REVOLVING CREDIT AND SECURITY AGREEMENT

EXHIBIT 10.19

REVOLVING CREDIT

AND

SECURITY AGREEMENT

NATIONAL CITY BUSINESS CREDIT, INC.

(AS LENDER, AS ADMINISTRATIVE AGENT AND AS COLLATERAL AGENT)

and

NATIONAL CITY BANK

(AS ISSUER, AS LEAD ARRANGER AND AS SOLE BOOK RUNNER)

and

SUCH OTHER LENDERS WHICH ARE NOW OR HEREAFTER A PARTY HERETO

and

THE BORROWERS PARTY HERETO

(AS BORROWERS)

and

THE GUARANTORS PARTY HERETO

(AS GUARANTORS)

DECEMBER 29, 2005

TABLE OF CONTENTS

 

 

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REVOLVING CREDIT AND SECURITY AGREEMENT

This Revolving Credit and Security Agreement (this “Agreement”), dated this 29 ^th day of December, 2005, by and among the Borrowers (as hereinafter defined), each of the Guarantors (as hereinafter defined), the financial institutions which are now or which hereafter become a party hereto (collectively, the “Lenders” and individually, a “Lender”), National City Business Credit, Inc., an Ohio corporation (“NCBC”), as administrative agent and collateral agent for the Lenders and the Issuer (as hereinafter defined) (NCBC, in such capacity, the “Agent”), Bank of America, N.A., as syndication agent for the Lenders (the “Syndication Agent”), and National City Bank, a national banking association, as the Issuer.

IN CONSIDERATION of the mutual covenants and undertakings herein contained, the receipt and sufficiency of which are hereby acknowledged, the Borrowers, the Guarantors, the Lenders, the Agent, the Syndication Agent and the Issuer hereby agree as follows:

I. DEFINITIONS .

1.1 Accounting Terms .

As used in this Agreement, the Notes, or any certificate, report or other document made or delivered pursuant to this Agreement, accounting terms not defined in Section 1.2 or elsewhere in this Agreement and accounting terms partly defined in Section 1.2 to the extent not defined shall have the respective meanings given to them under GAAP. All financial computations to be made under this Agreement shall, unless otherwise specifically provided herein, be made in accordance with GAAP applied on a basis consistent in all material respects with the financial statements delivered to the Agent and the Lenders on or prior to the Closing Date.

1.2 General Terms .

For purposes of this Agreement the following terms shall have the following meanings:

“ Accountants ” shall have the meaning set forth in Section 9.6.

“ Administrative Questionnaire ” means an Administrative Questionnaire in a form supplied by the Agent.

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

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

“ Affiliate ” of any Person shall mean (a) any Person which, directly or indirectly, is in control of, is controlled by, or is under common control with such Person, or (b) any Person who is a director or officer (i) of such Person, (ii) of any Subsidiary of such Person or (iii) of any Person described in clause (a) above. For purposes of this definition, control of a Person shall

 

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mean the power, direct or indirect, (x) to vote five percent (5%) or more of the securities having ordinary voting power for the election of directors of such Person, or (y) to direct or cause the direction of the management and policies of such Person whether by contract or otherwise.

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

“ Agent’s Letter ” shall mean the Agent’s fee letter dated of even date herewith, by and among the Borrowers and the Agent, together with all amendments, supplements, modifications, substitutions and replacements thereto and thereof.

“ Aggregate Consideration ” shall mean with respect to any Permitted Acquisition the sum of (a) the cash paid by any Loan Party, directly or indirectly, to the seller in connection therewith, plus (b) Indebtedness incurred or assumed by any Loan Party, whether in favor of the seller or otherwise and whether fixed or contingent, in connection with such Permitted Acquisition, plus (c) any Guaranty given or incurred (without duplication) by any Loan Party in connection therewith, and plus (d) any other consideration given or obligation incurred by any Loan Party in connection therewith.

“ Agreement ” shall have the meaning set forth in the preamble to this Agreement, as amended, restated, modified or supplemented from time to time.

“ Alternate Base Rate ” shall mean, for any day, a rate per annum equal to the higher of: (a) the rate of interest which is established from time to time by National City Bank at its principal office in Cleveland, Ohio as its “prime rate” or “base rate” in effect, such rate to be adjusted automatically, without notice, as of the opening of business on the effective date of any change in such rate (it being agreed that: (i) such rate is not necessarily the lowest rate of interest then available from National City Bank on fluctuating rate loans and (ii) such rate may be established by National City Bank by public announcement or otherwise) and (b) the Federal Funds Effective Rate in effect on such day plus one half of one percent (.50%).

“ Anti-Terrorism Laws ” shall mean any laws relating to terrorism or money laundering, including Executive Order No. 13224, the USA Patriot Act, the laws comprising or implementing the Bank Secrecy Act, and the laws administered by the United States Treasury Department’s Office of Foreign Asset Control (as any of the foregoing laws may from time to time be amended, renewