of a year of 365 or 366 days, as applicable.  The applicable interest rate for each Base
Rate Loan shall change simultaneously with each change in the Base Rate.

 

SECTION 5                                   FEES.

 

5.1                                 Non-Use Fee. 
The Company agrees to pay to the Administrative Agent for the account of
each Lender a non-use fee, for the period from the Closing Date to the
Termination Date, at the Non-Use Fee Rate in effect from time to time on such
Lender’s Pro Rata Share (as adjusted from time to time) of the average unused
amount of the Revolving Commitment during 

 

29

 

each calendar
quarter.  For purposes of calculating
usage under this Section, the Revolving Commitment shall be deemed used to the
extent of Revolving Outstandings.  Such
non-use fee shall be payable in arrears on the last day of each calendar
quarter and on the Termination Date for any period then ending for which such
non-use fee shall not have previously been paid.  The non-use fee shall be computed for the
actual number of days elapsed on the basis of a year of 360 days.

 

5.2                                 Letter of Credit Fees.  (a) 
The Company agrees to pay to the Administrative Agent for the account of each
Lender a letter of credit fee for each Letter of Credit equal to the L/C Fee
Rate in effect from time to time on such Lender’s Pro Rata Share (as adjusted
from time to time) of the undrawn amount of such Letter of Credit (computed for
the actual number of days elapsed on the basis of a year of 360 days); provided
that, unless the Required Lenders otherwise consent, the rate applicable to
each Letter of Credit shall be increased by 2% at any time that an Event of
Default exists.  Such letter of credit
fee shall be payable in arrears on the last day of each calendar quarter and on
the Termination Date (or such later date on which such Letter of Credit expires
or is terminated) for the period from the date of the issuance of each Letter
of Credit (or the last day on which the letter of credit fee was paid with
respect thereto) to the date such payment is due or, if earlier, the date on
which such Letter of Credit expired or was terminated.  Notwithstanding anything to the contrary
contained herein, with respect to the letter of credit fee that is payable at
the L/C Fee Rate as provided in this Section 5.2, 0.25% of such
letter of credit fee shall be considered a fronting fee payable entirely to the
Issuing Lender.

 

(b)                                 In addition, with respect to each Letter
of Credit, the Company agrees to pay to the Issuing Lender, for its own
account, such reasonable fees and expenses as the Issuing Lender customarily
requires in connection with the issuance, negotiation, processing and/or
administration of letters of credit in similar situations.

 

5.3                                 Administrative Agent’s Fees. 
The Company agrees to pay to the Administrative Agent such agent’s fees
as are mutually agreed to from time to time by the Company and the
Administrative Agent including the fees set forth in the Agent Fee Letter.  The Company acknowledges and agrees that the
Agent Fee Letter continues to be in full force and effect for all purposes.

 

SECTION 6                                   REDUCTION OR TERMINATION OF THE REVOLVING COMMITMENT;
PREPAYMENTS.

 

6.1                                 Reduction or Termination of the Revolving
Commitment.

 

6.1.1            Voluntary Reduction or Termination of the Revolving Commitment. 
The Company may from time to time on at least five (5) Business
Days’ prior written notice given in accordance with Section 15.3
hereof (which the Administrative Agent shall promptly advise each Lender
thereof) permanently reduce the Revolving Commitment to an amount not less than
the Revolving Outstandings.  Any such
reduction shall be in an amount not less than $500,000 or a higher integral
multiple of $100,000.  Concurrently with
any reduction of the Revolving Commitment to zero, the Company shall pay all
accrued interest on the Revolving Loans, all accrued non-use fees and all
accrued letter of credit fees and shall Cash Collateralize in full all
obligations arising with respect to the Letters of Credit.

 

30

 

6.1.2            All Reductions of the Revolving Commitment. 
All reductions of the Revolving Commitment shall reduce the Commitments
ratably among the Lenders according to their respective Pro Rata Shares.

 

6.2                                 Prepayments.

 

6.2.1            Voluntary Prepayments.  The Company
may from time to time prepay the Loans in whole or in part; provided
that the Company shall give the Administrative Agent (which shall promptly
advise each Lender) notice thereof not later than 11:00 A.M., Chicago
time, on the day of such prepayment (which shall be a Business Day), specifying
the Loans to be prepaid and the date and amount of prepayment.  Any such partial prepayment shall be in an
amount equal to $500,000 or a higher integral multiple of $100,000.

 

6.2.2                        Mandatory Prepayments.

 

(a)                                  The Company shall make a prepayment of
the Term Loan until paid in full upon the occurrence of any of the following
(each a “Mandatory Prepayment Event”) at the following times and in the
following amounts (such applicable amounts being referred to as “Designated
Proceeds”):

 

(i)                                   Concurrently with the receipt by any Loan
Party of any Net Cash Proceeds from any Asset Disposition (excluding (1) any
proceeds from the Drennen Road Transaction received by the Company or any other
Loan Party prior to the date hereof, (2) the first $1,000,000 of proceeds
from the Drennen Road Transaction received by the Company or any other Loan
Party after the date hereof, (3) an amount equal to fifty percent (50%) of
the proceeds from the Drennen Road Transaction in excess of $1,000,000 received
by the Company or any other Loan Party after the date hereof, (4) an
amount equal to fifty percent (50%) of the proceeds received by the Company or
any other Loan Party from the sale of water storage rights related to any
agreement entered into among the Company or Transit Mix Concrete Co., Valco, Inc.
and the Woodmoor Water Reclamation District or other Woodmoor, Colorado
government agency, and (5) in addition to the foregoing, an aggregate of
$200,000 in proceeds per Fiscal Year in respect of Asset Dispositions occurring
in such Fiscal Year), in an amount equal to 100% of such Net Cash Proceeds.

 

(ii)                                Concurrently with the receipt by any Loan
Party of any Net Cash Proceeds from any issuance of Capital Securities of any
Loan Party (excluding (x) any issuance of Capital Securities pursuant to
any employee or director option program, benefit plan or compensation program
and (y) any issuance by a Subsidiary to the Company or another
Subsidiary), in an amount equal to 100% of such Net Cash Proceeds.

 

(iii)                             Concurrently with the receipt by any Loan
Party of any Net Cash Proceeds from any issuance of any Debt of any Loan Party
(excluding Subordinated 

 

31

 

Debt permitted under Section 11.1),
in an amount equal to 100% of such Net Cash Proceeds.

 

(iv)                            Within one-hundred twenty (120) days
after the end of each Fiscal Year (commencing with Fiscal Year 2009), in an
amount equal to fifty percent (50.0%) of Excess Cash Flow for such Fiscal Year.

 

(b)                                 If on any day the Revolving Outstandings
exceed the Borrowing Base, the Company shall immediately prepay Revolving Loans
and/or Cash Collateralize the outstanding Letters of Credit, or do a combination
of the foregoing, in an amount sufficient to eliminate such excess.

 

(c)                                  If on any day on which the Revolving
Commitment is reduced pursuant to Section 6.1 the Revolving
Outstandings exceed the Revolving Commitment, the Company shall immediately
prepay Revolving Loans or Cash Collateralize the outstanding Letters of Credit,
or do a combination of the foregoing, in an amount sufficient to eliminate such
excess.

 

6.3                                 Manner of Prepayments.

 

6.3.1            All Prepayments.  Each voluntary partial
prepayment of the Term Loan shall be in a principal amount of $500,000 or a
higher integral multiple of $100,000. 
Any partial prepayment of a Group of LIBOR Loans shall be subject to the
proviso to Section 2.2.3(a). 
Any prepayment of a LIBOR Loan on a day other than the last day of an
Interest Period therefor shall include interest on the principal amount being
repaid and shall be subject to Section 8.4.  All prepayments of the Term Loan shall be
applied pro rata and in the inverse order of maturity to the remaining installments
thereof.  Except as otherwise provided by
this Agreement, all principal payments in respect of the Loans shall be applied
first, to repay outstanding Base Rate Loans and then to repay outstanding LIBOR
Rate Loans in direct order of Interest Period maturities.

 

6.4                                 Repayments.

 

6.4.1            Revolving Loans.  The Revolving Loans of each
Lender shall be paid in full and the Revolving Commitment shall terminate on
the Termination Date.

 

6.4.2            Term Loan.  The principal amount of the Term Loan shall
be paid in installments as follows:

 

	
  Payment Date

  	
   

  	
  Term Loan

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  June 30, 2009

  	
   

  	
  $

  	
  250,000

  	
   

  
	
  September 30, 2009

  	
   

  	
  $

  	
  250,000

  	
   

  
	
  December 31, 2009

  	
   

  	
  $

  	
  250,000

  	
   

  
	
  March 31, 2010

  	
   

  	
  $

  	
  250,000

  	
   

  
	
  June 30, 2010

  	
   

  	
  $

  	
  375,000

  	
   

  
	
  September 30, 2010

  	
   

  	
  $

  	
  375,000

  	
   

  
	
  December 31, 2010

  	
   

  	
  $

  	
  375,000

  	
   

  

 

32

 

	
  Payment Date

  	
   

  	
  Term Loan

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  March 31, 2011

  	
   

  	
  $

  	
  375,000

  	
   

  
	
  June 30, 2011

  	
   

  	
  $

  	
  500,000

  	
   

  
	
  September 30, 2011

  	
   

  	
  $

  	
  500,000

  	
   

  
	
  December 31, 2011

  	
   

  	
  $

  	
  500,000

  	
   

  
	
  March 31, 2012

  	
   

  	
  $

  	
  500,000

  	
   

  

 

Unless sooner paid in
full, the outstanding principal balance of the Term Loan shall be paid in full
on the Term Loan Maturity Date.

 

SECTION 7                                   MAKING AND PRORATION OF PAYMENTS; SETOFF;
TAXES.

 

7.1                                 Making of Payments. 
All payments of principal or interest on the Notes, and of all fees,
shall be made by the Company to the Administrative Agent in immediately
available funds at the office specified by the Administrative Agent not later
than 2:00 p.m., Chicago time, on the date due; and funds received after
that hour shall be deemed to have been received by the Administrative Agent on
the following Business Day.  The
Administrative Agent shall promptly remit to each Lender its share of all such
payments received in collected funds by the Administrative Agent for the account
of such Lender.  All payments under Section 8.1
shall be made by the Company directly to the Lender entitled thereto without
setoff, counterclaim or other defense.

 

7.2                                 Application of Certain Payments. 
So long as no Event of Default has occurred and is continuing, (a) payments
matching specific scheduled payments then due shall be applied to those
scheduled payments and (b) voluntary and mandatory prepayments shall be
applied as set forth in Sections 6.2 and 6.3.  After the occurrence and during the continuance
of an Event of Default, all amounts collected or received by the Administrative
Agent or any Lender as proceeds from the sale of, or other realization upon,
all or any part of the Collateral shall be applied as set forth in the Guaranty
and Collateral Agreement.  Concurrently
with each remittance to any Lender of its share of any such payment, the
Administrative Agent shall advise such Lender as to the application of such
payment.

 

7.3                                 Due Date Extension. 
If any payment of principal or interest with respect to any of the
Loans, or of any fees, falls due on a day which is not a Business Day, then
such due date shall be extended to the immediately following Business Day
(unless, in the case of a LIBOR Loan, such immediately following Business Day is
the first Business Day of a calendar month, in which case such due date shall
be the immediately preceding Business Day) and, in the case of principal,
additional interest shall accrue and be payable for the period of any such
extension.

 

7.4                                 Setoff.  The Company,
for itself and each other Loan Party, agrees that the Administrative Agent and
each Lender have all rights of set-off and bankers’ lien provided by applicable
law, and in addition thereto, the Company, for itself and each other Loan
Party, agrees that at any time any Event of Default exists, the Administrative
Agent and each Lender may apply to the payment of any Obligations of the
Company and each other Loan Party hereunder, whether or not then due, any and
all balances, credits, deposits, accounts or moneys of the

 

33

 

Company and each other Loan Party then or thereafter
with the Administrative Agent or such Lender.

 

7.5                                 Proration of Payments. 
If any Lender shall obtain any payment or other recovery (whether
voluntary, involuntary, by application of offset or otherwise, on account of (a) principal
of or interest on any Loan, but excluding (i) any payment pursuant to Section 8.7
or 15.6 and (ii) payments of interest on any Affected Loan) or (b) its
participation in any Letter of Credit) in excess of its applicable Pro Rata
Share of payments and other recoveries obtained by all Lenders on account of
principal of and interest on the Loans (or such participation) then held by
them, then such Lender shall purchase from the other Lenders such
participations in the Loans (or sub-participations in Letters of Credit) held
by them as shall be necessary to cause such purchasing Lender to share the
excess payment or other recovery ratably with each of them; provided
that if all or any portion of the excess payment or other recovery is
thereafter recovered from such purchasing Lender, the purchase shall be
rescinded and the purchase price restored to the extent of such recovery.

 

7.6                                 Taxes.

 

(a)                                  All payments made by the Company
hereunder or under any Loan Documents shall be made without setoff,
counterclaim, or other defense.  To the
extent permitted by applicable law, all payments hereunder or under the Loan
Documents (including any payment of principal, interest, or fees) to, or for
the benefit, of any person shall be made by the Company free and clear of and
without deduction or withholding for, or account of, any Taxes now or
hereinafter imposed by any taxing authority.

 

(b)                                 If the Company makes any payment
hereunder or under any Loan Document in respect of which it is required by applicable
law to deduct or withhold any Taxes, the Company shall increase the payment
hereunder or under any such Loan Document such that after the reduction for the
amount of Taxes withheld (and any taxes withheld or imposed with respect to the
additional payments required under this Section 7.6(b)), the amount
paid to the Lenders or the Administrative Agent equals the amount that was
payable hereunder or under any such Loan Document without regard to this Section 7.6(b).  To the extent the Company withholds any Taxes
on payments hereunder or under any Loan Document, the Company shall pay the
full amount deducted to the relevant taxing authority within the time allowed
for payment under applicable law and shall deliver to the Administrative Agent
within 30 days after it has made payment to such authority a receipt issued by
such authority (or other evidence satisfactory to the Administrative Agent)
evidencing the payment of all amounts so required to be deducted or withheld
from such payment.

 

(c)                                  If any Lender or the Administrative Agent
is required by law to make any payments of any Taxes on or in relation to any
amounts received or receivable hereunder or under any other Loan Document, or
any Tax is assessed against a Lender or the Administrative Agent with respect
to amounts received or receivable hereunder or under any other Loan Document,
the Company will indemnify such person against (i) such Tax (and any
reasonable counsel fees and expenses associated with such Tax) and (ii) any
taxes imposed as a result of the receipt of the payment under this Section 7.6(c).  A certificate prepared in good faith as to
the 

 

34

 

amount of such payment by such Lender or the
Administrative Agent shall, absent manifest error, be final, conclusive, and
binding on all parties.

 

(d)                                 (i)                                     To the extent permitted by applicable law, each Lender
that is not a United States person within the meaning of Code Section 7701(a)(30)
(a “Non-U.S. Participant”) shall deliver to the Company and the
Administrative Agent on or prior to the Closing Date (or in the case of a
Lender that is an Assignee, on the date of such assignment to such Lender) two
accurate and complete original signed copies of IRS Form W-8BEN, W-8ECI,
or W-8IMY (or any successor or other applicable form prescribed by the IRS)
certifying to such Lender’s entitlement to a complete exemption from, or a
reduced rate in, United States withholding tax on interest payments to be made
hereunder or any Loan.  If a Lender that
is a Non-U.S. Participant is claiming a complete exemption from withholding on
interest pursuant to Code Sections 871(h) or 881(c), the Lender shall
deliver (along with two accurate and complete original signed copies of IRS Form W-8BEN)
a certificate in form and substance reasonably acceptable to Administrative
Agent (any such certificate, a “Withholding Certificate”).  In addition, each Lender that is a Non-U.S.
Participant agrees that from time to time after the Closing Date, (or in the
case of a Lender that is an Assignee, after the date of the assignment to such
Lender), when a lapse in time (or change in circumstances occurs) renders the
prior certificates hereunder obsolete or inaccurate in any material respect,
such Lender shall, to the extent permitted under applicable law, deliver to the
Company and the Administrative Agent two new and accurate and complete original
signed copies of an IRS Form W-8BEN, W-8ECI, or W-8IMY (or any successor
or other applicable forms prescribed by the IRS), and if applicable, a new
Withholding Certificate, to confirm or establish the entitlement of such Lender
or the Administrative Agent to an exemption from, or reduction in, United
States withholding tax on interest payments to be made hereunder or any Loan.

 

(ii)                                  Each Lender that is not a Non-U.S.
Participant (other than any such Lender which is taxed as a corporation for
U.S. federal income tax purposes) shall provide two properly completed and duly
executed copies of IRS Form W-9 (or any successor or other applicable
form) to the Company and the Administrative Agent certifying that such Lender
is exempt from United States backup withholding tax.  To the extent that a form provided pursuant
to this Section 7.6(d)(ii) is rendered obsolete or inaccurate
in any material respects as result of change in circumstances with respect to
the status of a Lender, such Lender shall, to the extent permitted by
applicable law, deliver to the Company and the Administrative Agent revised
forms necessary to confirm or establish the entitlement to such Lender’s or
Agent’s exemption from United States backup withholding tax.

 

(iii)                               The Company shall not be required to pay additional
amounts to a Lender, or indemnify any Lender, under this Section 7.6
to the extent that such obligations would not have arisen but for the failure
of such Lender to comply with Section 7.6(d).

 

(iv)                              Each Lender agrees to indemnify the
Administrative Agent and hold the Administrative Agent harmless for the full
amount of any and all present or future Taxes and related liabilities
(including penalties, interest, additions to tax and expenses, and any Taxes
imposed by any jurisdiction on amounts payable to the Administrative Agent
under this Section 7.6) which are imposed on or with respect to
principal, interest or fees payable to such Lender hereunder and which are not
paid by the Company pursuant to this Section 7.6, whether or not 

 

35

 

such Taxes or related liabilities were correctly or legally
asserted.  This indemnification shall be
made within 30 days from the date the Administrative Agent makes written demand
therefor.

 

SECTION 8                                   INCREASED COSTS; SPECIAL PROVISIONS FOR LIBOR LOANS.

 

8.1                                 Increased Costs.  (a) 
If, after the date hereof, the adoption of, or any change in, any applicable
law, rule or regulation, or any change in the interpretation or
administration of any applicable law, rule or regulation by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender with any
request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency: 
(i) shall impose, modify or deem applicable any reserve (including
any reserve imposed by the FRB, but excluding any reserve included in the
determination of the LIBOR Rate pursuant to Section 4), special
deposit or similar requirement against assets of, deposits with or for the
account of, or credit extended by any Lender; or (ii) shall impose on any
Lender any other condition affecting its LIBOR Loans, its Note or its
obligation to make LIBOR Loans; and the result of anything described in clauses
(i) and (ii) above is to increase the cost to (or to impose a cost
on) such Lender (or any LIBOR Office of such Lender) of making or maintaining
any LIBOR Loan, or to reduce the amount of any sum received or receivable by
such Lender (or its LIBOR Office) under this Agreement or under its Note with
respect thereto, then upon demand by such Lender (which demand shall be
accompanied by a statement setting forth the basis for such demand and a
calculation of the amount thereof in reasonable detail, a copy of which shall
be furnished to the Administrative Agent), the Company shall pay directly to
such Lender such additional amount as will compensate such Lender for such
increased cost or such reduction, so long as such amounts have accrued on or
after the day which is 180 days prior to the date on which such Lender first
made demand therefor.

 

(b)                                 If any Lender shall reasonably determine
that any change in, or the adoption or phase-in of, any applicable law, rule or
regulation regarding capital adequacy, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or the
compliance by any Lender or any Person controlling such Lender with any request
or directive regarding capital adequacy (whether or not having the force of
law) of any such authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on such Lender’s or such
controlling Person’s capital as a consequence of such Lender’s obligations
hereunder or under any Letter of Credit to a level below that which such Lender
or such controlling Person could have achieved but for such change, adoption,
phase-in or compliance (taking into consideration such Lender’s or such
controlling Person’s policies with respect to capital adequacy) by an amount
deemed by such Lender or such controlling Person to be material, then from time
to time, upon demand by such Lender (which demand shall be accompanied by a
statement setting forth the basis for such demand and a calculation of the
amount thereof in reasonable detail, a copy of which shall be furnished to the
Administrative Agent), the Company shall pay to such Lender such additional
amount as will compensate such Lender or such controlling Person for such
reduction so long as such amounts have accrued on or after the day which is 180
days prior to the date on which such Lender first made demand therefor.

 

36

 

8.2                                 Basis for Determining Interest Rate
Inadequate or Unfair.  If:

 

(a)                                  the Administrative Agent reasonably
determines (which determination shall be binding and conclusive on the Company)
that by reason of circumstances affecting the interbank LIBOR market adequate
and reasonable means do not exist for ascertaining the applicable LIBOR Rate;
or

 

(b)                                 the Required Lenders advise the
Administrative Agent that the LIBOR Rate as determined by the Administrative
Agent will not adequately and fairly reflect the cost to such Lenders of
maintaining or funding LIBOR Loans for such Interest Period (taking into account
any amount to which such Lenders may be entitled under Section 8.1)
or that the making or funding of LIBOR Loans has become impracticable as a
result of an event occurring after the date of this Agreement which in the
opinion of such Lenders materially affects such Loans;

 

then the Administrative Agent shall promptly notify the
other parties thereof and, so long as such circumstances shall continue, (i) no
Lender shall be under any obligation to make or convert any Base Rate Loans
into LIBOR Loans and (ii) on the last day of the current Interest Period
for each LIBOR Loan, such Loan shall, unless then repaid in full, automatically
convert to a Base Rate Loan.

 

8.3                                 Changes in Law Rendering LIBOR Loans
Unlawful.  If any change in, or the adoption of any new,
law or regulation, or any change in the interpretation of any applicable law or
regulation by any governmental or other regulatory body charged with the
administration thereof, should make it (or in the good faith judgment of any
Lender cause a substantial question as to whether it is) unlawful for any
Lender to make, maintain or fund LIBOR Loans, then such Lender shall promptly
notify each of the other parties hereto and, so long as such circumstances
shall continue, (a) such Lender shall have no obligation to make or
convert any Base Rate Loan into a LIBOR Loan (but shall make Base Rate Loans
concurrently with the making of or conversion of Base Rate Loans into LIBOR
Loans by the Lenders which are not so affected, in each case in an amount equal
to the amount of LIBOR Loans which would be made or converted into by such
Lender at such time in the absence of such circumstances) and (b) on the
last day of the current Interest Period for each LIBOR Loan of such Lender (or,
in any event, on such earlier date as may be required by the relevant law,
regulation or interpretation), such LIBOR Loan shall, unless then repaid in
full, automatically convert to a Base Rate Loan.  Each Base Rate Loan made by a Lender which,
but for the circumstances described in the foregoing sentence, would be a LIBOR
Loan (an “Affected Loan”) shall remain outstanding for the period
corresponding to the Group of LIBOR Loans of which such Affected Loan would be
a part absent such circumstances.

 

8.4                                 Funding Losses. 
The Company hereby agrees that upon demand by any Lender (which demand
shall be accompanied by a statement setting forth the basis for the amount
being claimed, a copy of which shall be furnished to the Administrative Agent),
the Company will indemnify such Lender against any net loss or expense which
such Lender may sustain or incur (including any net loss or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired
by such Lender to fund or maintain any LIBOR Loan), as reasonably determined by
such Lender, as a result of (a) any payment, prepayment or conversion of
any LIBOR Loan of such Lender on a date other than the last day of an Interest
Period for such Loan (including any conversion pursuant to Section 8.3)
or (b) any failure of the Company to borrow, convert or continue any Loan
on a date specified therefor in a notice of borrowing, 

 

37

 

conversion or continuation pursuant to this
Agreement.  For this purpose, all notices
to the Administrative Agent pursuant to this Agreement shall be deemed to be
irrevocable.

 

8.5                                 Right of Lenders to Fund through Other
Offices.  Each Lender may, if it so elects, fulfill its
commitment as to any LIBOR Loan by causing a foreign branch or Affiliate of such
Lender to make such Loan; provided that in such event for the purposes
of this Agreement such Loan shall be deemed to have been made by such Lender
and the obligation of the Company to repay such Loan shall nevertheless be to
such Lender and shall be deemed held by it, to the extent of such Loan, for the
account of such branch or Affiliate.

 

8.6                                 Discretion of Lenders as to Manner of
Funding.  Notwithstanding any provision of this
Agreement to the contrary, each Lender shall be entitled to fund and maintain
its funding of all or any part of its Loans in any manner it sees fit, it being
understood, however, that for the purposes of this Agreement all determinations
hereunder shall be made as if such Lender had actually funded and maintained
each LIBOR Loan during each Interest Period for such Loan through the purchase
of deposits having a maturity corresponding to such Interest Period and bearing
an interest rate equal to the LIBOR Rate for such Interest Period.

 

8.7                                 Mitigation of Circumstances; Replacement
of Lenders.  (a)  Each Lender shall promptly notify
the Company and the Administrative Agent of any event of which it has knowledge
which will result in, and will use reasonable commercial efforts available to
it (and not, in such Lender’s sole judgment, otherwise disadvantageous to such
Lender) to mitigate or avoid, (i) any obligation by the Company to pay any
amount pursuant to Sections 7.6 or 8.1 or (ii) the
occurrence of any circumstances described in Sections 8.2 or 8.3
(and, if any Lender has given notice of any such event described in clause (i) or
(ii) above and thereafter such event ceases to exist, such Lender shall
promptly so notify the Company and the Administrative Agent).  Without limiting the foregoing, each Lender
will designate a different funding office if such designation will avoid (or
reduce the cost to the Company of) any event described in clause (i) or (ii) above
and such designation will not, in such Lender’s sole judgment, be otherwise
disadvantageous to such Lender.

 

8.8                                 Conclusiveness of Statements; Survival of
Provisions.  Determinations and statements of any Lender
pursuant to Sections 8.1, 8.2, 8.3 or 8.4 shall be
conclusive absent demonstrable error. 
Lenders may use reasonable averaging and attribution methods in
determining compensation under Sections 8.1 and 8.4, and the
provisions of such Sections shall survive repayment of the Obligations,
cancellation of any Notes, expiration or termination of the Letters of Credit
and termination of this Agreement.

 

SECTION 9                                   REPRESENTATIONS AND WARRANTIES.

 

To induce the
Administrative Agent and the Lenders to enter into this Agreement and to induce
the Lenders to make Loans and issue and participate in Letters of Credit
hereunder, the Company represents and warrants to the Administrative Agent and
the Lenders that:

 

9.1                                 Organization. 
Each Loan Party is validly existing and in good standing under the laws
of its jurisdiction of incorporation; and each Loan Party is duly qualified to
do business in each jurisdiction where, because of the nature of its activities
or properties, such qualification is 

 

38

 

required, except for such jurisdictions where the
failure to so qualify would not have a Material Adverse Effect.

 

9.2                                 Authorization; No Conflict. 
Each Loan Party is duly authorized to execute and deliver each Loan
Document to which it is a party, the Company is duly authorized to borrow
monies hereunder and each Loan Party is duly authorized to perform its Obligations
under each Loan Document to which it is a party.  The execution, delivery and performance by
each Loan Party of each Loan Document to which it is a party, and the
borrowings by the Company hereunder, do not and will not (a) require any
consent or approval of any governmental agency or authority (other than any
consent or approval which has been obtained and is in full force and effect), (b) conflict
with (i) any provision of law applicable to such Loan Party, the violation
of which could reasonably be expected to result in a Material Adverse Effect, (ii) the
charter, by-laws or other organizational documents of any Loan Party or (iii) any
agreement, indenture, instrument or other document, or any judgment, order or
decree, which is binding upon any Loan Party or any of their respective
properties or (c) require, or result in, the creation or imposition of any
Lien on any asset of any Loan Party (other than Liens in favor of the
Administrative Agent created pursuant to the Collateral Documents).

 

9.3                                 Validity and Binding Nature. 
Each of this Agreement and each other Loan Document to which any Loan
Party is a party is the legal, valid and binding obligation of such Person,
enforceable against such Person in accordance with its terms, subject to
bankruptcy, fraudulent transfer, moratorium, reorganization, insolvency and
similar laws affecting the enforceability of creditors’ rights generally and to
general principles of equity.

 

9.4                                 Financial Condition. 
The audited consolidated financial statements of the Company and its
Subsidiaries as at December 31, 2007, and the unaudited consolidated
financial statements of the Company and its Subsidiaries as at February 28,
2009 (such financial statements providing sales and pre-tax income
information), copies of which have been delivered to each Lender, were prepared
in accordance with GAAP (subject, in the case of such unaudited statements, to
the absence of footnotes and to normal year-end adjustments) and present fairly
the consolidated financial condition of the Company and its Subsidiaries as at
such dates and the results of their operations for the periods then ended.  The Company has delivered to the
Administrative Agent a draft of the audited consolidated financial statements
of the Company and its Subsidiaries as at December 31, 2008 (the “Draft
2008 Financial Statements”), which were prepared in accordance with GAAP,
the financial results of which are consistent in all respects with the
preliminary consolidated financial information previously provided by the
Company with respect to the financial performance of the Company and its
Subsidiaries in Fiscal Year 2008.  The
final audited consolidated financial statements of the Company and its
Subsidiaries as at December 31, 2008 (the “Final 2008 Financial
Statements”) will be delivered to the Administrative Agent by April 20,
2009 (certified without adverse reference to going concern value and without
qualification by Deloitte & Touche LLP or other independent auditors
of recognized standing selected by the Company and reasonably acceptable to the
Administrative Agent) and such Final 2008 Financial Statements will have no
material changes (to the extent adverse to any Loan Party) from the Draft 2008
Financial Statements on which the Administrative Agent and each Lender has
relied in determining to enter into this Agreement and to provide the
Commitments.

 

39

 

9.5                                 No Material Adverse Change. 
Since December 31, 2008 there has been no material adverse change
in the business, assets, liabilities, properties, condition (financial or
otherwise) or results of operations of the Loan Parties taken as a whole.

 

9.6                                 Litigation and Contingent Liabilities. 
No litigation (including derivative actions), arbitration proceeding or
governmental investigation or proceeding is pending or, to the Company’s
knowledge, threatened against any Loan Party which might reasonably be expected
to have a Material Adverse Effect, except as set forth in Schedule 9.6.  Other than any liability incident to such
litigation or proceedings, no Loan Party has any material Contingent
Liabilities not listed on Schedule 9.6 or permitted by Section 11.1.

 

9.7                                 Ownership of Properties; Liens. 
Each Loan Party owns good and, in the case of real property, marketable
title to all of its material properties and assets, real and personal, tangible
and intangible, of any nature whatsoever (including patents, trademarks, trade
names, service marks and copyrights), free and clear of all Liens, charges and
claims (including infringement claims with respect to patents, trademarks,
service marks, copyrights and the like) other than Permitted Liens.

 

9.8                                 Equity Ownership; Subsidiaries. 
All issued and outstanding Capital Securities of the Loan Parties (other
than the Company) are duly authorized and validly issued, fully-paid,
non-assessable, and free and clear of all Liens other than those in favor of
the Administrative Agent, and such securities were issued in compliance with
all applicable state and federal laws concerning the issuance of securities.  Schedule 9.8 sets forth the authorized
Capital Securities of each Loan Party (other than the Company) as of the
Closing Date.  All of the issued and
outstanding Capital Securities of the Loan Parties (other than the Company) are
owned as set forth on Schedule 9.8 as of the Closing Date.  As of the Closing Date, except as set forth
on Schedule 9.8, there are no pre-emptive or other outstanding rights,
options, warrants, conversion rights or other similar agreements or
understandings for the purchase or acquisition of any Capital Securities of any
Loan Party (other than the Company).

 

9.9                                 Pension Plans.  (a) The
Unfunded Liability of all Pension Plans does not in the aggregate exceed twenty
percent of the Total Plan Liability for all such Pension Plans.  Each Pension Plan complies in all material
respects with all applicable requirements of law and regulations.  No contribution failure under Section 412
of the Code, Section 302 of ERISA or the terms of any Pension Plan has
occurred with respect to any Pension Plan, sufficient to give rise to a Lien
under Section 302(f) of ERISA, or otherwise to have a Material
Adverse Effect.  There are no pending or,
to the knowledge of Company, threatened, claims, actions, investigations or
lawsuits against any Pension Plan, any fiduciary of any Pension Plan, or
Company or other any member of the Controlled Group with respect to a Pension
Plan or a Multiemployer Pension Plan which could reasonably be expected to have
a Material Adverse Effect.  Neither the
Company nor any other member of the Controlled Group has engaged in any
prohibited transaction (as defined in Section 4975 of the Code or Section 406
of ERISA) in connection with any Pension Plan or Multiemployer Pension Plan
which would subject that Person to any material liability.  Within the past five years, neither the
Company nor any other member of the Controlled Group has engaged in a
transaction which resulted in a Pension Plan with an Unfunded Liability being
transferred out of the Controlled Group, which could reasonably be expected to
have a Material Adverse Effect.  No
Termination Event has occurred or is reasonably expected to occur with 

 

40

 

respect to any Pension Plan, which could reasonably be
expected to have a Material Adverse Effect.

 

(b)                                 All contributions (if any) have been made
to any Multiemployer Pension Plan that are required to be made by the Company
or any other member of the Controlled Group under the terms of the plan or of
any collective bargaining agreement or by applicable law; neither the Company
nor any other member of the Controlled Group has withdrawn or partially
withdrawn from any Multiemployer Pension Plan, incurred any withdrawal
liability with respect to any such plan or received notice of any claim or
demand for withdrawal liability or partial withdrawal liability from any such
plan, and no condition has occurred which, if continued, could result in a
withdrawal or partial withdrawal from any such plan; and neither the Company
nor any other member of the Controlled Group has received any notice that any
Multiemployer Pension Plan is in reorganization, that increased contributions
may be required to avoid a reduction in plan benefits or the imposition of any
excise tax, that any such plan is or has been funded at a rate less than that
required under Section 412 of the Code, that any such plan is or may be
terminated, or that any such plan is or may become insolvent.

 

9.10                           Investment Company Act. 
No Loan Party is an “investment company” or a company “controlled” by an
“investment company” or a “subsidiary” of an “investment company,” within the
meaning of the Investment Company Act of 1940.

 

9.11                           Intentionally Omitted.

 

9.12                           Regulation U. 
The Company is not engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing
or carrying Margin Stock.

 

9.13                           Taxes.  Each Loan
Party has timely filed all tax returns and reports required by law to have been
filed by it and has paid all taxes and governmental charges due and payable
with respect to such return, except any such taxes or charges which are being
diligently contested in good faith by appropriate proceedings and for which
adequate reserves in accordance with GAAP shall have been set aside on its
books.  The Loan Parties have made
adequate reserves on their books and records in accordance with GAAP for all
taxes that have accrued but which are not yet due and payable.  No Loan Party has participated in any
transaction that relates to a year of the taxpayer (which is still open under
the applicable statute of limitations) which is a “reportable transaction”
within the meaning of Treasury Regulation Section 1.6011-4(b)(2) (irrespective
of the date when the transaction was entered into).

 

9.14                           Solvency, etc. 
On the Closing Date, and immediately prior to and after giving effect to
the issuance of each Letter of Credit and each borrowing hereunder and the use
of the proceeds thereof, with respect to each Loan Party other than Inactive
Subsidiaries, individually, (a) the fair value of its assets is greater
than the amount of its liabilities (including disputed, contingent and
unliquidated liabilities) as such value is established and liabilities
evaluated in accordance with GAAP, (b) the present fair saleable value of
its assets is not less than the amount that will be required to pay the
probable liability on its debts as they become absolute and matured, (c) it
is able to realize upon its assets and pay its debts and other liabilities
(including disputed, contingent and unliquidated liabilities) as they mature in
the normal course 

 

41

 

of business, (d) it does not intend to, and does
not believe that it will, incur debts or liabilities beyond its ability to pay
as such debts and liabilities mature and (e) it is not engaged in business
or a transaction, and is not about to engage in business or a transaction, for
which its property would constitute unreasonably small capital.

 

9.15                           Environmental Matters.  The on-going operations of each Loan Party
comply in all respects with all Environmental Laws, except such non-compliance
which could not (if enforced in accordance with applicable law) reasonably be
expected to result, either individually or in the aggregate, in a Material
Adverse Effect.  Each Loan Party has
obtained, and maintained in good standing, all licenses, permits,
authorizations, registrations and other approvals required under any
Environmental Law and required for their respective ordinary course operations,
and for their reasonably anticipated future operations, and each Loan Party is
in compliance with all terms and conditions thereof, except where the failure
to do so could not reasonably be expected to result in material liability to
any Loan Party and could not reasonably be expected to result, either
individually or in the aggregate, in a Material Adverse Effect.  No Loan Party or any of its properties or
operations is subject to, or reasonably anticipates the issuance of, any
written order from or agreement with any Federal, state or local governmental
authority, nor subject to any judicial or docketed administrative or other
proceeding, respecting any Environmental Law, Environmental Claim or Hazardous
Substance.  There are no Hazardous Substances
or other conditions or circumstances existing with respect to any property,
arising from operations prior to the Closing Date, or relating to any waste
disposal, of any Loan Party that would reasonably be expected to result, either
individually or in the aggregate, in a Material Adverse Effect.  No Loan Party has any underground storage
tanks that are not properly registered or permitted under applicable
Environmental Laws or that at any time have released, leaked, disposed of or
otherwise discharged Hazardous Substances.

 

9.16                           Insurance.  Set forth on Schedule
9.16 is a complete and accurate summary of the property and casualty
insurance program of the Loan Parties as of the Closing Date (including the
names of all insurers, policy numbers, expiration dates, amounts and types of
coverage, annual premiums, exclusions, deductibles, self-insured retention, and
a description in reasonable detail of any self-insurance program, retrospective
rating plan, fronting arrangement or other risk assumption arrangement
involving any Loan Party).  Each Loan
Party and its properties are insured with financially sound and reputable
insurance companies which are not Affiliates of the Loan Parties, in such
amounts, with such deductibles and covering such risks as are customarily
carried by companies engaged in similar businesses and owning similar
properties in localities where such Loan Parties operate.

 

9.17                           Real Property. 
Set forth on Schedule 9.17 is a complete and accurate list, as of
the Closing Date, of the address of all real property owned or leased by any
Loan Party, together with, in the case of leased property, the name and mailing
address of the lessor of such property.

 

9.18                           Information. 
All information heretofore or contemporaneously herewith furnished in
writing by any Loan Party to the Administrative Agent or any Lender for
purposes of or in connection with this Agreement and the transactions
contemplated hereby is, and all written information hereafter furnished by or
on behalf of any Loan Party to the Administrative Agent or any Lender pursuant
hereto or in connection herewith will be (including, without limitation, all
information filed prior to or after the date hereof with the SEC), true and
accurate 

 

42

 

in every material respect on the date as of which such
information is dated or certified, and none of such information is or will be
incomplete by omitting to state any material fact necessary to make such
information not misleading in light of the circumstances under which made (it
being recognized by the Administrative Agent and the Lenders that any
projections, forecasts and other forward looking statements provided by the
Loan Parties are based on good faith estimates and assumptions believed by the
Loan Parties to be reasonable as of the date of the applicable projections or
assumptions and that actual results during the period or periods covered by any
such projections and forecasts may differ from projected or forecasted
results).

 

9.19                           Intellectual Property. 
Each Loan Party owns and possesses or has a license or other right to
use all patents, patent rights, trademarks, trademark rights, trade names,
trade name rights, service marks, service mark rights and copyrights as are
necessary for the conduct of the businesses of the Loan Parties, without any
infringement upon rights of others which could reasonably be expected to have a
Material Adverse Effect.

 

9.20                           Burdensome Obligations. 
No Loan Party is a party to any agreement or contract or subject to any
restriction contained in its organizational documents which could reasonably be
expected to have a Material Adverse Effect.

 

9.21                           Labor Matters. 
Except as set forth on Schedule 9.21, no Loan Party is subject to
any labor or collective bargaining agreement. 
There are no existing or threatened strikes, lockouts or other labor
disputes involving any Loan Party that singly or in the aggregate could
reasonably be expected to have a Material Adverse Effect.  Hours worked by and payment made to employees
of the Loan Parties are not in violation of the Fair Labor Standards Act or any
other applicable law, rule or regulation dealing with such matters.

 

9.22                           No Default.  No Event of
Default or Unmatured Event of Default exists or would result from the incurrence
by any Loan Party of any Debt hereunder or under any other Loan Document.

 

9.23                           Inactive Subsidiaries. 
Each of the Inactive Subsidiaries has ceased the operation of business
and has no material assets or liabilities.

 

SECTION 10                             AFFIRMATIVE COVENANTS.

 

Until the expiration or
termination of the Commitments and thereafter until all Obligations hereunder
and under the other Loan Documents are paid in full (other than any Obligation arising solely from any Bank Product
Agreement or contingent indemnification Obligations to the extent no claim
giving rise thereto has been asserted) and all Letters of Credit have
been terminated or Cash Collateralized, the Company agrees that, unless at any
time the Required Lenders shall otherwise expressly consent in writing, it
will:

 

10.1                           Reports, Certificates and Other
Information.  Furnish to the Administrative Agent and each
Lender:

 

10.1.1                                          Annual Report. 
Promptly when available and in any event within one hundred twenty (120)
days after the close of each Fiscal Year: (a) a copy of the annual audit
report of the Company and its Subsidiaries for such Fiscal Year, including
therein

 

43

 

consolidated balance sheets and statements of earnings
and cash flows of the Company and its Subsidiaries as at the end of such Fiscal
Year, certified without adverse reference to going concern value and without
qualification by independent auditors of recognized standing selected by the
Company and reasonably acceptable to the Administrative Agent, together with (i) a
written statement from such accountants to the effect that in making the
examination necessary for the signing of such annual audit report by such
accountants, nothing came to their attention that caused them to believe that
the Company was not in compliance with any provision of Section 11.13
of this Agreement insofar as such provision relates to accounting matters or,
if something has come to their attention that caused them to believe that the
Company was not in compliance with any such provision, describing such
non-compliance in reasonable detail and (ii) a comparison with the budget
for such Fiscal Year and a comparison with the previous Fiscal Year; and (b) a
consolidating balance sheet of the Company and its Subsidiaries as of the end
of such Fiscal Year and consolidating statement of earnings and cash flows for
the Company and its Subsidiaries for such Fiscal Year, certified by a Senior
Officer of the Company.

 

10.1.2              Interim Reports.  (a)  Promptly when available and in any
event within 45 days after the end of each Fiscal Quarter, consolidated and
consolidating balance sheets of the Company and its Subsidiaries as of the end
of such Fiscal Quarter, together with consolidated and consolidating statements
of earnings and cash flows for such Fiscal Quarter and for the period beginning
with the first day of such Fiscal Year and ending on the last day of such
Fiscal Quarter, together with a comparison with the corresponding period of the
previous Fiscal Year and a comparison with the budget for such period of the
current Fiscal Year, certified by a Senior Officer of the Company; and (b) promptly
when available and in any event within 30 days after the end of each month,
consolidated and consolidating statements of earnings for the Company and its
Subsidiaries for such month and for the period beginning with the first day of
such Fiscal Year and ending on the last day of such month, together with (x) a
comparison with the corresponding period of the previous Fiscal Year and a
comparison with the budget for such period of the current Fiscal Year,
certified by a Senior Officer of the Company, and (y) a monthly internal
management report providing an analysis of the financial performance for such
month and for the period beginning with the first day of the applicable Fiscal
Year and ending on the last day of such month.

 

10.1.3              Compliance Certificates.  Contemporaneously with the furnishing of a copy
of each annual audit report pursuant to Section 10.1.1 and each set
of quarterly statements pursuant to Section 10.1.2, a duly
completed compliance certificate in the form of Exhibit B, with
appropriate insertions, dated the date of such annual report or such quarterly
statements and signed by a Senior Officer of the Company, containing (i) a
computation of each of the financial ratios, restrictions and requirements set
forth in Section 11.13 and to the effect that such officer has not
become aware of any Event of Default or Unmatured Event of Default that has
occurred and is continuing or, if there is any such event, describing it and
the steps, if any, being taken to cure it and (ii) to the extent there has been a change in the corporate structure of the
Company or the Subsidiaries since the previously delivered compliance
certificate under this Section 10.1.3, an updated organizational
chart listing all Subsidiaries and the jurisdictions of their respective
incorporation.

 

44

 

10.1.4                                          Reports to the SEC and to Shareholders. 
Promptly upon the filing or sending thereof, copies of all regular,
periodic or special reports of any Loan Party filed with the SEC; copies of all
registration statements of any Loan Party filed with the SEC (other than on Form S-8);
copies of all proxy statements or other communications made to security holders
generally; and copies of any other filings, reports or other documents to or
from any securities exchange or the SEC upon the Administrative Agent’s
request.

 

10.1.5                                          Notice of Default, Litigation and ERISA
Matters.  Promptly upon becoming aware of any of the
following, written notice describing the same and the steps being taken by the
Company or the Subsidiary affected thereby with respect thereto:

(a)           the
occurrence of an Event of Default or an Unmatured Event of Default;

 

(b)           any
litigation, arbitration or governmental investigation or proceeding not
previously disclosed by the Company to the Lenders which has been instituted
or, to the knowledge of the Company, is threatened against any Loan Party or to
which any of the properties of any thereof is subject which might reasonably be
expected to have a Material Adverse Effect;

 

(c)           the
institution of any steps by any member of the Controlled Group or any other
Person to terminate any Pension Plan, or the failure of any member of the
Controlled Group to make a required contribution to any Pension Plan (if such
failure is sufficient to give rise to a Lien under Section 302(f) of ERISA)
or to any Multiemployer Pension Plan, or the taking of any action with respect
to a Pension Plan which could result in the requirement that the Company
furnish a bond or other security to the PBGC or such Pension Plan, or the
occurrence of any event with respect to any Pension Plan or Multiemployer
Pension Plan which could result in the incurrence by any member of the
Controlled Group of any material liability, fine or penalty (including any
claim or demand for withdrawal liability or partial withdrawal from any
Multiemployer Pension Plan), or any material increase in the contingent
liability of the Company with respect to any post-retirement welfare benefit
plan or other employee benefit plan of the Company or another member of the
Controlled Group, or any notice that any Multiemployer Pension Plan is in
reorganization, that increased contributions may be required to avoid a
reduction in plan benefits or the imposition of an excise tax, that any such
plan is or has been funded at a rate less than that required under Section 412
of the Code, that any such plan is or may be terminated, or that any such plan
is or may become insolvent;

 

(d)           any
cancellation or material change in any insurance maintained by any Loan Party;
or

 

(e)           any
other event (including (i) any violation of any Environmental Law or the
assertion of any Environmental Claim or (ii) the enactment or
effectiveness of any law, rule or regulation) which might reasonably be
expected to have a Material Adverse Effect.

 

10.1.6                                          Borrowing Base Certificates and
Additional Monthly Reports.  Within
fifteen (15) days of the end of each month, (i) a Borrowing Base
Certificate dated as of the 

 

45

 

end of such month and executed by a Senior Officer of
the Company on behalf of the Company (provided that (a) the Company
may deliver a Borrowing Base Certificate more frequently if it chooses and (b) during
any time an Event of Default exists, the Administrative Agent may require the
Company to deliver Borrowing Base Certificates more frequently), and (ii) reports
setting forth the aging and other relevant information of the accounts
receivable, accounts payable and inventory of the Loan Parties as of such month
end (such reports to be in form and substance reasonably acceptable to the
Administrative Agent).

 

10.1.7              Management Reports.  Promptly upon receipt thereof, copies of all
detailed financial and management reports submitted to the Company by
independent auditors in connection with each annual or interim audit made by
such auditors of the books of the Company.

 

10.1.8              Projections.  As soon as practicable, and in any event not
later than thirty (30) days after the commencement of each Fiscal Year,
financial projections for the Company and its Subsidiaries for such Fiscal Year
(including monthly operating and cash flow budgets) prepared in a manner
consistent with the projections delivered by the Company to the Administrative
Agent prior to the Closing Date or otherwise in a manner reasonably
satisfactory to the Administrative Agent, accompanied by a certificate of a
Senior Officer of the Company on behalf of the Company to the effect that such
projections were based on good faith estimates of future financial performance
prepared by the Company.

 

10.1.9              Subordinated Debt Notices.  Promptly following receipt, copies of any
notices (including notices of default or acceleration) received from any holder
or trustee of, under or with respect to any Subordinated Debt.

 

10.1.10            Other Information.  Promptly from time to time, such other
information concerning the Loan Parties as any Lender or the Administrative
Agent may reasonably request.

 

10.2         Books, Records and Inspections.  Keep, and cause each other Loan Party to
keep, its books and records in accordance with sound business practices
sufficient to allow the preparation of financial statements in accordance with
GAAP; permit, and cause each other Loan Party to permit, any Lender or the
Administrative Agent or any representative thereof to inspect the properties
and operations of the Loan Parties; and permit, and cause each other Loan Party
to permit, at any reasonable time and with reasonable notice (or at any time
without notice if an Event of Default exists), any Lender or the Administrative
Agent or any representative thereof to visit any or all of its offices, to
discuss its financial matters with its officers and its independent auditors
(and the Company hereby authorizes such independent auditors to discuss such
financial matters with any Lender or the Administrative Agent or any
representative thereof), and to examine (and, at the expense of the Loan
Parties, photocopy extracts from) any of its books or other records; and
permit, and cause each other Loan Party to permit, the Administrative Agent and
its representatives to inspect the Inventory and other tangible assets of the
Loan Parties, to perform appraisals of the equipment of the Loan Parties, and
to inspect, audit, check and make copies of and extracts from the books,
records, computer data, computer programs, journals, orders, receipts,
correspondence and other data relating to Inventory, Accounts and any other
collateral.  All such inspections or
audits by the Administrative Agent shall be at the Company’s 

 

46

 

expense, provided that so long as no Event of
Default or Unmatured Event of Default exists, the Company shall not be required
to reimburse the Administrative Agent for inspections or audits more frequently
than once each Fiscal Year.

 

10.3         Maintenance of Property; Insurance.  (a)  Keep, and cause each other Loan
Party (other than the Inactive Subsidiaries) to keep, all property useful and
necessary in the business of the Loan Parties in working order and in
substantially the same condition as of the date hereof, ordinary wear and tear
excepted.

 

(b)           Maintain, and cause each other Loan
Party (other than the Inactive Subsidiaries) to maintain, with responsible
insurance companies, such insurance coverage as may be required by any law or
governmental regulation or court decree or order applicable to it and such
other insurance, to such extent and against such hazards and liabilities, as is
customarily maintained by companies similarly situated, but which shall insure
against all risks and liabilities of the type identified on Schedule 9.16
and shall have insured amounts no less than, and deductibles no higher than,
those set forth on such schedule; and, upon written request of the
Administrative Agent or any Lender, furnish within three (3) Business Days
of such request to the Administrative Agent or such Lender a certificate
setting forth in reasonable detail the nature and extent of all insurance
maintained by the Loan Parties.  The
Company shall cause each issuer of an insurance policy to provide the Administrative
Agent with an endorsement (i) showing the Administrative Agent as lender’s
loss payee with respect to each policy of property or casualty insurance and
naming the Administrative Agent as an additional insured with respect to each
policy of liability insurance, (ii) providing that thirty (30) days’
notice will be given to the Administrative Agent prior to any cancellation of,
material reduction or change in coverage provided by or other material
modification to such policy and (iii) reasonably acceptable in all other
respects to the Administrative Agent.

 

(c)           UNLESS
THE COMPANY PROVIDES THE ADMINISTRATIVE AGENT WITH EVIDENCE OF THE INSURANCE
COVERAGE REQUIRED BY THIS AGREEMENT WITHIN THREE (3) BUSINESS DAYS OF
WRITTEN REQUEST BY THE ADMINISTRATIVE AGENT OR ANY LENDER, THE ADMINISTRATIVE
AGENT MAY PURCHASE INSURANCE AT THE COMPANY’S EXPENSE TO PROTECT THE
ADMINISTRATIVE AGENT’S AND THE LENDERS’ INTERESTS IN THE COLLATERAL.  THIS INSURANCE MAY, BUT NEED NOT, PROTECT ANY
LOAN PARTY’S INTERESTS.  THE COVERAGE
THAT THE ADMINISTRATIVE AGENT PURCHASES MAY NOT PAY ANY CLAIM THAT IS MADE
AGAINST ANY LOAN PARTY IN CONNECTION WITH THE COLLATERAL.  THE COMPANY MAY LATER CANCEL ANY
INSURANCE PURCHASED BY THE ADMINISTRATIVE AGENT, BUT ONLY AFTER PROVIDING THE
ADMINISTRATIVE AGENT WITH EVIDENCE THAT THE COMPANY HAS OBTAINED INSURANCE AS
REQUIRED BY THIS AGREEMENT.  IF THE
ADMINISTRATIVE AGENT PURCHASES INSURANCE FOR THE COLLATERAL, THE COMPANY WILL
BE RESPONSIBLE FOR THE COSTS OF THAT INSURANCE, INCLUDING INTEREST AND ANY
OTHER CHARGES THAT MAY BE IMPOSED WITH THE PLACEMENT OF THE INSURANCE,
UNTIL THE EFFECTIVE DATE OF THE CANCELLATION OR EXPIRATION OF THE
INSURANCE.  THE COSTS OF THE INSURANCE MAY BE
ADDED TO THE PRINCIPAL AMOUNT OF THE LOANS OWING HEREUNDER.  

 

47

 

THE COSTS OF THE INSURANCE MAY BE MORE THAN
THE COST OF THE INSURANCE THE LOAN PARTIES MAY BE ABLE TO OBTAIN ON THEIR
OWN.

 

10.4         Compliance with Laws, Material Contracts; Payment of
Taxes and Liabilities.  (a) Comply, and cause each Loan Party to
comply, in all material respects with all material applicable laws, rules,
regulations, decrees, orders, judgments, licenses, material contracts and
permits, the noncompliance with which could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect; and (b) pay,
and cause each Loan Party to pay, prior to delinquency, all United States
federal taxes and all other material taxes and governmental charges against it
or any of its property, as well as claims of any kind which, if unpaid, might
become a Lien on any of its property, other than Liens permitted by Section 11.2; provided
that the foregoing shall not require the Company or any Subsidiary to pay any
such tax or charge so long as it shall contest the validity thereof in good
faith by appropriate proceedings and shall set aside on its books adequate
reserves with respect thereto in accordance with GAAP.

 

10.5         Maintenance of Existence, etc.  Maintain and preserve, and (subject to Section 11.5)
cause each other Loan Party other than the Inactive Subsidiaries to maintain
and preserve, (a) its existence and good standing in the jurisdiction of
its organization and (b) its qualification to do business and good
standing in each jurisdiction where the nature of its business makes such
qualification necessary (other than such jurisdictions in which the failure to
be qualified or in good standing could not reasonably be expected to have a
Material Adverse Effect).  For the
avoidance of doubt, the Company may dissolve any of the Inactive Subsidiaries
prior to the first anniversary of this Agreement with prior notice to the
Administrative Agent.

 

10.6         Use of Proceeds.  Use the proceeds of the Loans and the Letters
of Credit, solely for working capital purposes, for Capital Expenditures and
for other general business purposes; and not use or permit any proceeds of any
Loan to be used, either directly or indirectly, for the purpose, whether
immediate, incidental or ultimate, of “purchasing or carrying” any Margin
Stock.

 

10.7         Employee Benefit Plans.

 

(a)           Maintain, and cause each other member
of the Controlled Group to maintain, each Pension Plan in substantial
compliance with all applicable requirements of law and regulations.

 

(b)           Make, and cause each other member of
the Controlled Group to make, on a timely basis, all required contributions to
any Multiemployer Pension Plan.

 

(c)           Not, and not permit any other member
of the Controlled Group to (i) seek a waiver of the minimum funding
standards of ERISA, (ii) terminate or withdraw from any Pension Plan or
Multiemployer Pension Plan or (iii) take any other action with respect to
any Pension Plan that would reasonably be expected to entitle the PBGC to
terminate, impose liability in respect of, or cause a trustee to be appointed
to administer, any Pension Plan, unless the actions or events described in
clauses (i), (ii) and (iii) individually or in the aggregate would
not have a Material Adverse Effect.

 

10.8         Environmental Matters.  If any release or threatened release or other
disposal of Hazardous Substances shall occur or shall have occurred on any real
property or any other assets 

 

48

 

of any Loan Party, the Company shall, or shall cause
the applicable Loan Party to, cause the prompt containment and removal of such
Hazardous Substances and the remediation of such real property or other assets
as necessary to comply with all Environmental Laws and to preserve the value of
such real property or other assets.  Without limiting the generality of the
foregoing, the Company shall, and shall cause each other Loan Party to, comply
with any Federal or state judicial or administrative order requiring the
performance at any real property of any Loan Party of activities in response to
the release or threatened release of a Hazardous Substance.  To the extent that the transportation of
Hazardous Substances is permitted by this Agreement, the Company shall, and
shall cause its Subsidiaries to, dispose of such Hazardous Substances, or of
any other wastes, only at licensed disposal facilities operating in compliance
with Environmental Laws.

 

10.9         Further Assurances.  Take, and cause each other Loan Party to
take, such actions as are necessary or as the Administrative Agent or the
Required Lenders may reasonably request from time to time to ensure that the
Obligations of each Loan Party under the Loan Documents are secured by
substantially all of the assets of the Company and each domestic Subsidiary (as
well as all Capital Securities of each domestic Subsidiary and 65% of all
Capital Securities of each direct foreign Subsidiary) and guaranteed by each
domestic Subsidiary (including, upon the acquisition or creation thereof, any
Subsidiary acquired or created after the Closing Date), in each case as the
Administrative Agent may determine, including (a) the execution and
delivery of guaranties, security agreements, pledge agreements, mortgages,
deeds of trust, financing statements and other documents, and the filing or
recording of any of the foregoing and (b) the delivery of certificated
securities and other Collateral with respect to which perfection is obtained by
possession.  Notwithstanding anything to
the contrary contained herein, the Inactive Subsidiaries shall not be required
to become Loan Parties or Guarantors so long as the Inactive Subsidiaries
continue to be dormant companies without business operations and such Inactive
Subsidiaries are dissolved by April 16, 2010, it being agreed that on the
earlier of such date or the date on which any of the Inactive Subsidiaries
commences business operations, the Inactive Subsidiaries shall be required to
become Loan Parties and Guarantors and execute all required documentation in
connection therewith.

 

10.10       Deposit Accounts.  Unless the Administrative Agent otherwise
consents in writing, the Loan Parties shall maintain, within sixty (60) days of
the Closing Date, all of their deposit and securities accounts with the
Administrative Agent; provided that the Loan Parties may maintain a maximum
aggregate balance of $400,000 in local depository accounts, except that the
accounts with any single institution shall not exceed a maximum aggregate
balance of $75,000, it being agreed that each of the Company and the
Subsidiaries will, upon the Administrative Agent’s request, use commercially
reasonable efforts to cause the local depository institutions to enter into
account control agreements in favor of the Administrative Agent (each such
account control agreement to be on terms reasonably satisfactory to the
Administrative Agent in all respects).

 

10.11       Interest Rate Protection.  Enter into, not later than ninety (90) days
after the Closing Date, a Hedging Agreement with a term of at least three (3) years
on an ISDA standard form with one or more Lenders or Affiliates thereof or with
counterparties reasonably acceptable to the Administrative Agent to hedge the
interest rate with respect to not less than 50% of the 

 

49

 

principal amount of the Term Loan in form and
substance reasonably satisfactory to the Administrative Agent.

 

10.12       Rocky Mountain Transaction.  The Company shall use commercially reasonable
efforts to consummate the Rocky Mountain Transaction within one hundred twenty
(120) days of the Closing Date (a) on substantially the terms set forth in
the letter of intent previously provided to the Administrative Agent regarding
the Rocky Mountain Transaction or (b) on terms consented to by the
Required Lenders in the event the final terms of the Rocky Mountain Transaction
are materially different from the terms in the letter of intent.  The proceeds of the Rocky Mountain
Transaction (net of the reasonable costs and expenses incurred by the Company
or Rocky Mountain in connection with such transaction) shall be used to prepay
the Term Loan on the terms set forth in Section 6.2.2 and 6.3.1.  Notwithstanding anything to the contrary
contained herein, on or prior to December 31, 2009, either the Rocky
Mountain Transaction shall have been consummated as provided above or the
Company shall have provided to the Lenders a detailed plan of liquidation
regarding Rocky Mountain, which plan shall be reasonably acceptable to the
Required Lenders.

 

SECTION 11          NEGATIVE COVENANTS

 

Until the expiration or
termination of the Commitments and thereafter until all Obligations hereunder
and under the other Loan Documents are paid in full (other than any Obligation arising solely from any Bank Product
Agreement or contingent indemnification Obligations to the extent no claim
giving rise thereto has been asserted) and all Letters of Credit have
been terminated or Cash Collateralized, the Company agrees that, unless at any
time the Required Lenders shall otherwise expressly consent in writing, it
will:

 

11.1         Debt.  Not, and not permit any other Loan Party to,
incur, permit to remain outstanding, assume
or in any way become committed for Debt, except (i) Debt incurred
hereunder or to any Lender or the Administrative Agent, (ii) Debt existing
on the date of this Agreement and shown in the Draft 2008 Financial Statements
(other than the Debt to be Repaid) delivered to the Administrative Agent prior
to the date hereof, (iii) Debt existing on the date hereof as listed in Schedule
11.1 hereto, (iv) Debt with respect to which the Required Lenders have
given the Company prior written consent; and (v) Debt in the aggregate
amount not greater than $500,000 at any time.

 

11.2         Liens.  Not, and not permit any other Loan Party to,
create, suffer or permit to exist any Lien of any
kind or nature upon any of their assets now or hereafter owned or acquired, or
acquire or agree to acquire any property or assets of any character under any
conditional sale agreement or other title retention agreement; notwithstanding
the foregoing, Permitted Liens are permitted hereunder.

 

11.3         Intentionally Omitted.

 

11.4         Restricted Payments.  Not, and not permit any other Loan Party to, (a) make
any distribution to any holders of its Capital Securities, (b) purchase or
redeem any of its Capital Securities, (c) pay any management fees or
similar fees to any of its equityholders or any Affiliate thereof, (d) make
any redemption, prepayment, defeasance, repurchase or any other 

 

50

 

payment in respect of any Subordinated Debt or (e) set
aside funds for any of the foregoing. 
Notwithstanding the foregoing, (i) any Subsidiary may pay dividends
or make other distributions to the Company or to a domestic Wholly-Owned
Subsidiary; (ii) the Company may make regularly scheduled payments of
interest in respect of Subordinated Debt to the extent permitted under the
subordination provisions thereof; and (iii) from and
after the date of this Agreement, the Company may purchase its outstanding
Capital Securities so long as (A) no Event of Default exists as of the
date of any proposed purchase, and (B) the total of all such purchases
from June 30, 2005 (both prior to and after giving effect to the
contemplated purchase) shall not exceed $1,438,000 in the aggregate.

 

11.5         Mergers, Consolidations, Sales.  Not, and not permit any other Loan Party to, (a) be
a party to any merger or consolidation, or purchase or otherwise acquire all or
substantially all of the assets or any Capital Securities of any class of, or
any partnership or joint venture interest in, any other Person, (b) sell,
transfer, convey or lease all or any substantial part of its assets or Capital
Securities (including the sale of Capital Securities of any Subsidiary) except
for sales of inventory in the ordinary course of business, or (c) sell or
assign with or without recourse any receivables, except for (i) any such
merger, consolidation, sale, transfer, conveyance, lease or assignment of or by
any Wholly-Owned Subsidiary into the Company or into any other domestic Wholly-Owned
Subsidiary; (ii) any such purchase or other acquisition by the Company or
any domestic Wholly-Owned Subsidiary of the assets or Capital Securities of any
Wholly-Owned Subsidiary; and (iii) sales and dispositions of assets
(excluding the Capital Securities of Subsidiaries) for at least fair market
value (as determined by the Board of Directors of the Company) so long as the
net book value of all assets sold or otherwise disposed of in any Fiscal Year
does not exceed $3,000,000 (excluding the Rocky Mountain Transaction).  Notwithstanding anything to the contrary
contained herein, the Rocky Mountain Transaction shall be a permitted
transaction under this Agreement (to the extent such transaction satisfies the
terms of Section 10.12 hereof) and this Section 11.5
shall not apply to the Rocky Mountain Transaction.

 

11.6         Modification of Organizational
Documents.  Not permit the charter,
by-laws or other organizational documents of any Loan Party to be amended or
modified in any way which could reasonably be expected to materially adversely
affect the interests of the Lenders; not change, or allow any Loan Party to
change, its state of incorporation or its organizational form unless such Loan
Party gives the Administrative Agent ninety (90) days’ prior written notice;
provided, however, that the restrictions contained in this Section 11.6
shall not apply to the Inactive Subsidiaries so long as the Inactive
Subsidiaries remain inactive companies with no business operations or material
assets.

 

11.7         Transactions with Affiliates.  Not, and not permit any other Loan Party to,
enter into, or cause, suffer or permit to exist any transaction, arrangement or
contract with any of its other Affiliates (other than the Loan Parties) which
is on terms which are less favorable than are obtainable from any Person which
is not one of its Affiliates.

 

11.8         Unconditional Purchase Obligations.  Not, and not permit any other Loan Party to,
enter into or be a party to any contract for the purchase of materials,
supplies or other property or services if such contract requires that payment
be made by it regardless of whether delivery is ever made of such materials,
supplies or other property or services.

 

51

 

11.9         Inconsistent Agreements.  Not, and not permit any other Loan Party to,
enter into any agreement containing any provision which would (a) be
violated or breached by any borrowing by the Company hereunder or by the
performance by any Loan Party of any of its Obligations hereunder or under any
other Loan Document, (b) prohibit any Loan Party from granting to the
Administrative Agent and the Lenders, a Lien on any of its assets or (c) create
or permit to exist or become effective any encumbrance or restriction on the
ability of any Subsidiary to (i) pay dividends or make other distributions
to the Company or any other Subsidiary, or pay any Debt owed to the Company or
any other Subsidiary, (ii) make loans or advances to any Loan Party or (iii) transfer
any of its assets or properties to any Loan Party, other than (A) customary
restrictions and conditions contained in agreements relating to the sale of all
or a substantial part of the assets of any Subsidiary pending such sale, provided
that such restrictions and conditions apply only to the Subsidiary to be sold
and such sale is permitted hereunder (B) restrictions or conditions
imposed by any agreement relating to purchase money Debt, Capital Leases and
other secured Debt permitted by this Agreement if such restrictions or
conditions apply only to the property or assets securing such Debt and (C) customary
provisions in leases and other contracts restricting the assignment thereof.

 

11.10       Business Activities; Issuance of Equity. 
Not, and not permit any other Loan Party to, engage in any line of
business other than the businesses engaged in on the date hereof and businesses
reasonably related thereto.  Not, and not
permit any other Loan Party to, issue any Capital Securities other than (a) any
issuance of shares of the Company’s common Capital Securities pursuant to any
employee or director option program, benefit plan or compensation program or (b) any
issuance by a Subsidiary to the Company or another Subsidiary in accordance
with Section 11.4.

 

11.11       Investments. 
Not, and not permit any other Loan Party to, make or permit to exist any
Investment in any other Person, except the following:

 

(a)           contributions
by the Company to the capital of any Wholly-Owned Subsidiary, or by any
Subsidiary to the capital of any other domestic Wholly-Owned Subsidiary, so
long as the recipient of any such capital contribution has guaranteed the
Obligations and such guaranty is secured by a pledge of all of its Capital
Securities and substantially all of its real and personal property, in each
case in accordance with Section 11.10;

 

(b)           Investments
constituting Debt permitted by Section 11.1;

 

(c)           Contingent
Liabilities constituting Debt permitted by Section 11.1 or Liens
permitted by Section 11.2;

 

(d)           Cash
Equivalent Investments;

 

(e)           bank
deposits in the ordinary course of business, provided that, commencing
sixty (60) days after the Closing Date, the aggregate amount of all such
deposits which are maintained with any bank other than a Lender shall not at
any time exceed the amounts described in Section 10.10 hereof;

 

52

 

(f)            Investments
in securities of Account Debtors received pursuant to any plan of
reorganization or similar arrangement upon the bankruptcy or insolvency of such
account debtors;

 

(g)           Investments
listed on Schedule 11.11 as of the Closing Date;

 

(h)           extensions of credit upon customary
terms to their customers in the ordinary course of their business; and

 

(i)             extensions of credit to officers
and employees in accordance with policies in effect on the date of this
Agreement to the extent the Administrative Agent has received a written copy of
such policy;

 

provided that (x) any Investment which when made complies
with the requirements of the definition of the term “Cash Equivalent
Investment” may continue to be held notwithstanding that such Investment if
made thereafter would not comply with such requirements; (y) no Investment
otherwise permitted by clause (b), (c), (g), (h) or (i) of this Section 11.11
shall be permitted to be made if, immediately before or after giving effect
thereto, any Event of Default or Unmatured Event of Default exists.

 

11.12       Restriction of Amendments to Certain
Documents.   Not, and not permit any other Loan Party to,
make or agree to any amendment to or modification of, or waive any of its
rights under (a) any agreement or instrument governing any Subordinated
Debt which would (i) have the effect of (x) providing for earlier
payment in respect of principal or redemptions or otherwise, (y) requiring
collateral or guarantees to secure any Subordinated Debt or (z) increasing
the interest rate payable with respect to any Subordinated Debt or (ii) otherwise
adversely affect the interest of the Lenders in any material respect, or (b) the
Mining Royalty Agreement without prompt notice thereof to the Administrative
Agent (such notice to include a description of the amendment, modification or
waiver).

 

11.13       Financial Covenants.

 

11.13.1            Minimum
Adjusted EBITDA.  Not permit Adjusted
EBITDA for any Computation Period to be less than the applicable amount set
forth below for such Computation Period:

 

	
  Computation

  Period Ending

  	
   

  	
  Adjusted EBITDA

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  June 30,
  2009

  	
   

  	
  $

  	
  7,500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  September 30,
  2009

  	
   

  	
  $

  	
  8,150,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  December 31,
  2009 and each Fiscal Quarter end thereafter

  	
   

  	
  $

  	
  6,500,000

  	
   

  

 

53

 

11.13.2            Minimum
Fixed Charge Coverage Ratio.  Not
permit the Fixed Charge Coverage Ratio for any Computation Period to be less
than 1.30 to 1.00 for such Computation Period.

 

11.13.3            Minimum Tangible Net Worth. 
Not permit Tangible Net Worth as of the last day of any Computation
Period to be less than $32,000,000 (provided that the required amount of
Tangible Net Worth shall increase (but not decrease) each Fiscal Year,
commencing with Fiscal Year 2010, by an amount equal to fifty percent (50%) of
the Consolidated Net Income for the immediately preceding Fiscal Year.

 

11.13.4            Maximum
Adjusted Total Cash Flow Leverage. 
Not permit the Adjusted Total Cash Flow Leverage as of the last day of
any Computation Period to exceed the applicable ratio set forth below for such
Computation Period:

 

	
  Computation

  Period Ending

  	
   

  	
  Adjusted Total Cash

  Flow Leverage Ratio

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  June 30,
  2009

  	
   

  	
  2.75 to 1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  September 30,
  2009 and December 31, 2009

  	
   

  	
  2.25 to 1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  March 31,
  2010 and June 30, 2010

  	
   

  	
  2.75 to 1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  September 30,
  2010

  	
   

  	
  2.50 to 1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  December 31,
  2010

  	
   

  	
  2.00 to 1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  March 31,
  2011 and June 30, 2011

  	
   

  	
  2.50 to 1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  September 30,
  2011

  	
   

  	
  2.25 to 1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  December 31,
  2011

  	
   

  	
  1.75 to 1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  March 31,
  2012 and each Fiscal Quarter end thereafter

  	
   

  	
  2.25 to 1.00

  	
   

  

 

11.13.5            Capital
Expenditures.  Not permit the
aggregate amount of all Capital Expenditures made by the Loan Parties in any
Fiscal Year to exceed $3,500,000.

 

SECTION 12                             EFFECTIVENESS; CONDITIONS OF LENDING,
ETC.

 

The obligation of each
Lender to make its Loans and of the Issuing Lender to issue Letters of Credit
is subject to the following conditions precedent:

 

12.1         Initial Credit Extension.  The obligation of the Lenders to make the
initial Loans and the obligation of the Issuing Lender to issue its initial
Letter of Credit (whichever first 

 

54

 

occurs) is, in addition to the conditions precedent
specified in Section 12.2, subject to the conditions precedent that
(a) all Debt to be Repaid has been (or concurrently with the initial
borrowing will be) paid in full, and that all agreements and instruments
governing the Debt to be Repaid and that all Liens securing such Debt to be
Repaid have been (or concurrently with the initial borrowing will be)
terminated and (b) the Administrative Agent shall have received all of the
following, each duly executed and dated the Closing Date (or such earlier date
as shall be satisfactory to the Administrative Agent), in form and substance
satisfactory to the Administrative Agent (and the date on which all such
conditions precedent have been satisfied or waived in writing by the
Administrative Agent and the Lenders is called the “Closing Date”):

 

12.1.1      Notes.  A Revolving Loan Note and Term Loan Note for
each Lender.

 

12.1.2      Authorization
Documents.  For each Loan Party, such
Person’s (a) charter (or similar formation document), certified by the
appropriate governmental authority; (b) good standing certificates in its
state of incorporation and in each other state requested by the Administrative
Agent; (c) bylaws; (d) resolutions of its board of directors
approving and authorizing such Person’s execution, delivery and performance of
the Loan Documents to which it is party and the transactions contemplated
thereby; and (e) signature and incumbency certificates of its officers
executing any of the Loan Documents (it being understood that the
Administrative Agent and each Lender may conclusively rely on each such
certificate until formally advised by a like certificate of any changes
therein), all certified by its secretary or an assistant secretary (or similar
officer) as being in full force and effect without modification.

 

12.1.3      Consents,
etc.  Certified copies of all
documents evidencing any necessary corporate action, consents and
governmental approvals (if any) required for the execution, delivery and
performance by the Loan Parties of the documents referred to in this Section 12.

 

12.1.4      Borrowing
Request and Letter of Direction.  A
borrowing request and letter of direction containing funds flow information
with respect to the proceeds of the Loans on the Closing Date.

 

12.1.5      Guaranty
and Collateral Agreement.  A
counterpart of the Guaranty and Collateral Agreement executed by each Loan Party,
together with all instruments, transfer powers and other items required to be
delivered in connection therewith.

 

12.1.6      Perfection
Certificate.  A Perfection
Certificate completed and executed by each Loan Party.

 

12.1.7      Mortgages.  With respect to each Mortgaged Property, a
duly executed Mortgage providing for a fully perfected Lien, in favor of the
Administrative Agent, in all right, title and interest of the Company or the
applicable Subsidiary in such real property.

 

12.1.8      Williams
Furnace Mortgaged Property.  With
respect to the Mortgaged Property owned by Williams Furnace, the following
additional items shall be provided or permitted:

 

55

 

(a)           an
ALTA Loan Title Insurance Policy, issued by an insurer acceptable to the
Administrative Agent, insuring the Administrative Agent’s first priority Lien
on such real property and containing such endorsements as the Administrative
Agent may reasonably require (it being understood that the amount of coverage, exceptions
to coverage and status of title set forth in such policy shall be acceptable to
the Administrative Agent, which title insurance shall initially be in the
amount of $5,000,000, provided that the amount of such title insurance may be
increased by the Administrative Agent after the Closing Date at the expense of
the Company to an amount equal to the Williams Furnace Valuation to the extent
the Williams Furnace Valuation exceeds $5,000,000);

 

(b)           copies
of all documents of record concerning such real property as shown on the
commitment for the ALTA Loan Title Insurance Policy referred to above;

 

(c)           original
or certified copies of all insurance policies required to be maintained with
respect to such real property by this Agreement, the applicable Mortgage or any
other Loan Document (or, in each case, a certificate of insurance with respect
to such insurance policies reasonably acceptable to the Administrative Agent);

 

(d)           a
survey certified to the Administrative Agent meeting such standards as the Administrative
Agent may reasonably establish and otherwise reasonably satisfactory to the
Administrative Agent (provided that if the survey is not available on
the Closing Date with respect to such Mortgaged Property, the Company will
cause Williams Furnace to deliver a survey for such Mortgaged Property within
sixty (60) days of the Closing Date and the title insurance policy shall be
brought forward and updated accordingly);

 

(e)           a
Phase II environmental site assessment in respect of such Mortgaged Property,
which assessment shall be performed after the Closing Date (provided
that (i) the Company shall permit the Administrative Agent and its
consultants and agents to perform the Phase II environmental site assessment on
such Mortgaged Property, (ii) the Company shall cause Williams Furnace to
provide full access to the applicable real property and all applicable
information for purposes of such assessment, (iii) the Company shall cause
Williams Furnace to provide all assistance reasonably required to perform and
complete such assessment, and (iv) all costs and expenses related thereto
shall be the sole responsibility of the Company);

 

(f)            flood
insurance policy concerning such real property, if required by the Flood
Disaster Protection Act of 1973; and

 

(g)           an appraisal,
prepared by an independent appraiser engaged directly by the Administrative
Agent, of such parcel of real property or interest in real property.

 

In addition to the
foregoing, (i) in the case of any leased real property, a Collateral
Access Agreement from the landlord of such property waiving any landlord’s Lien
in respect of personal property kept at the premises subject to such lease and
permitting access to the location by the Administrative Agent and its agents
and containing such other terms and provisions as may be required by the
Administrative Agent (to the extent that any Collateral Access 

 

56

 

Agreement is not
delivered on the Closing Date and the Administrative Agent elects to waive the
delivery of such Collateral Access Agreement as a closing condition, the
Company and the applicable Subsidiaries shall have forty-five (45) days after
the Closing Date to deliver a Collateral Access Agreement for each leased
location listed on Schedule 9.17 hereof where a material amount of
Collateral is located or historically has been located, it being agreed that
the failure to provide a reasonably acceptable Collateral Access Agreement for
all such leased locations within such forty-five (45) day period shall result
in an Event of Default), and (ii) in the case of all real property owned
by any Loan Party that will not be subject to a Mortgage, a title search
showing all Liens affecting such real property within forty-five (45) days of
the Closing Date (to the extent such title search results are not reasonably
acceptable to the Administrative Agent, the Company shall make commercially
reasonable efforts to remove any encumbrances or other exceptions to title
within forty-five (45) days of written request from the Administrative Agent,
and if such encumbrances or other title exceptions are not removed or otherwise
waived by Administrative Agent in writing within such time period, such failure
shall result in an Event of Default). 
All real property owned by any Loan Party that will not be subject to a
Mortgage will be subject to the negative pledge set forth in the Guaranty and
Collateral Agreement.

 

12.1.9      Draft
2008 Financial Statements.   The
Company shall have delivered to the Administrative Agent the Draft 2008
Financial Statements, along with a certificate from a Senior Officer stating
that there will be no material changes (to the extent adverse to any Loan
Party) to the Final 2008 Financial Statements, each of which shall be
satisfactory to the Administrative Agent in form and substance.

 

12.1.10    Opinions of Counsel.  Opinions of counsel for each Loan Party,
including local counsel in respect of each Mortgage, in each case in form and
substance satisfactory to the Administrative Agent.

 

12.1.11    Insurance.  Evidence of the existence of insurance
required to be maintained pursuant to Section 10.3(b), together
with evidence that the Administrative Agent has been named as a lender’s loss
payee and an additional insured on all related insurance policies.

 

12.1.12    Intentionally Omitted.

 

12.1.13    Payment of Fees.  Evidence of payment by the Company of all
accrued and unpaid fees, costs and expenses to the extent then due and payable
on the Closing Date, together with all Attorney Costs of the Administrative Agent
to the extent invoiced prior to the Closing Date, plus such additional
amounts of Attorney Costs as shall constitute the Administrative Agent’s
reasonable estimate of Attorney Costs incurred or to be incurred by the
Administrative Agent through the closing proceedings (provided that such
estimate shall not thereafter preclude final settling of accounts between the
Company and the Administrative Agent).

 

12.1.14    Solvency
Certificate.  A Solvency Certificate
executed by a Senior Officer of the Company.

 

57

 

12.1.15    Material
Adverse Change.  The Administrative
Agent shall be satisfied that since December 31, 2008 there has been no
material adverse change in the business, assets, liabilities, properties,
condition (financial or otherwise) or results of operations of the Loan Parties
taken as a whole.

 

12.1.16    Field Audit Report.  A field exam report prepared by an auditor
engaged by the Administrative Agent.

 

12.1.17    Search Results; Lien Terminations.  Certified copies of Uniform Commercial Code
search reports dated a date reasonably near to the Closing Date, listing all
effective financing statements which name any Loan Party (under their present
names and any previous names) as debtors, together with (a) copies of such
financing statements, (b) payoff letters evidencing repayment in full of
all Debt to be Repaid, the termination of all agreements relating thereto and
the release of all Liens granted in connection therewith, with Uniform
Commercial Code or other appropriate termination statements and documents
effective to evidence the foregoing (other than Liens permitted by Section 11.2)
and (c) such other Uniform Commercial Code termination statements as the
Administrative Agent may reasonably request.

 

12.1.18    Filings, Registrations and Recordings.  The Administrative Agent shall have received
each document (including Uniform Commercial Code financing statements) required
by the Collateral Documents or under law or reasonably requested by the
Administrative Agent to be filed, registered or recorded in order to create in
favor of the Administrative Agent, for the benefit of the Lenders, a perfected
Lien on the collateral described therein, prior to any other Liens (subject
only to Liens permitted pursuant to Section 11.2), in proper form
for filing, registration or recording.

 

12.1.19    Borrowing Base Certificate.  A Borrowing Base Certificate dated as of the
Closing Date.

 

12.1.20    Closing Certificate.  A certificate executed by an officer of the
Company on behalf of the Company certifying the matters set forth in Section 12.2.1
as of the Closing Date.

 

12.1.21    Other.  Such other documents as the Administrative
Agent or any Lender may reasonably request.

 

12.2                           Conditions.  The
obligation (a) of each Lender to make each Loan and (b) of the
Issuing Lender to issue each Letter of Credit is subject to the following
further conditions precedent that:

 

12.2.1      Compliance with Warranties, No Default,
etc.  Both before and after giving
effect to any borrowing and the issuance of any Letter of Credit, the following
statements shall be true and correct:

 

(a)           the representations and warranties of
each Loan Party set forth in this Agreement and the other Loan Documents shall
be true and correct in all respects with the same effect as if then made
(except to the extent stated to relate to a specific earlier 

 

58

 

date,
in which case such representations and warranties shall be true and correct as
of such earlier date); and

 

(b)           no
Event of Default or Unmatured Event of Default shall have then occurred and be
continuing.

 

Each request by the Company for the making of a Loan
or the issuance of a Letter of Credit shall be deemed to constitute a
representation and warranty by the Company that the conditions precedent set
forth in this Section 12.2.1 are satisfied at the time of the
making of such Loan or the issuance of such Letter of Credit.

 

SECTION 13                             EVENTS OF DEFAULT AND THEIR EFFECT.

 

13.1                           Events of Default. 
Each of the following shall constitute an Event of Default under
this Agreement:

 

13.1.1      Non-Payment
of the Loans, etc.  The Company or
any other Loan Party shall fail to make any payment of
principal or interest when and as due; or, in the case of any other amounts
payable hereunder or under any other Loan Document, the Company or any other
Loan Party shall fail to make such payment within five (5) days of the due
date thereof.

 

13.1.2      Cross-Default.  There shall occur any default or
event of default, or any event which might become such with notice or the
passage of time or both, or any similar event, or any event which requires the
prepayment of borrowed money or the acceleration of the maturity thereof, under
the terms of any evidence of Indebtedness or other agreement issued or assumed
or entered into by the Company or any other Loan Party or under the terms of
any indenture, agreement or instrument under which any such evidence of
Indebtedness or other agreement is issued, assumed, secured or guaranteed, and
such event shall continue beyond any applicable period of grace.

 

13.1.3      Bankruptcy,
Insolvency, etc.  Any Loan Party
becomes insolvent or generally fails to pay, or admits in writing its inability
or refusal to pay, debts as they become due; or any Loan Party applies for,
consents to, or acquiesces in the appointment of a trustee, receiver or other
custodian for such Loan Party or any property thereof, or makes a general
assignment for the benefit of creditors; or, in the absence of such
application, consent or acquiescence, a trustee, receiver or other custodian is
appointed for any Loan Party or for a substantial part of the property of any
thereof and is not discharged within 60 days; or any bankruptcy,
reorganization, debt arrangement, or other case or proceeding under any bankruptcy
or insolvency law, or any dissolution or liquidation proceeding, is commenced
in respect of any Loan Party, and if such case or proceeding is not commenced
by such Loan Party, it is consented to or acquiesced in by such Loan Party, or
remains for 60 days undismissed; or any Loan Party takes any action to
authorize, or in furtherance of, any of the foregoing.

 

13.1.4      Non-Compliance
with Loan Documents.  (a) Failure
by any Loan Party to comply with or to perform any covenant set forth in Section 9.4
(solely as such section relates to the delivery of the Final 2008 Financial
Statements), Sections 10.1.5, 10.3(b) 

 

59

 

(solely as such section relates to the maintenance of
insurance at all times), 10.5, 10.10 or 10.12, Section 11
or Section 12.1.8(d) or (e); or (b) failure by any
Loan Party to comply with or to perform any other provision of this Agreement
or any other Loan Document (and not constituting an Event of Default under any
other provision of this Section 13) and continuance of such failure
described in this clause (b) for 30 days.

 

13.1.5      Representations;
Warranties.  Any representation or
warranty made by any Loan Party herein or any other Loan Document is breached
or is false or misleading in any material respect, or any schedule,
certificate, financial statement, report, notice or other writing furnished by
any Loan Party to the Administrative Agent or any Lender in connection herewith
is false or misleading in any material respect on the date as of which the
facts therein set forth are stated or certified.

 

13.1.6      Pension
Plans.  (a) Any Person
institutes steps to terminate a Pension Plan if as a result of such termination
the Company or any member of the Controlled Group could be required to make a
contribution to such Pension Plan, or could incur a liability or obligation to
such Pension Plan, in excess of $500,000; (b) a contribution failure
occurs with respect to any Pension Plan sufficient to give rise to a Lien under
Section 302(f) of ERISA; (c) the Unfunded Liability exceeds
twenty percent of the Total Plan Liability, or (d) there shall occur any
withdrawal or partial withdrawal from a Multiemployer Pension Plan and the
withdrawal liability (without unaccrued interest) to Multiemployer Pension
Plans as a result of such withdrawal (including any outstanding withdrawal
liability that the Company or any member of the Controlled Group have incurred
on the date of such withdrawal) exceeds $500,000.

 

13.1.7                                          Litigation.  Any suit, action or other proceeding
(judicial or administrative) commenced against the Company or any other Loan
Party, or with respect to any assets of the Company or any other Loan Party,
shall threaten to have a material and adverse effect on the future operations of the Company or any
other Loan Party; or a final judgment or settlement shall be entered in, or
agreed to in respect of, any such suit, action or proceeding and said final
judgment or settlement would have a Material Adverse Effect on the Company and
the other Loan Parties taken as a whole, it being agreed that any final
judgment or settlement (either individually or collectively with all other
judgments and settlements) in excess of $250,000 shall be deemed to have a
Material Adverse Effect (provided that any amounts covered by insurance shall
not be included in such aggregate amount so long as the insurance company has
acknowledged coverage in writing).

 

13.1.8                                          Invalidity of Collateral Documents, etc. 
Any Collateral Document shall cease to be in full force and effect; or
any Loan Party (or any Person by, through or on behalf of any Loan Party) shall
contest in any manner the validity, binding nature or enforceability of any
Collateral Document.

 

13.1.9                                          Invalidity of Subordination Provisions,
etc.  Any subordination provision in any document
or instrument governing Subordinated Debt (if any), or any subordination
provision in any guaranty by any Subsidiary of any Subordinated Debt, shall
cease to be in full force and effect, or any Loan Party or any other Person
(including the holder of any 

 

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applicable Subordinated Debt) shall contest in any
manner the validity, binding nature or enforceability of any such provision.

 

13.1.10            Change
of Control.  A Change of Control shall
occur.

 

13.1.11            Material
Adverse Effect. The occurrence of any event having a Material Adverse
Effect.

 

13.2                           Effect of Event of Default. 
If any Event of Default described in Section 13.1.3 shall
occur in respect of the Company, the Commitments shall immediately terminate
and the Loans and all other Obligations hereunder shall become immediately due
and payable and the Company shall become immediately obligated to Cash
Collateralize all Letters of Credit, all without presentment, demand, protest
or notice of any kind; and, if any other Event of Default shall occur and be
continuing, the Administrative Agent may (and, upon the written request of the
Required Lenders shall) declare the Commitments to be terminated in whole or in
part and/or declare all or any part of the Loans and all other Obligations
hereunder to be due and payable and/or demand that the Company immediately Cash
Collateralize all or any Letters of Credit, whereupon the Commitments shall
immediately terminate (or be reduced, as applicable) and/or the Loans and other
Obligations hereunder shall become immediately due and payable (in whole or in
part, as applicable) and/or the Company shall immediately become obligated to
Cash Collateralize the Letters of Credit (all or any, as applicable), all
without presentment, demand, protest or notice of any kind.  The Administrative Agent shall promptly
advise the Company of any such declaration, but failure to do so shall not
impair the effect of such declaration. 
Any cash collateral delivered hereunder shall be held by the
Administrative Agent (without liability for interest thereon) and applied to
the Obligations arising in connection with any drawing under a Letter of
Credit.  After the expiration or
termination of all Letters of Credit, such cash collateral shall be applied by
the Administrative Agent to any remaining Obligations hereunder and any excess
shall be delivered to the Company or as a court of competent jurisdiction may
elect.

 

SECTION 14                             THE AGENT.

 

14.1                           Appointment and Authorization. 
Each Lender hereby irrevocably (subject to Section 14.10)
appoints, designates and authorizes the Administrative Agent to take such
action on its behalf under the provisions of this Agreement and each other Loan
Document and to exercise such powers and perform such duties as are expressly
delegated to it by the terms of this Agreement or any other Loan Document,
together with such powers as are reasonably incidental thereto.  Notwithstanding any provision to the contrary
contained elsewhere in this Agreement or in any other Loan Document, the
Administrative Agent shall not have any duty or responsibility except those
expressly set forth herein, nor shall the Administrative Agent have or be
deemed to have any fiduciary relationship with any Lender or participant, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Administrative Agent.  Without limiting the generality of the
foregoing sentence, the use of the term “agent” herein and in other Loan
Documents with reference to the Administrative Agent is not intended to connote
any fiduciary or other implied (or express) obligations arising under agency
doctrine of any applicable law.  

 

61

 

Instead, such term is used merely as a matter of
market custom, and is intended to create or reflect only an administrative
relationship between independent contracting parties.

 

14.2         Issuing Lender.  The Issuing Lender shall act on behalf of the
Lenders (according to their Pro Rata Shares) with respect to any Letters of
Credit issued by it and the documents associated therewith.  The Issuing Lender shall have all of the
benefits and immunities (a) provided to the Administrative Agent in this Section 14
with respect to any acts taken or omissions suffered by the Issuing Lender in
connection with Letters of Credit issued by it or proposed to be issued by it
and the applications and agreements for letters of credit pertaining to such
Letters of Credit as fully as if the term “Administrative Agent”, as used in
this Section 14, included the Issuing Lender with respect to such
acts or omissions and (b) as additionally provided in this Agreement with
respect to the Issuing Lender.

 

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

 

14.4         Exculpation of Administrative Agent.  None of the Administrative Agent nor any of
its directors, officers, employees or agents shall (a) be liable for any
action taken or omitted to be taken by any of them under or in connection with
this Agreement or any other Loan Document or the transactions contemplated
hereby (except to the extent resulting from its own gross negligence or willful
misconduct in connection with its duties expressly set forth herein as
determined by a final, nonappealable judgment by a court of competent
jurisdiction), or (b) be responsible in any manner to any Lender or
participant for any recital, statement, representation or warranty made by any
Loan Party or Affiliate of the Company, or any officer thereof, contained in this
Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Administrative Agent under or in connection with, this Agreement or any other
Loan Document, or the validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document (or the creation,
perfection or priority of any Lien or security interest therein), or for any
failure of the Company or any other party to any Loan Document to perform its
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 of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of the Company or any
of the Company’s Subsidiaries or Affiliates.

 

14.5         Reliance by Administrative Agent.  The Administrative Agent shall be entitled to
rely, and shall be fully protected in relying, upon any writing, communication,
signature, resolution, representation, notice, consent, certificate, electronic
mail message, affidavit, letter, telegram, facsimile, telex or telephone
message, statement or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons, and upon advice and statements of legal counsel (including counsel
to the Company), independent accountants and other experts selected by the
Administrative Agent.  The Administrative
Agent shall be fully justified in failing or refusing to take any action under 

 

62

 

this Agreement or any other Loan Document unless it
shall first receive such advice or concurrence of the Required Lenders as it
deems appropriate and, if it so requests, confirmation from the Lenders of
their obligation to indemnify the Administrative Agent 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 this Agreement or any other Loan Document in
accordance with a request or consent of the Required Lenders and such request
and any action taken or failure to act pursuant thereto shall be binding upon
each Lender.  For purposes of determining
compliance with the conditions specified in Section 12, each Lender
that has signed this Agreement shall be deemed to have consented to, approved
or accepted or to be satisfied with, each document or other matter required
thereunder to be consented to or approved by or acceptable or satisfactory to a
Lender unless the Administrative Agent shall have received written notice from
such Lender prior to the proposed Closing Date specifying its objection
thereto.

 

14.6         Notice of Default.  The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of any Event of Default or
Unmatured Event of Default except with respect to defaults in the payment of
principal, interest and fees required to be paid to the Administrative Agent
for the account of the Lenders, unless the Administrative Agent shall have
received written notice from a Lender or the Company referring to this
Agreement, describing such Event of Default or Unmatured Event of Default and
stating that such notice is a “notice of default”.  The Administrative Agent will notify the
Lenders of its receipt of any such notice. 
The Administrative Agent shall take such action with respect to such
Event of Default or Unmatured Event of Default as may be requested by the
Required Lenders in accordance with Section 13; provided
that unless and until the Administrative Agent has received any such request,
the Administrative Agent may (but shall not be obligated to) take such action,
or refrain from taking such action, with respect to such Event of Default or
Unmatured Event of Default as it shall deem advisable or in the best interest
of the Lenders.

 

14.7         Credit Decision.  Each Lender acknowledges that the
Administrative Agent has not made any representation or warranty to it, and
that no act by the Administrative Agent hereafter taken, including any consent
and acceptance of any assignment or review of the affairs of the Loan Parties,
shall be deemed to constitute any representation or warranty by the
Administrative Agent to any Lender as to any matter, including whether the
Administrative Agent has disclosed material information in its possession.  Each Lender represents to the Administrative
Agent that it has, independently and without reliance upon the Administrative
Agent and based on such documents and information as it has deemed appropriate,
made its own appraisal of and investigation into the business, prospects,
operations, property, financial and other condition and creditworthiness of the
Loan Parties, and made its own decision to enter into this Agreement and to
extend credit to the Company hereunder. 
Each Lender also represents that it will, independently and without
reliance upon the Administrative Agent and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigations as
it deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of the Company.  Except for notices, reports and other
documents expressly herein required to be furnished to the Lenders by the
Administrative Agent, the Administrative Agent shall not have any duty or
responsibility to provide any Lender with any credit or other

 

63

 

information concerning the business, prospects,
operations, property, financial or other condition or creditworthiness of the
Company which may come into the possession of the Administrative Agent.

 

14.8         Indemnification.  Whether or not the transactions contemplated
hereby are consummated, each Lender shall indemnify upon demand the
Administrative Agent and its directors, officers, employees and agents (to the
extent not reimbursed by or on behalf of the Company and without limiting the
obligation of the Company to do so), according to its applicable Pro Rata
Share, from and against any and all Indemnified Liabilities (as hereinafter
defined); provided that no Lender shall be liable for any payment to any
such Person of any portion of the Indemnified Liabilities to the extent
determined by a final, nonappealable judgment by a court of competent
jurisdiction to have resulted from the applicable Person’s own gross negligence
or willful misconduct.  No action taken
in accordance with the directions of the Required Lenders shall be deemed to
constitute gross negligence or willful misconduct for purposes of this
Section.  Without limitation of the
foregoing, each Lender shall reimburse the Administrative Agent upon demand for
its ratable share of any costs or out-of-pocket expenses (including Attorney
Costs and Taxes) incurred by the Administrative Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein,
to the extent that the Administrative Agent is not reimbursed for such expenses
by or on behalf of the Company.  The
undertaking in this Section shall survive repayment of the Loans,
cancellation of the Notes, expiration or termination of the Letters of Credit,
any foreclosure under, or modification, release or discharge of, any or all of
the Collateral Documents, termination of this Agreement and the resignation or
replacement of the Administrative Agent.

 

14.9         Administrative Agent in Individual
Capacity.  PVBT and its Affiliates
may make loans to, issue letters of credit for the account of, accept deposits
from, acquire equity interests in and generally engage in any kind of banking,
trust, financial advisory, underwriting or other business with the Loan Parties
and Affiliates as though PVBT were not the Administrative Agent hereunder and
without notice to or consent of any Lender. 
Each Lender acknowledges that, pursuant to such activities, PVBT or its
Affiliates may receive information regarding the Company or its Affiliates
(including information that may be subject to confidentiality obligations in
favor of the Company or such Affiliate) and acknowledge that the Administrative
Agent shall be under no obligation to provide such information to them.  With respect to their Loans (if any), PVBT and
its Affiliates shall have the same rights and powers under this Agreement as
any other Lender and may exercise the same as though PVBT were not the
Administrative Agent, and the terms “Lender” and “Lenders” include PVBT and its
Affiliates, to the extent applicable, in their individual capacities.

 

14.10       Successor Administrative Agent.  The Administrative Agent may resign as
Administrative Agent upon 30 days’ notice to the Lenders.  If the Administrative Agent resigns under
this Agreement, the Required Lenders shall, with (so long as no Event of
Default exists) the consent of the Company (which shall not be unreasonably
withheld or delayed), appoint from among the Lenders a successor agent for the
Lenders.  If no successor agent is
appointed prior to the effective date of the resignation of the Administrative
Agent, the Administrative Agent may 

 

64

 

appoint, after consulting with the Lenders and the
Company, a successor agent from among the Lenders.  Upon the acceptance of its appointment as successor
agent hereunder, such successor agent shall succeed to all the rights, powers
and duties of the retiring Administrative Agent and the term “Administrative
Agent” shall mean such successor agent, and the retiring Administrative Agent’s
appointment, powers and duties as Administrative Agent shall be terminated.
After any retiring Administrative Agent’s resignation hereunder as
Administrative Agent, the provisions of this Section 14 and Sections
15.5 and 15.17 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.  If no successor agent has
accepted appointment as Administrative Agent by the date which is 30 days
following a retiring Administrative Agent’s notice of resignation, the retiring
Administrative Agent’s resignation shall nevertheless thereupon become
effective and the Lenders shall perform all of the duties of the Administrative
Agent hereunder until such time, if any, as the Required Lenders appoint a
successor agent as provided for above.

 

14.11       Collateral Matters.  The Lenders irrevocably authorize the
Administrative Agent, at its option and in its discretion, (a) to release
any Lien granted to or held by the Administrative Agent under any Collateral
Document (i) upon termination of the Commitments and payment in full of
all Loans and all other obligations of the Company hereunder (other than any Obligation arising solely from
any Bank Product Agreement or contingent indemnification Obligations to the
extent no claim giving rise thereto has been asserted) and the
expiration or termination of all Letters of Credit (or Cash Collateralization
of all such Letters of Credit); (ii) constituting property sold or to be
sold or disposed of as part of or in connection with any disposition permitted
hereunder; or (iii) subject to Section 15.1, if approved,
authorized or ratified in writing by the Required Lenders; or (b) to
subordinate its interest in any Collateral to any holder of a Lien on such
Collateral which is permitted by Section 11.2  (it being understood that the Administrative
Agent may conclusively rely on a certificate from the Company in determining
whether the Debt secured by any such Lien is permitted by Section 11.1).  Upon request by the Administrative Agent at
any time, the Lenders will confirm in writing the Administrative Agent’s
authority to release, or subordinate its interest in, particular types or items
of Collateral pursuant to this Section 14.11.  Each Lender hereby authorizes the
Administrative Agent to give blockage notices in connection with any
Subordinated Debt at the direction of Required Lenders and agrees that it will
not act unilaterally to deliver such notices.

 

14.12       Administrative Agent May File
Proofs of Claim.  In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to any Loan Party, the Administrative Agent (irrespective
of whether the principal of any Loan shall then be due and payable as herein
expressed or by declaration or otherwise and irrespective of whether the
Administrative Agent shall have made any demand on the Company) shall be
entitled and empowered, by intervention in such proceeding or otherwise:

 

(a)           to file and prove a claim for the
whole amount of the principal and interest owing and unpaid in respect of the
Loans, and all other Obligations that are owing and unpaid and to file such
other documents as may be necessary or advisable in order to have the claims of
the Lenders and the Administrative Agent (including any claim for the
reasonable compensation, expenses, disbursements and advances of the Lenders
and the Administrative Agent and their 

 

65

 

respective agents and counsel and all other amounts
due the Lenders and the Administrative Agent under Sections 5, 15.5
and 15.17) allowed in such judicial proceedings; and

 

(b)           to collect and receive any monies or
other property payable or deliverable on any such claims and to distribute the
same;

 

and any custodian, receiver,
assignee, trustee, liquidator, sequestrator or other similar official in any
such judicial proceeding is hereby authorized by each Lender to make such
payments to the Administrative Agent and, in the event that the Administrative
Agent shall consent to the making of such payments directly to the Lenders, to
pay to the Administrative Agent any amount due for the reasonable compensation,
expenses, disbursements and advances of the Administrative Agent and its agents
and counsel, and any other amounts due the Administrative Agent under Sections
5, 15.5 and 15.17.

 

Nothing contained herein
shall be deemed to authorize the Administrative Agent to authorize or consent
to or accept or adopt on behalf of any Lender any plan of reorganization,
arrangement, adjustment or composition affecting the Obligations or the rights
of any Lender or to authorize the Administrative Agent to vote in respect of
the claim of any Lender in any such proceeding.

 

SECTION 15          GENERAL.

 

15.1         Waiver; Amendments.  No delay on the part of the Administrative
Agent or any Lender in the exercise of any right, power or remedy shall operate
as a waiver thereof, nor shall any single or partial exercise by any of them of
any right, power or remedy preclude other or further exercise thereof, or the
exercise of any other right, power or remedy. 
No amendment, modification or waiver of, or consent with respect to, any
provision of this Agreement or the other Loan Documents shall in any event be
effective unless the same shall be in writing and acknowledged by Lenders
having aggregate Pro Rata Shares of not less than the aggregate Pro Rata Shares
expressly designated herein with respect thereto or, in the absence of such
designation as to any provision of this Agreement, by the Required Lenders, and
then any such amendment, modification, waiver or consent shall be effective
only in the specific instance and for the specific purpose for which
given.  No amendment, modification,
waiver or consent shall (a) extend or increase the Commitment of any
Lender without the written consent of such Lender, (b) extend the date
scheduled for payment of any principal (excluding mandatory prepayments) of or
interest on the Loans or any fees payable hereunder without the written consent
of each Lender directly affected thereby, (c) reduce the principal amount
of any Loan, the rate of interest thereon or any fees payable hereunder,
without the consent of each Lender directly affected thereby (except for
periodic adjustments of interest rates and fees resulting from a change in the
Applicable Margin as provided for in this Agreement); or (d) release any
party from its obligations under the Guaranty and Collateral Agreement or all
or any substantial part of the Collateral granted under the Collateral
Documents, change the definition of Required Lenders, any provision of this Section 15.1
or reduce the aggregate Pro Rata Share required to effect an amendment,
modification, waiver or consent, without, in each case, the written consent of
all Lenders.  No provision of Sections
6.2.2 or 6.3 with respect to the timing or application of mandatory
prepayments of the Loans shall be amended, modified or waived without the
consent of Lenders having a majority of the aggregate Pro Rata Shares of the
Term Loans affected 

 

66

 

thereby.  No
provision of Section 14 or other provision of this Agreement
affecting the Administrative Agent in its capacity as such shall be amended,
modified or waived without the consent of the Administrative Agent.  No provision of this Agreement relating to
the rights or duties of the Issuing Lender in its capacity as such shall be
amended, modified or waived without the consent of the Issuing Lender.

 

15.2         Confirmations.  The Company and each holder of a Note agree
from time to time, upon written request received by it from the other, to
confirm to the other in writing (with a copy of each such confirmation to the
Administrative Agent) the aggregate unpaid principal amount of the Loans then
outstanding under such Note.

 

15.3         Notices.  Except as otherwise provided in Sections 2.2.2
and 2.2.3, all notices hereunder shall be in writing (including
facsimile transmission) and shall be sent to the applicable party at its
address shown on Annex B or at such other address as such party may, by
written notice received by the other parties, have designated as its address
for such purpose.  Notices sent by
facsimile transmission shall be deemed to have been given when sent; notices
sent by mail shall be deemed to have been given three Business Days after the
date when sent by registered or certified mail, postage prepaid; and notices
sent by hand delivery or overnight courier service shall be deemed to have been
given when received.  For purposes of Sections
2.2.2 and 2.2.3, the Administrative Agent shall be entitled to rely
on telephonic instructions from any person that the Administrative Agent in
good faith believes is an authorized officer or employee of the Company, and
the Company shall hold the Administrative Agent and each other Lender harmless
from any loss, cost or expense resulting from any such reliance.

 

15.4         Computations.  Where the character or amount of any
asset or liability or item of income or expense is required to be determined,
or any consolidation or other accounting computation is required to be made,
for the purpose of this Agreement, such determination or calculation shall, to
the extent applicable and except as otherwise specified in this Agreement, be
made in accordance with GAAP, consistently applied; provided that if the
Company notifies the Administrative Agent that the Company wishes to amend any
covenant in Sections 10 or 11.13 (or any related definition) to
eliminate or to take into account the effect of any change in GAAP on the
operation of such covenant (or if the Administrative Agent notifies the Company
that the Required Lenders wish to amend Sections 10 or 11.13 (or
any related definition) for such purpose), then the Company’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 (or related definition) is amended in a manner
satisfactory to the Company and the Required Lenders.

 

15.5         Costs, Expenses and Taxes.  The Company agrees to pay on demand all
reasonable out-of-pocket costs and expenses of the Administrative Agent
(including Attorney Costs and any Taxes) in connection with the preparation,
negotiation, execution, syndication, delivery and administration (including
perfection and protection of any Collateral and the costs of Intralinks (or
other similar service), if applicable) of this Agreement, the other Loan
Documents and all other documents provided for herein or delivered or to be
delivered hereunder or in connection herewith (including any amendment,
supplement or waiver to any Loan Document), whether or not the transactions
contemplated hereby or thereby shall be consummated, and all reasonable
out-of-pocket costs and expenses (including Attorney Costs 

 

67

 

and any Taxes) incurred by the Administrative Agent
and each Lender after an Event of Default in connection with the collection of
the Obligations or the enforcement of this Agreement the other Loan Documents
or any such other documents or during any workout, restructuring or
negotiations in respect thereof.  In
addition, the Company agrees to pay, and to hold the Administrative Agent and
the Lenders harmless from all liability for, any fees of the Company’s auditors
in connection with any reasonable exercise by the Administrative Agent and the
Lenders of their rights pursuant to Section 10.2.  All Obligations provided for in this Section 15.5
shall survive repayment of the Loans, cancellation of the Notes, expiration or
termination of the Letters of Credit and termination of this Agreement.

 

15.6         Assignments; Participations.

 

15.6.1  Assignments.  (a)  Any Lender may at any time assign
to one or more Persons (any such Person, an “Assignee”) all or any
portion of such Lender’s Loans and Commitments, with the prior written consent
of the Administrative Agent, the Issuing Lender (for an assignment of the
Revolving Loans and the Revolving Commitment) and, so long as no Event of
Default exists, the Company (which consents shall not be unreasonably withheld
or delayed and shall not be required for an assignment by a Lender to a Lender
or an Affiliate of a Lender).  Except as
the Administrative Agent may otherwise agree, any such assignment shall be in a
minimum aggregate amount equal to $5,000,000 or, if less, the remaining
Commitment and Loans held by the assigning Lender.  The Company and the Administrative Agent
shall be entitled to continue to deal solely and directly with such Lender in
connection with the interests so assigned to an Assignee until the
Administrative Agent shall have received and accepted an effective assignment
agreement in substantially the form of Exhibit D hereto (an “Assignment
Agreement”) executed, delivered and fully completed by the applicable
parties thereto and a processing fee of $3,500. 
Any attempted assignment by a Lender not made in accordance with this Section 15.6.1
shall be treated as the sale of a participation under Section 15.6.2.

 

(b)   From and after the date on which the
conditions described above have been met, (i) such Assignee shall be
deemed automatically to have become a party hereto and, to the extent that
rights and obligations hereunder have been assigned to such Assignee pursuant
to such Assignment Agreement, shall have the rights and obligations of a Lender
hereunder and (ii) the assigning Lender, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment
Agreement, shall be released from its rights (other than its indemnification
rights) and obligations hereunder.  Upon
the request of the Assignee (and, as applicable, the assigning Lender) pursuant
to an effective Assignment Agreement, the Company shall execute and deliver to
the Administrative Agent for delivery to the Assignee (and, as applicable, the
assigning Lender) a Note in the principal amount of the Assignee’s Pro Rata
Share of the Revolving Commitment plus the principal amount of the Assignee’s
Term Loan (and, as applicable, a Note in the principal amount of the Pro Rata
Share of the Revolving Commitment retained by the assigning Lender plus the
principal amount of the Term Loan retained by the assigning Lender).  Each such Note shall be dated the effective
date of such assignment.  Upon receipt by
the assigning Lender of such Note, the assigning Lender shall return to the
Company any prior Note held by it.

 

(c)   Any Lender may at any time pledge or assign a
security interest in all or any portion of its rights under this Agreement to
secure obligations of such Lender, including any 

 

68

 

pledge or
assignment to secure obligations to a Federal Reserve Bank, and this Section shall
not apply to any such pledge or assignment of a security interest; 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.

 

15.6.2  Participations.  Any Lender may at any time sell to one or
more Persons participating interests in its Loans, Commitments or other
interests hereunder (any such Person, a “Participant”).  In the event of a sale by a Lender of a
participating interest to a Participant, (a) such Lender’s obligations
hereunder shall remain unchanged for all purposes, (b) the Company and the
Administrative Agent shall continue to deal solely and directly with such
Lender in connection with such Lender’s rights and obligations hereunder and (c) all
amounts payable by the Company shall be determined as if such Lender had not
sold such participation and shall be paid directly to such Lender.  No Participant shall have any direct or
indirect voting rights hereunder except with respect to any event described in Section 15.1
expressly requiring the unanimous vote of all Lenders or, as applicable, all
affected Lenders.  Each Lender agrees to
incorporate the requirements of the preceding sentence into each participation
agreement which such Lender enters into with any Participant.  The Company agrees that if amounts
outstanding under this Agreement are due and payable (as a result of
acceleration or otherwise), each Participant shall be deemed to have the right
of set-off in respect of its participating interest in amounts owing under this
Agreement and with respect to any Letter of Credit to the same extent as if the
amount of its participating interest were owing directly to it as a Lender
under this Agreement; provided that such right of set-off shall be
subject to the obligation of each Participant to share with the Lenders, and
the Lenders agree to share with each Participant, as provided in Section 7.5.  The Company also agrees that each Participant
shall be entitled to the benefits of Section 7.6 or 8 as if
it were a Lender (provided that on the date of the participation no
Participant shall be entitled to any greater compensation pursuant to Section 7.6
or 8 than would have been paid to the participating Lender on such date
if no participation had been sold and that each Participant complies with Section 7.6(d) as
if it were an Assignee).

 

15.7         Register.  The Administrative Agent shall maintain a
copy of each Assignment Agreement delivered and accepted by it and register
(the “Register”) for the recordation of names and addresses of the
Lenders and the Commitment of each Lender from time to time and whether such
Lender is the original Lender or the Assignee. 
No assignment shall be effective unless and until the Assignment
Agreement is accepted and registered in the Register. All records of transfer
of a Lender’s interest in the Register shall be conclusive, absent manifest
error, as to the ownership of the interests in the Loans. The Administrative
Agent shall not incur any liability of any kind with respect to any Lender with
respect to the maintenance of the Register.

 

15.8         GOVERNING LAW.  THIS AGREEMENT AND EACH NOTE SHALL BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE,
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.

 

69

 

15.9         Confidentiality.  As
required by federal law and the Administrative Agent’s policies and practices,
the Administrative Agent may need to obtain, verify, and record  certain customer identification information and
documentation in connection with opening or maintaining accounts, or
establishing or continuing to provide services. 
The Administrative Agent and each Lender agree to use
commercially reasonable efforts (equivalent to the efforts the Administrative
Agent or such Lender applies to maintain the confidentiality of its own
confidential information) to maintain as confidential all information provided
to them by any Loan Party and designated as confidential, except that the
Administrative Agent and each Lender may disclose such information (a) to
Persons employed or engaged by the Administrative Agent or such Lender in
evaluating, approving, structuring or administering the Loans and the
Commitments; (b) to any assignee or participant or potential assignee or
participant that has agreed to comply with the covenant contained in this Section 15.9
(and any such assignee or participant or potential assignee or participant may
disclose such information to Persons employed or engaged by them as described
in clause (a) above); (c) as required or requested by any federal or
state regulatory authority or examiner, or any insurance industry association,
or as reasonably believed by the Administrative Agent or such Lender to be
compelled by any court decree, subpoena or legal or administrative order or
process; (d) as, on the advice of the Administrative Agent’s or such
Lender’s counsel, is required by law; (e) in connection with the exercise
of any right or remedy under the Loan Documents or in connection with any
litigation to which the Administrative Agent or such Lender is a party; (f) to
any nationally recognized rating agency that requires access to information
about a Lender’s investment portfolio in connection with ratings issued with
respect to such Lender; (g) to any Affiliate of the Administrative Agent,
the Issuing Lender or any other Lender who may provide Bank Products to the
Loan Parties; or (h) that ceases to be confidential through no fault of
the Administrative Agent or any Lender. 
Notwithstanding the foregoing, the Company consents to the publication
by the Administrative Agent or any Lender of a tombstone or similar advertising
material relating to the financing transactions contemplated by this Agreement,
and the Administrative Agent reserves the right to provide to industry trade
organizations information necessary and customary for inclusion in league table
measurements.

 

15.10       Severability.  Whenever possible each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be ineffective
to the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Agreement.  All obligations of the Company and rights of
the Administrative Agent and the Lenders expressed herein or in any other Loan
Document shall be in addition to and not in limitation of those provided by
applicable law.

 

15.11       Nature of Remedies.  All Obligations of the Company and rights of
the Administrative Agent and the Lenders expressed herein or in any other Loan
Document shall be in addition to and not in limitation of those provided by
applicable law.  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.

 

70

 

15.12       Entire Agreement.  This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding among the parties
hereto and supersedes all prior or contemporaneous agreements and
understandings of such Persons, verbal or written, relating to the subject
matter hereof and thereof (except as relates to the fees described in Section 5.3)
and any prior arrangements made with respect to the payment by the Company of
(or any indemnification for) any fees, costs or expenses payable to or incurred
(or to be incurred) by or on behalf of the Administrative Agent or the Lenders.

 

15.13       Counterparts.  This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts and each such counterpart shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same
Agreement.  Receipt of an executed
signature page to this Agreement by facsimile or other electronic
transmission shall constitute effective delivery thereof.  Electronic records of executed Loan Documents
maintained by the Lenders shall be deemed to be originals.

 

15.14       Successors and Assigns.  This Agreement shall be binding upon the
Company, the Lenders and the Administrative Agent and their respective
successors and assigns, and shall inure to the benefit of the Company, the
Lenders and the Administrative Agent and the successors and assigns of the
Lenders and the Administrative Agent.  No
other Person shall be a direct or indirect legal beneficiary of, or have any
direct or indirect cause of action or claim in connection with, this Agreement
or any of the other Loan Documents.  The
Company may not assign or transfer any of its rights or Obligations under this
Agreement without the prior written consent of the Administrative Agent and
each Lender.

 

15.15       Captions.  Section captions used in this
Agreement are for convenience only and shall not affect the construction
of this Agreement.

 

15.16       Customer Identification - USA Patriot
Act Notice.  Each
Lender and PVBT (for itself and not on behalf of any other party) hereby
notifies the Loan Parties that, pursuant to the requirements of the USA Patriot
Act, Title III of Pub. L. 107-56, signed into law October 26, 2001 (the “Act”),
it is required to obtain, verify and record information that identifies the
Loan Parties, which information includes the name and address of the Loan
Parties and other information that will allow such Lender or PVBT, as applicable,
to identify the Loan Parties in accordance with the Act.

 

15.17       INDEMNIFICATION BY THE
COMPANY.  IN CONSIDERATION OF
THE EXECUTION AND DELIVERY OF THIS AGREEMENT BY THE ADMINISTRATIVE AGENT AND
THE LENDERS AND THE AGREEMENT TO EXTEND THE COMMITMENTS PROVIDED HEREUNDER, THE
COMPANY HEREBY AGREES TO INDEMNIFY, EXONERATE AND HOLD THE ADMINISTRATIVE
AGENT, EACH LENDER AND EACH OF THE OFFICERS, DIRECTORS, EMPLOYEES, AFFILIATES
AND AGENTS OF THE ADMINISTRATIVE AGENT AND EACH LENDER (EACH A “LENDER PARTY”)
FREE AND HARMLESS FROM AND AGAINST ANY AND ALL ACTIONS, CAUSES OF ACTION,
SUITS, LOSSES, LIABILITIES, DAMAGES AND EXPENSES, INCLUDING ATTORNEY COSTS
(COLLECTIVELY, THE “INDEMNIFIED LIABILITIES”), INCURRED BY THE LENDER
PARTIES OR ANY OF THEM AS A 

 

71

 

RESULT OF, OR ARISING OUT OF, OR RELATING TO (A) ANY
TENDER OFFER, MERGER, PURCHASE OF CAPITAL SECURITIES, PURCHASE OF ASSETS OR
SIMILAR TRANSACTION FINANCED OR PROPOSED TO BE FINANCED IN WHOLE OR IN PART,
DIRECTLY OR INDIRECTLY, WITH THE PROCEEDS OF ANY OF THE LOANS, (B) THE
USE, HANDLING, RELEASE, EMISSION, DISCHARGE, TRANSPORTATION, STORAGE, TREATMENT
OR DISPOSAL OF ANY HAZARDOUS SUBSTANCE AT ANY PROPERTY OWNED OR LEASED BY ANY
LOAN PARTY, (C) ANY VIOLATION OF ANY ENVIRONMENTAL LAWS WITH RESPECT TO
CONDITIONS AT ANY PROPERTY OWNED OR LEASED BY ANY LOAN PARTY OR THE OPERATIONS
CONDUCTED THEREON, (D) THE INVESTIGATION, CLEANUP OR REMEDIATION OF
OFFSITE LOCATIONS AT WHICH ANY LOAN PARTY OR THEIR RESPECTIVE PREDECESSORS ARE
ALLEGED TO HAVE DIRECTLY OR INDIRECTLY DISPOSED OF HAZARDOUS SUBSTANCES OR (E) THE
EXECUTION, DELIVERY, PERFORMANCE OR ENFORCEMENT OF THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT BY ANY OF THE LENDER PARTIES, EXCEPT FOR ANY SUCH INDEMNIFIED
LIABILITIES ARISING ON ACCOUNT OF THE APPLICABLE LENDER PARTY’S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT AS DETERMINED BY A FINAL, NONAPPEALABLE
JUDGMENT BY A COURT OF COMPETENT JURISDICTION. 
IF AND TO THE EXTENT THAT THE FOREGOING UNDERTAKING MAY BE
UNENFORCEABLE FOR ANY REASON, THE COMPANY HEREBY AGREES TO MAKE THE MAXIMUM
CONTRIBUTION TO THE PAYMENT AND SATISFACTION OF EACH OF THE INDEMNIFIED
LIABILITIES WHICH IS PERMISSIBLE UNDER APPLICABLE LAW.  ALL OBLIGATIONS PROVIDED FOR IN THIS SECTION 15.17
SHALL SURVIVE REPAYMENT OF THE LOANS, CANCELLATION OF THE NOTES, EXPIRATION OR
TERMINATION OF THE LETTERS OF CREDIT, ANY FORECLOSURE UNDER, OR ANY
MODIFICATION, RELEASE OR DISCHARGE OF, ANY OR ALL OF THE COLLATERAL DOCUMENTS
AND TERMINATION OF THIS AGREEMENT.

 

15.18       Nonliability of Lenders.  The relationship between the Company on the
one hand and the Lenders and the Administrative Agent on the other hand shall
be solely that of borrower and lender. 
Neither the Administrative Agent nor any Lender has any fiduciary
relationship with or duty to any Loan Party arising out of or in connection
with this Agreement or any of the other Loan Documents, and the relationship
between the Loan Parties, on the one hand, and the Administrative Agent and the
Lenders, on the other hand, in connection herewith or therewith is solely that
of debtor and creditor.  Neither the
Administrative Agent nor any Lender undertakes any responsibility to any Loan
Party to review or inform any Loan Party of any matter in connection with any
phase of any Loan Party’s business or operations.  The Company agrees, on behalf of itself and
each other Loan Party, that neither the Administrative Agent nor any Lender
shall have liability to any Loan Party (whether sounding in tort, contract or
otherwise) for losses suffered by any Loan Party in connection with, arising
out of, or in any way related to the transactions contemplated and the
relationship established by the Loan Documents, or any act, omission or event
occurring in connection therewith, unless it is determined in a final
non-appealable judgment by a court of competent jurisdiction that such losses
resulted from the gross negligence or willful misconduct of the party from
which recovery is sought.  NO LENDER PARTY SHALL BE LIABLE FOR ANY DAMAGES ARISING FROM THE USE BY

 

72

 

OTHERS OF ANY INFORMATION OR OTHER MATERIALS
OBTAINED THROUGH INTRALINKS OR OTHER SIMILAR INFORMATION TRANSMISSION SYSTEMS
IN CONNECTION WITH THIS AGREEMENT, NOR SHALL ANY LENDER PARTY HAVE ANY
LIABILITY WITH RESPECT TO, AND THE COMPANY ON BEHALF OF ITSELF AND EACH OTHER
LOAN PARTY, HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE FOR ANY SPECIAL,
PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ARISING OUT OF ITS ACTIVITIES IN
CONNECTION HEREWITH OR THEREWITH (WHETHER BEFORE OR AFTER THE CLOSING
DATE).  The Company acknowledges that it has been advised by
counsel in the negotiation, execution and delivery of this Agreement and the other
Loan Documents to which it is a party. 
No joint venture is created hereby or by the other Loan Documents or
otherwise exists by virtue of the transactions contemplated hereby among the
Lenders or among the Loan Parties and the Lenders.

 

15.19       FORUM SELECTION AND
CONSENT TO JURISDICTION.  ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED
EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS OR IN THE UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS; PROVIDED THAT
NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE THE
ADMINISTRATIVE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY
OTHER JURISDICTION.  THE COMPANY HEREBY
EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE
STATE OF ILLINOIS AND OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF ILLINOIS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE.  THE COMPANY FURTHER IRREVOCABLY CONSENTS TO
THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL
SERVICE WITHIN OR WITHOUT THE STATE OF ILLINOIS.  THE COMPANY HEREBY EXPRESSLY AND IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY
SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.

 

15.20       WAIVER OF JURY TRIAL. 
EACH OF THE COMPANY, THE ADMINISTRATIVE AGENT AND EACH LENDER HEREBY
WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR
DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE, ANY OTHER LOAN DOCUMENT AND
ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN
THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY
LENDING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, AND
AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT
BEFORE A JURY.

 

73

 

The parties hereto have
caused this Agreement to be duly executed and delivered by their duly
authorized officers as of the date first set forth above.

 

	
   

  	
  CONTINENTAL MATERIALS CORPORATION,

  
	
   

  	
  as the Company and a Loan Party

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Joseph J. Sum

  
	
   

  	
   

  	
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE PRIVATEBANK AND TRUST COMPANY,
  as Administrative Agent, as a Lender and the initial Issuing Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Steven M. Cohen

  
	
   

  	
   

  	
  Managing Director & Senior Vice President

  

 

74

 

ANNEX
A

 

LENDERS
AND PRO RATA SHARES

 

	
  Lender

  	
   

  	
  Revolving

  Commitment

  Amount

  	
   

  	
  Pro Rata

  Share

  	
   

  	
  Term Loan

  Commitment

  	
   

  	
  Pro Rata

  Share

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  The PrivateBank
  and Trust Company

  	
   

  	
  $

  	
  20,000,000

  	
   

  	
  100

  	
  %

  	
  $

  	
  10,000,000

  	
   

  	
  100

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TOTALS

  	
   

  	
  $

  	
  20,000,000

  	
   

  	
  100

  	
  %

  	
  $

  	
  10,000,000

  	
   

  	
  100

  	
  %

  

 

75

 

ANNEX
B

 

ADDRESSES
FOR NOTICES

 

CONTINENTAL MATERIALS CORPORATION, as the Company

 

200 South Wacker Drive

Suite 4000

Chicago, Illinois 60606

Attention:  Vice President & CFO

Facsimile:  (312) 541-8089

 

THE PRIVATEBANK AND TRUST COMPANY, as Administrative Agent, Issuing Lender
and a Lender

 

Notices of Borrowing, Conversion, Continuation and
Letter of Credit Issuance

 

120 South LaSalle Street

Chicago, Illinois 60603

Attention: 
Rosina Ordaz

Telephone: (312) 564-1321

Facsimile: 
(312) 564-6886

 

All Other Notices

 

120 South LaSalle Street

Chicago, Illinois 60603

Attention: 
Steven M. Cohen

Facsimile: 
(312) 564-6887

 

76

 

ANNEX
C

 

APPLICABLE
MARGIN

 

Applicable
Margin means, for any day, the rate per annum set
forth below opposite the level (the “Level”) then in effect, it being
understood that the Applicable Margin for (i) LIBOR Loans shall be the
percentage set forth under the column “LIBOR Margin”, (ii) Base Rate Loans
shall be the percentage set forth under the column “Base Rate Margin”, (iii) the
Non-Use Fee Rate shall be the percentage set forth under the column “Non-Use
Fee Rate” and (iv) the L/C Fee shall be the percentage set forth under the
column “L/C Fee Rate”:

 

	
   

  	
   

  	
   

  	
   

  	
  Revolving Loan and

  Term Loan

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Level

  	
   

  	
  Total Cash Flow Leverage Ratio

  	
   

  	
  LIBOR

  Margin

  	
   

  	
  Base Rate

  Margin

  	
   

  	
  Non-Use

  Fee Rate

  	
   

  	
  L/C Fee

  Rate

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  I

  	
   

  	
  Less than 1.50 to 1.0

  	
   

  	
  2.0

  	
  %

  	
  0

  	
  %

  	
  0.25

  	
  %

  	
  1.50

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  II

  	
   

  	
  Equal to or greater than 1.50 to 1.0 but less than
  2.0 to 1.0

  	
   

  	
  2.50

  	
  %

  	
  0.25

  	
  %

  	
  0.25

  	
  %

  	
  1.50

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  III

  	
   

  	
  Equal to or greater than 2.0 to 1.0 but less than
  2.50 to 1.0

  	
   

  	
  3.0

  	
  %

  	
  0.75

  	
  %

  	
  0.25

  	
  %

  	
  1.50

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  IV

  	
   

  	
  Equal to or greater than 2.50 to 1.0 but less than
  3.0 to 1.0

  	
   

  	
  3.50

  	
  %

  	
  1.25

  	
  %

  	
  0.25

  	
  %

  	
  1.50

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  V

  	
   

  	
  Equal to or greater than 3.0 to 1.0

  	
   

  	
  4.0

  	
  %

  	
  1.75

  	
  %

  	
  0.25

  	
  %

  	
  1.50

  	
  %

  

 

The LIBOR Margin, the
Base Rate Margin, the Non-Use Fee Rate and the L/C Fee Rate shall be adjusted,
to the extent applicable, on the fifth (5th) Business Day after the Company
provides the annual and quarterly financial statements and other information
pursuant to Sections 10.1.1 or 10.1.2, as applicable, and the
related Compliance Certificate, pursuant to Section 10.1.3.  Notwithstanding anything contained in this
paragraph to the contrary, (a) if the Company fails to deliver the
financial statements and Compliance Certificate in accordance with the
provisions of Sections 10.1.1, 10.1.2 and 10.1.3, the
LIBOR Margin, the Base Rate Margin, the Non-Use Fee Rate and the L/C Fee Rate
shall be based upon Level V above beginning on the date such financial
statements and Compliance Certificate were required to be delivered until the
fifth (5th) Business Day after such financial statements and Compliance
Certificate are actually delivered, whereupon the Applicable Margin shall be
determined by the then current Level; (b)  no reduction to any Applicable
Margin shall become effective at any time when an Event of Default or Unmatured
Event of Default has occurred and is continuing; and (c) notwithstanding
anything to the contrary contained herein, the initial Applicable Margin on the
Closing Date shall be based on Level III and such margin shall continue until
the date on which the financial 

 

77

 

statements and
Compliance Certificate are delivered for the Fiscal Quarter ending September 30,
2009 (at which point the margin may be adjusted as provided above).

 

78

 

EXHIBIT A

 

FORM OF NOTE

 

	
   

  	
  April     , 2009

  
	
  $                                 

  	
  Chicago, Illinois

  

 

The
undersigned, for value received, promises to pay to the order of                        
(the “Lender”) at the principal office of The PrivateBank and Trust
Company (the “Administrative Agent”) in Chicago, Illinois the aggregate
unpaid amount of all Loans made to the undersigned by the Lender pursuant to
the Credit Agreement referred to below (as shown on the schedule attached
hereto (and any continuation thereof) or in the records of the Lender), such
principal amount to be payable on the dates set forth in the Credit Agreement.

 

The
undersigned further promises to pay interest on the unpaid principal amount of
each Loan from the date of such Loan until such Loan is paid in full, payable
at the rate(s) and at the time(s) set forth in the Credit
Agreement.  Payments of both principal
and interest are to be made in lawful money of the United States of America.

 

This
Note evidences indebtedness incurred under, and is subject to the terms and
provisions of, the Credit Agreement, dated as of April                   ,
2009 (as amended, restated, supplemented or otherwise modified from time to
time, the “Credit Agreement”; terms not otherwise defined herein are
used herein as defined in the Credit Agreement), among the undersigned, certain
financial institutions (including the Lender) and the Administrative Agent, to
which Credit Agreement reference is hereby made for a statement of the terms
and provisions under which this Note may or must be paid prior to its due date
or its due date accelerated.

 

This
Note is made under and governed by the laws of the State of Illinois applicable
to contracts made and to be performed entirely within such State.

 

 

	
   

  	
  CONTINENTAL
  MATERIALS CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

79

 

EXHIBIT B

 

FORM OF COMPLIANCE
CERTIFICATE

 

To:          The PrivateBank and Trust Company, as Administrative Agent

 

Please
refer to the Credit Agreement dated as of April     , 2009
(as amended, restated, supplemented or otherwise modified from time to time,
the “Credit Agreement”) among Continental Materials Corporation (the “Company”),
various financial institutions and The PrivateBank and Trust Company, as
Administrative Agent.  Terms used but not
otherwise defined herein are used herein as defined in the Credit Agreement.

 

I.                                                         Reports.  Enclosed herewith is a copy of the [annual audited/quarterly/monthly] report of the Company as
at                     ,
         (the “Computation Date”),
which report fairly presents in all material respects the financial condition
and results of operations [(subject to the absence
of footnotes and to normal year-end adjustments)] of the Company as
of the Computation Date and has been prepared in accordance with GAAP
consistently applied.

 

II.                                                     Financial
Tests.  The Company hereby certifies
and warrants to you that the following is a true and correct computation as at
the Computation Date of the following ratios and/or financial restrictions
contained in the Credit Agreement:

 

	
  A.

  	
   

  	
  Section 11.13.1
  - Minimum Adjusted EBITDA

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.

  	
  Consolidated
  Net Income

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.

  	
  Plus:

  	
  (i) 
  income tax expense

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (ii) 
  Interest Expense

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (iii) depreciation

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (iv) 
  amortization

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (v) 
  depletion

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (vi) 
  other non-cash charges (to the extent reasonably approved by the
  Administrative Agent, except that no approval is necessary for impairment
  charges taken by Rocky Mountain in 2008 and 2009)

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.

  	
  Total
  (EBITDA)

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.

  	
  Plus:

  	
  any
  gains from Asset Dispositions, any extraordinary gains and any gains from
  discontinued operations (net of costs and expenses)

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.

  	
  Total
  (Adjusted EBITDA)

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.

  	
  Minimum
  required

  	
   

  	
  $

  	
   

  

 

80

 

	
  B.

  	
   

  	
  Section 11.13.2 - Minimum
  Fixed Charge Coverage Ratio

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.

  	
  Adjusted EBITDA

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.

  	
  Income taxes paid

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.

  	
  Capital Expenditures
  (unfinanced)

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.

  	
  Sum of (2) and (3)

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.

  	
  Remainder of
  (1) minus (4)

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.

  	
  Interest Expense

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  7.

  	
  Required payments of
  principal of Funded Debt (including Term Loans but excluding Revolving Loans)

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8.

  	
  Sum of (6) and (7)

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  9.

  	
  Ratio of (5) to
  (8)

  	
   

  	
               to
  1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  10.

  	
  Minimum Required

  	
   

  	
               to
  1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C.

  	
   

  	
  Section 11.13.3 - Minimum
  Tangible Net Worth

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.

  	
  Net Worth plus
  Subordinated Debt

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.

  	
  Intangible assets
  (goodwill, intellectual property, prepaid expenses, deferred charges, etc.)

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.

  	
  Obligations payable by
  Affiliates

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.

  	
  Loans to Officers,
  Stockholders, etc.

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.

  	
  Sum of (2),
  (3) and (4)

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.

  	
  Tangible Net Worth

  (Item 1 less Item 5)

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  7.

  	
  Minimum Required

  	
   

  	
  $

  	
   

  

 

81

 

	
  D.

  	
   

  	
  Section 11.13.4 - Maximum
  Adjusted Total Cash Flow Leverage

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.

  	
  Total Debt

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.

  	
  Adjusted
  EBITDA

  (from
  Item A(5) above)

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.

  	
  Ratio
  of (1) to (2)

  	
   

  	
               to
  1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.

  	
  Maximum
  allowed

  	
   

  	
               to
  1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  E.

  	
   

  	
  Section 11.13.5
  - Capital Expenditures

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.

  	
  Capital
  Expenditures for the

  Fiscal Year

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.

  	
  Maximum
  Permitted Capital Expenditures

  	
   

  	
  $

  	
   

  

 

The
Company further certifies to you that no Event of Default or Unmatured Event of
Default has occurred and is continuing.

 

The
Company has caused this Certificate to be executed and delivered by its duly
authorized officer on                ,       .

 

 

	
   

  	
  CONTINENTAL
  MATERIALS CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

82

 

EXHIBIT C

 

FORM OF BORROWING BASE
CERTIFICATE

 

To:          The PrivateBank and Trust Company, as
Administrative Agent

 

Please
refer to the Credit Agreement dated as of April     , 2009
(as amended, restated, supplemented or otherwise modified from time to time,
the “Credit Agreement”) among Continental Materials Corporation (the “Company”),
various financial institutions and The PrivateBank and Trust Company, as
Administrative Agent.  This certificate
(this “Certificate”), together with supporting calculations attached
hereto, is delivered to you pursuant to the terms of the Credit Agreement.  Capitalized terms used but not otherwise
defined herein shall have the same meanings herein as in the Credit Agreement.

 

The
Company hereby certifies and warrants to the Administrative Agent and the
Lenders that at the close of business on                      ,
         (the “Calculation Date”),
the Borrowing Base was $                  ,
computed as set forth on the schedule attached hereto.

 

The
Company has caused this Certificate to be executed and delivered by its officer
thereunto duly authorized on                     ,
          .

 

 

	
   

  	
  CONTINENTAL
  MATERIALS CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

83

 

SCHEDULE
TO BORROWING BASE CERTIFICATE

Dated as of [                         ]

 

See Attached Form

 

84

 

EXHIBIT
D

 

FORM OF

ASSIGNMENT AGREEMENT

 

Date:                              

 

To:                              Continental Materials Corporation

 

and

 

The PrivateBank and Trust
Company, as Administrative Agent

 

Re:                               Assignment under the Credit Agreement
referred to below

 

Gentlemen and Ladies:

 

Please refer to Section 15.6.1
of the Credit Agreement dated as of April             ,
2009 (as amended or otherwise modified from time to time, the “Credit
Agreement”) among Continental Materials Corporation (the “Company”),
various financial institutions and The PrivateBank and Trust Company, as
administrative agent (in such capacity, the “Administrative Agent”).  Unless otherwise defined herein or the
context otherwise requires, terms used herein have the meanings provided in the
Credit Agreement.

 

                         
(the “Assignor”) hereby sells and assigns, without recourse, to                                  (the
“Assignee”), and the Assignee hereby purchases and assumes from the
Assignor, that interest in and to the Assignor’s rights and obligations under
the Credit Agreement as of the date hereof equal to      %
of all of the Loans, of the participation interests in the Letters of Credit
and of the Commitments, such sale, purchase, assignment and assumption to be
effective as of                ,                ,
or such later date on which the Company and the Administrative Agent shall have
consented hereto (the “Effective Date”). 
After giving effect to such sale, purchase, assignment and assumption,
the Assignee’s and the Assignor’s respective percentages for purposes of the
Credit Agreement will be as set forth opposite their names on the signature pages hereof.

 

The Assignor hereby
instructs the Administrative Agent to make all payments from and after the
Effective Date in respect of the interest assigned hereby directly to the
Assignee.  The Assignor and the Assignee
agree that all interest and fees accrued up to, but not including, the
Effective Date are the property of the Assignor, and not the Assignee.  The Assignee agrees that, upon receipt of any
such interest or fees, the Assignee will promptly remit the same to the Assignor.

 

85

 

The Assignor represents
and warrants that it is the legal and beneficial owner of the interest being
assigned by it hereunder and that such interest is free and clear of any
adverse claim.

 

Unless otherwise waived
by the Administrative Agent, the Assignor shall pay the fee payable to the
Administrative Agent pursuant to Section 15.6.1 of the Credit
Agreement.

 

The Assignee hereby
confirms that it has received a copy of the Credit Agreement.  Except as otherwise provided in the Credit
Agreement, effective as of the Effective Date:

 

(a)                                  the Assignee (i) shall be deemed
automatically to have become a party to the Credit Agreement and to have all
the rights and obligations of a “Lender” under the Credit Agreement as if it
were an original signatory thereto to the extent specified in the second
paragraph hereof; and (ii) agrees to be bound by the terms and conditions
set forth in the Credit Agreement as if it were an original signatory thereto;
and

 

(b)                                 the Assignor shall be released from its
obligations under the Credit Agreement to the extent specified in the second
paragraph hereof.

 

The Assignee hereby
advises each of you of the following administrative details with respect to the
assigned Loans and Commitment:

 

(A)                              Institution Name:

 

Address:

 

Attention:

 

Telephone:

 

Facsimile:

 

(B)                                Payment Instructions:

 

This Assignment shall be
governed by and construed in accordance with the laws of the State of Illinois

 

Please evidence your
receipt hereof and your consent to the sale, assignment, purchase and
assumption set forth herein by signing and returning counterparts hereof to the
Assignor and the Assignee.

 

86

 

	
  Percentage =      %

  	
  [ASSIGNEE]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
  Adjusted Percentage =     %

  	
  [ASSIGNOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

 

ACKNOWLEDGED AND
CONSENTED TO

this          
day of                   ,
         

 

THE PRIVATEBANK AND TRUST
COMPANY, as Administrative Agent

 

 

	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  

 

 

ACKNOWLEDGED AND
CONSENTED TO

this    
day of               ,

 

CONTINENTAL MATERIALS
CORPORATION

 

 

	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  

 

87

 

EXHIBIT
E

 

FORM OF NOTICE OF BORROWING

 

To:          The PrivateBank and Trust Company, as
Administrative Agent

 

Please
refer to the Credit Agreement dated as of April          ,
2009 (as amended, restated, supplemented or otherwise modified from time to
time, the “Credit Agreement”) among Continental Materials Corporation (the “Company”),
various financial institutions and The PrivateBank and Trust Company, as
Administrative Agent.  Terms used but not
otherwise defined herein are used herein as defined in the Credit Agreement.

 

The
undersigned hereby gives irrevocable notice, pursuant to Section 2.2.2
of the Credit Agreement, of a request hereby for a borrowing as follows:

 

(i)            The requested borrowing date for the
proposed borrowing (which is a Business Day) is                             ,
          .

 

(ii)           The aggregate amount of the proposed
borrowing is $                      .

 

(iii)          The type of Revolving Loans comprising
the proposed borrowing are [Base Rate] [LIBOR] Loans.

 

(iv)          The duration of the Interest Period
for each LIBOR Loan made as part of the proposed borrowing, if applicable, is                        
months (which shall be 1, 2, 3 or 6 months).

 

The
undersigned hereby certifies that on the date hereof and on the date of
borrowing set forth above, and immediately after giving effect to the borrowing
requested hereby: (i) there exists and there shall exist no Unmatured
Event of Default or Event of Default under the Credit Agreement; and (ii) each
of the representations and warranties contained in the Credit Agreement and the
other Loan Documents is true and correct as of the date hereof, except to the
extent that such representation or warranty expressly relates to another date
and except for changes therein expressly permitted or expressly contemplated by
the Credit Agreement.

 

The
Company has caused this Notice of Borrowing to be executed and delivered by its
officer thereunto duly authorized on                         ,
              .

 

	
   

  	
  CONTINENTAL
  MATERIALS CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

88

 

EXHIBIT
F

 

FORM OF NOTICE OF CONVERSION/CONTINUATION

 

To:          The PrivateBank and Trust Company, as
Administrative Agent

 

Please
refer to the Credit Agreement dated as of April           ,
2009 (as amended, restated, supplemented or otherwise modified from time to
time, the “Credit Agreement”) among Continental Materials Corporation (the “Company”),
various financial institutions and The PrivateBank and Trust Company, as
Administrative Agent.  Terms used but not
otherwise defined herein are used herein as defined in the Credit Agreement.

 

The
undersigned hereby gives irrevocable notice, pursuant to Section 2.2.3
of the Credit Agreement, of its request to:

 

(a)           on [    date   
] convert $[                 ]of
the aggregate outstanding principal amount of the [                ]
Loan, bearing interest at the [               ]
Rate, into a(n) [                   ]
Loan [and, in the case of a LIBOR Loan, having an Interest Period of [              ]
month(s)];

[(b)          on [   
date    ] continue $[                ]of
the aggregate outstanding principal amount of the [              ]
Loan, bearing interest at the LIBOR Rate, as a LIBOR Loan having an Interest
Period of [            ]
month(s)].

 

The
undersigned hereby represents and warrants that all of the conditions contained
in Section 12.2 of the Credit Agreement have been satisfied on and
as of the date hereof, and will continue to be satisfied on and as of the date
of the conversion/continuation requested hereby, before and after giving effect
thereto.

 

The
Company has caused this Notice of Conversion/Continuation to be executed and
delivered by its officer thereunto duly authorized on                            ,
               .

 

	
   

  	
  CONTINENTAL
  MATERIALS CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

89Unassociated Document

    
      

       

      Confidential
Employment Separation Agreement and Release

       

       

        
          

        

      

      This
Confidential Employment Separation Agreement and Release (the “Agreement") is
between James A. Todd (“Executive”), on the one hand, and Fushi Copperweld, Inc.
(“Fushi” or the “Company”), on the other hand.

    

     

    WHEREAS,
Executive is currently employed as Executive Vice President and Corporate
Controller of Fushi and serves on the Boards of Directors of certain entities
affiliated with the Company pursuant to an employment agreement between
Executive and Fushi;

     

    WHEREAS,
Executive has provided notice to Fushi of his intent to voluntarily resign his
employment with Fushi;

     

    WHEREAS,
as a result of Executive’s decision, Executive will resign from his employment
with Fushi and his seats on the Boards of Directors of entities affiliated with
the Company effective February 11, 2009 (the “Separation Date”),
and;

     

    WHEREAS,
both Fushi and Executive desire to enter into this Agreement to finally resolve
all questions of compensation, entitlement to benefits, and any and all other
claims, whether known or unknown, which Executive could potentially have
relating to Executive’s employment with and separation from his employment with
Fushi.  In exchange for Fushi providing these benefits to which
Executive is not otherwise entitled, Executive agrees to waive and settle any
and all potential legal claims and rights relating to Executive’s employment
with and separation from Fushi.

     

    NOW,
THEREFORE, in consideration of the mutual promises set forth below, and
intending to be legally bound, Fushi and Executive agree as
follows:

     

    1.  Current Employment
Agreement.  The Parties acknowledge and agree that they are
parties to an employment agreement titled Executive Employment Agreement for
James A. Todd dated October 29, 2007 (the “Employment
Agreement”).  The Parties further acknowledge and agree that the
Employment Agreement superceded and cancelled an earlier employment agreement
between Executive and Copperweld Bimetallics, LLC dated January 1,
2007.  Finally, the Parties acknowledge and agree that the Employment
Agreement is the only employment agreement in effect between
them.   The Parties agree that, except for Executive’s
post-employment covenants and obligations in the Employment Agreement, which
shall continue in full force, this Agreement shall cancel and supercede the
Employment Agreement and that such Employment Agreement, except for Executive’s
post-employment covenants and obligations contained in sections 14, 15, 16 and
17, shall have no further effect or force.

     

    2.  Separation of
Employment.  Executive acknowledges that he has provided notice
to Fushi of his intent to resign his employment with the Company effective
February 11, 2009.  Employee acknowledges and agrees that his decision
to resign his employment was not due to any request or requirement, express or
implied, by Fushi.  Fushi is providing the compensation and benefits
providing in this Agreement to settle any claims and/or bona fide disputes
Executive may have and in exchange for Executive’s releases and covenants herein
as well as Executive’s good will.

     

    
      
         

      

      
        - 1
-

        
          

        

      

      
         

      

       

    

    3.  Resignation from Boards of
Directors.  As part of Executive’s resignation of employment
from Fushi, effective February 11, 2009, Executive shall resign his seats on the
Boards of Directors for any entity affiliated with Fushi, including: Copperweld
Bimetallics, LLC; and Copperweld Bimetallics UK Ltd.  In order to
effect such resignations for the relevant Boards of Directors, Executive shall
timely submit written notices of such resignations in a format requested by the
applicable entities.

     

    4.  Severance
Payment.  As consideration for Executive’s releases and
covenants herein, Fushi agrees to pay Executive severance pay in the gross
amount of Ninety Two Thousand Five Hundred Dollars and Eight Cents ($92,500.08),
subject to applicable withholdings and deductions
(“Severance”).  Executive and Fushi agree and acknowledge that this
amount is equal to six (6) months of pay at Executive’s final
salary.  Fushi shall pay the Severance in twelve (12) equal
semi-monthly installments of Seven Thousand Seven Hundred and Eight Dollars and
Thirty Four Cents ($7,708.34), subject to applicable withholdings and
deductions.  Accordingly, the Severance installment payments shall
take place over six (6) months (the “Severance Period”).  No payment
shall be owed or due under this Agreement until the expiration of the revocation
period set forth herein and only if this Agreement has been executed and not
revoked.  Fushi shall issue the first installment payment within
fifteen (15) business days of the expiration of the revocation
period.

     

    5.  Insurance and Benefits
Participation.

     

    (a) By
virtue of his resignation, Executive acknowledges that his coverage under
Fushi’s group health and dental insurance plan or any other group health and
dental insurance plan offered by any entity affiliated with Fushi in which
Executive participates ends effective February 28, 2009.  Thereafter,
he is entitled to continue his coverage and any dependent insurance coverage for
up to 18 months, under the Consolidated Omnibus Budget Reconciliation Act of
1985 (“COBRA”).  If Executive elects to continue such coverage under
the applicable health and dental insurance plan, the effective date of the
beginning of such continuation coverage is March 1, 2009.

     

    (b) If
Executive elects to continue health and dental insurance coverage under the
Company’s plan, Fushi agrees to pay for such insurance coverage premiums for
Executive at the same level it pays for active employees for a period of six (6)
months from the date of his termination, or effective through August 31, 2009,
and during this time period, Executive will be responsible only for payment of
his Executive share of premiums charged by Fushi to active
employees.  This premium amount will be deducted from Executive’s
severance payments.  This amount may change each Plan year depending
on the premium charged to active employees.

     

    (c) After
that 6-month period, effective September 1, 2009, Executive may continue his
coverage through the date of the 18-month maximum coverage, or through August
31, 2010, but during that time period, Executive will be personally responsible
for full coverage of premium payments -- up to 102% of the total cost of
premiums incurred by Fushi for medical and dental insurance
coverage.

     

    (d) Per
the terms of COBRA, continuation coverage will be terminated before the end of
the maximum period if any required premium is not paid on time, if a qualified
beneficiary becomes covered under another group health plan that does not impose
any pre-existing condition exclusion for a pre-existing condition of the
qualified beneficiary, if a covered Executive enrolls in Medicare, or if the
employer ceases to provide any group health plan for its
employees.  Continuation coverage may also be terminated for any
reason the Plan would terminate coverage of a participant or beneficiary not
receiving continuation coverage (such as fraud).

     

    
      
         

      

      
        - 2
-

        
          

        

      

      
         

      

    

     

    (e) Fushi
agrees to pay coverage premiums for Basic Life Insurance and Basic AD&D
Insurance for Executive at the same level of coverage prior to termination for a
period of six (6) months from the date of his termination or effective through
August 31, 2009.  Coverage will be terminated before the end of the
maximum period if Executive becomes insured under another employer’s plan. After
that 6-month period, effective September 1, 2009, Executive may elect to
continue such coverage only if and pursuant to any conversion benefits otherwise
available.

     

    

    (f)
Executive will be compensated for 2009 Vacation in the gross amount of Ten
Thousand Six Hundred Seventy Three Dollars and Eight Cents ($10,673.08), less
withholdings required by law.  Payment will encompass three (3) weeks
vacation pay accrued up through the effective date of termination from
employment, and no further vacation pay will be due to him under this Agreement
or otherwise.  Payment will be made on the employee’s Separation
Date.

    

    6.  Stock
Options.

     

    (a) The
Company hereby acknowledges that you are the holder of non-qualified options to
purchase 135,000 shares of common stock of the Company, of which options for
84,375 shares have vested and options for [50,625] shares have not
vested.  Provided that you do not revoke this Agreement pursuant to
Paragraph 8 below, the unvested options for 50,625 shares shall be deemed to
have immediately vested as of the Separation Date.  In addition, the
Company and Executive acknowledge that, on January 23, 2009, the Company granted
Executive an additional 40,000 non-qualified options pursuant to a Non-Qualified
Stock Option Agreement dated April 15, 2008 (“January 23, 2009
Grant”).  The Company and Executive further acknowledge that none of
the options granted pursuant to the January 23, 2009 Grant are currently
vested.  However, as additional consideration for this Agreement, the
Company shall deem 10,000 of the options granted pursuant to the January 23,
2009 Grant to have immediately vested as of the Separation Date.

     

    (b) Any and
all such options held by you may be exercised by you on a “Cashless” basis (as
defined below) until their expiration date.  For the purposes of this
Agreement, a “Cashless Exercise” shall mean an exercise pursuant to the
following provisions which shall be added as an amendment to each vested option
held by you:

     

    Cashless
Exercise.  In lieu of exercising this Option for cash, Optionee
may elect to receive, without the payment by the Optionee of any additional
consideration, Common Stock equal to the value of this Option (or the portion
thereof being canceled) by surrender of this Option at the principal office of
the Corporation together with the Notice of Exercise attached hereto indicating
such election, in which event the Corporation shall issue to the Holder hereof a
number of shares of Common Stock computed using the following
formula:

     

    
      
         

      

      
        - 3
-

        
          

        

      

      
         

      

    

    
       

    
      	 	
              Y (A -
      B)

            
	
              X=  

            	
              A

            

    Where:                 
X =  The number of
shares of Common Stock to be issued to the Optionee pursuant to this cashless
exercise.

     

    Y=  The number of shares of
Common Stock in respect of which the net issue election is made.

     

    A=      The
last trade price as reported by Bloomberg, LLP of one share of Common Stock on
the trading day the date the net issue election is made.

     

    B=  The Exercise Price (as
adjusted to the date of the cashless exercise).

     

    7.  Section
409A.    The Parties acknowledge and agree that the
Severance and other benefits provided in this Agreement are provided as a
settlement of any potential claims Executive may have.  In addition,
Executive releases Fushi from any obligations or responsibilities arising from
or relating to Paragraph 26 of the Employment Agreement.  Executive
further acknowledges and agrees that Fushi has not made any representation
regarding the applicable tax treatment of any compensation or benefits provided
herein and that Executive should consult with his tax advisor for any possible
tax implication or treatment of such compensation and
benefits.  Executive further acknowledges and agrees that Executive is
solely responsible for any taxes, penalties, or fines he may owe as a result of
any payments or benefits provided under this Agreement.

     

    8.  Post-Employment
Covenants.   Executive specifically agrees to be bound and
abide by all post-employment covenants set forth in his Employment Agreement
including, but not limited to, the covenants set forth in Paragraphs 14, 15, 16,
and 17 of the Employment Agreement.   Executive represents that
he has reviewed such covenants, including the non-competition covenant and that
he will fully comply with such provisions.  Such provisions are
specifically incorporated into this Agreement for reference and enforcement
purposes.

     

    9.  Release. Executive
hereby releases Fushi (Fushi Copperweld, Inc.), Copperweld Bimetallics, LLC,
Copperweld Bimetallics Holdings, LLC, Copperweld International Holdings, LLC,
Copperweld Bimetallics UK, Ltd., International Manufacturing Equipment
Suppliers, LLC, and any other entity affiliated with Fushi as well as their
respective subsidiaries, predecessors, successors, affiliates, and assigns, and
the shareholders, directors, officers, employees, and agents of the foregoing
(hereinafter also referred to collectively as "the Released Parties"), from any
and all rights and claims that arose prior to Executive's signing of this
Agreement and that involve or in any way relate to Executive’s employment with
Fushi or the termination of that employment, but excluding any claims relating
to stock options discussed in paragraph 6 above.  The rights and
claims that Executive hereby releases include, but are not limited to, any and
all rights and claims arising under Title VII of the Civil Rights Act of 1964
(Title VII), the Americans with Disabilities Act (ADA), the Age Discrimination
in Employment Act (ADEA), the Family and Medical Leave Act (FMLA), the Worker
Adjustment and Retraining Notification Act (WARN), the Uniformed Services
Employment and Reemployment Rights Act (USERRA), the Employee Retirement Income
Security Act (ERISA) (except claims for vested benefits), the Fair Labor
Standards Act (FLSA), and any other federal, state, or local law or regulation,
and any and all claims for wrongful or unjust discharge or breach of contract or
promise, express or implied.

     

    
      
         

      

      
        - 4
-

        
          

        

      

      
         

      

       

    

    10.  Covenant Not to Sue
Executive promises never to file a lawsuit or request arbitration concerning,
and promises not to otherwise assert, any claims that are released in this
Agreement.  This release shall not constitute a release of any claims
for breach of this Agreement, nor shall it bar a lawsuit by Executive to enforce
the terms of this Agreement or any stock option discussed in paragraph 6
above.  Executive does not give up the right to file a Charge of
Discrimination with the Equal Employment Opportunity Commission, but Executive
expressly waives and releases any right to obtain monetary relief relating to
such a charge or subsequent lawsuit filed by the Equal Employment Opportunity
Commission.

     

    a. In the event that
Executive brings an action against the Released Parties based on any other claim
released in this Agreement, the Released Parties may, at their option, and as
applicable (a) stop making payments that would otherwise have been due under
this Agreement; (b) demand the return of any payments that have been made under
this Agreement; (c) plead this Agreement in bar to any such action; (d) seek any
and all remedies available, including but not limited to injunctive relief and
monetary damages, costs and reasonable attorneys’ fees.

     

    b. In the
event that the Released Parties breach this Agreement, Executive will be
entitled to bring an action for breach of this Agreement but not for any claims
released in this Agreement.  In the event that the Released Parties
prevail in such an action, they will be entitled to recover (as appropriate and
applicable) monetary damages, injunctive relief, costs and reasonable attorneys’
fees.

     

    11.  Confidentiality.  Executive
shall keep the details of this Agreement in strict confidence, and shall not
reveal details of the Agreement to anyone except members of the Executive’s
immediate family, the Executive’s attorney, and Executive’s tax
advisor.  Executive further agrees and understands that he is
responsible for ensuring that these individuals also maintain the
confidentiality of this Agreement and the Confidential Employment Termination
Letter.

     

    12.  Notification of
Subpoena/Court Order.  Executive agrees that Executive will not
voluntarily assist a party opposing the Released Parties in any present,
potential, or future legal proceedings by or against the Released
Parties.  Executive agrees that he will provide information to a party
opposing the Released Parties in any present, potential, or future legal
proceedings by or against the Released Parties, only pursuant to and to the
extent required by subpoena or order of court.  Executive further
agrees that, if Executive is served with any subpoena or order of court relating
in any way to the business of Fushi, Executive will immediately notify Fushi of
his receipt of that subpoena or order and will provide Fushi with a copy of such
subpoena or order of court.

     

    13.  Nondisparagement.  Executive
agrees not to directly or indirectly disparage the Released Parties, or their
products or services, or engage in any communications which could cause injury
to or harm the business or reputations of the Released Parties.

     

    
      
         

      

      
        - 5
-

        
          

        

      

      
         

      

       

    

    14.  Fushi
Property.  Executive acknowledges that the information,
observations, data, and knowledge about business matters involving Fushi or the
other Released Parties which Executive obtained during the course of his
employment with Fushi, and which are not generally known to the public,
constitute confidential, proprietary, and trade secret information of Fushi’s
and/or the other Released Parties’.  This information includes, but is
not limited to, corporate information, including contractual arrangements,
plans, locations, strategies, tactics, potential acquisitions or business
combinations, or joint venture possibilities, policies, and negotiations;
marketing information, including sales, purchasing, and inventory plans,
strategies, tactics, methods, customers, advertising, promotion or market
research data; financial information, including operating results and
statistics, cost and performance data, projections, forecasts, investors, and
holdings; and operational information, including trade secrets, secret formulas,
control and inspection practices, accounting systems and controls, computer
programs and data, personnel lists, resumes, personal data, organizational
structure, and performance evaluations.  Executive further
acknowledges that the disclosure or use of all or any of Fushi's or any of the
other Released Parties’ confidential, proprietary, or trade secret information
by any party other than Fushi and/or other Released Party would have an
immediate, material, and adverse effect on Fushi and/or the other Released
Parties. Executive further acknowledges that Executive is obligated under
statutory and common law not to use or disclose, without Fushi’s prior written
consent, any confidential, proprietary, or trade secret information of Fushi’s
or any of the other Released Parties.  Executive agrees that he will
abide by his statutory and common law obligations not to use or disclose
Fushi’s  or any of the other Released Parties’ confidential,
proprietary, or trade secret information and further agrees not to otherwise
take any action that is injurious to Fushi or any of the other Released
Parties.

     

    15.  No Admission of
Wrongdoing.  Fushi believes that, in its employment of
Executive, Fushi and the other Released Parties have acted lawfully and
consistent with the Employment Agreement.  Executive expressly agrees
that by offering this Agreement or by entering into this Agreement, Fushi and
the other Released Parties in no way admit that the Company or any of the other
Released Parties have acted unlawfully, breached the Employment Agreement or
otherwise treated Executive in any way unlawfully, discriminatorily, wrongly, or
unfairly.

     

    16.  Review by Legal
Counsel.  Fushi hereby advises Executive to consult with an
attorney about the requirements of this Agreement and the Agreement’s release
before signing this Agreement.

     

    17.  Consideration
Period.  Executive hereby acknowledges that he received this
Agreement on February 16, 2009.  Executive shall have a period of
twenty-one (21) days
after Executive’s receipt of the Agreement, within which to review, consider,
and sign the Agreement.  If Executive wishes to enter into this
Agreement, Executive must sign the Agreement, have Executive’s signature
witnessed, and return the Agreement to Eddie Hall, at the
offices of Copperweld Bimetallics, LLC, 254 Cotton Mill Road,
Fayetteville, TN  37334, no later than 5:00 p.m. on March
9, 2009.  If
Executive fails to return the signed and witnessed Agreement to Copperweld by
5:00 p.m. on March 9, 2009, the offer of separation benefits set forth in this
Agreement shall be null and void.

     

    18.  Revocation
Period.   Executive shall have a period of seven (7) days following
Executive’s signing of this Agreement, within which to change his mind and
revoke the Agreement.  If Executive wishes to revoke the Agreement
after signing the Agreement, Executive must provide written notice of that
revocation to Eddie
Hall (address above) no later than the eighth (8) day after signing the
Agreement (the “Effective Date”).  This Agreement shall become
effective and enforceable after the expiration of seven days after Executive has
signed the Agreement, provided that Executive has not revoked the Agreement
during that seven-day period.

     

    
      
         

      

      
        - 6
-

        
          

        

      

      
         

      

       

    

    19.  Executive
hereby represents that he has had an opportunity to review and discuss the terms
and meaning of this Agreement with Executive’s legal counsel, that Executive
understands the terms and meaning of the Agreement, and that Executive is
entering into the Agreement freely and voluntarily.

     

    20.  Miscellaneous.

     

    (a) If any
provision of this Agreement or any application of this Agreement is held to be
invalid by a court of competent jurisdiction, the invalidity of that provision
or application shall not affect the validity or enforceability of any other
provision or application of this Agreement.

     

    (b) This
Agreement shall be governed by, and shall be interpreted in accordance with, the
internal law, and not the law of conflicts, of Tennessee.

     

    (c) Executive
acknowledges and agrees that the remedy at law available to Fushi for breach by
Executive of any of Executive’s obligations under this Agreement and the
post-employment covenants in the Employment Agreement would be inadequate and
that damages flowing from such a breach would not readily be susceptible to
being measured in monetary terms.  Accordingly, Executive
acknowledges, consents and agrees that, in addition to any other rights or
remedies which Fushi may have at law, in equity or under this Agreement, upon
adequate proof of Executive’s violation of such provisions, Fushi shall be
entitled to immediate injunctive relief and may obtain a temporary order
restraining any threatened or further breach without the necessity of proof of
actual damages.

     

    (d) The
headings and captions of this Agreement are provided for convenience only and
are intended to have no effect in construing or interpreting this
Agreement.  The term “including” is used in this Agreement to list
items by way of example and shall not be deemed to constitute a limitation of
any term or provision contained herein.

     

    (e) This
Agreement may be executed in two or more separate counterparts, each of which
shall be deemed an original and all of which shall be part of the same
Agreement.  Furthermore, facsimile reproductions of original
signatures shall be deemed binding for purpose of enforcement and execution of
this Agreement.

     

    (f) This
Agreement shall be binding upon and enure to the benefit of the Parties hereto
and the Released Parties and the respective heirs, executors, administrators,
personal representatives, successors, and assigns of the Parties and Released
Parties.

     

    (g) The
Parties agree that any rule of construction by which terms of an agreement are
construed against the drafter of the agreement shall not apply to any
interpretation of this Agreement.

     

    
      
         

      

      
        - 7
-

        
          

        

      

      
         

      

       

    

    (h) This
Agreement represents the entire agreement between Executive and
Fushi.  The Released Parties have made no written or oral
representations or promises to, or agreements with, Executive other than the
promises and agreements of Fushi that are set forth in this
Agreement.

     

    [Remainder
of Page Intentionally Left Blank; Signature Page Follows]

     

    
      
         

      

      
        - 8
-

        
          

        

      

      
         

      

    

     

    IN
WITNESS WHEREOF, and intending to be legally bound, the parties have executed
this Confidential Employment Separation Agreement and Release on the dates
indicated below.

     

     

    
      
        
          
            	JAMES
      A. TODD  	 	 	FUSHI
      COPPERWELD, INC.	 
	 	 	 	 	 
	 	 	 	 	 
	
                    /s/
      James A. Todd

                  	 	 	
                    /s/
      Chris Wenbing Wang

                  	 
	
                    Executive’s
      Signature   

                  	 	 	
                    Name 

                  	 

          

        

      

    

     

    
      	
              s/
      Sandra A. Vanug 

            	 	 	
              President
      and CFO

            	 
	
              Witness  

            	 	 	
              Title

            	 

    

     

    
      	
              February
      17, 2009  

            	 	 	
              March
      3, 2009   

            	 
	
              Date   

            	 	 	
              Date 

            	 

    

     

    Provided
to Employee on  February 16,
2009.

    

    
      
         

      

      
        - 9
-

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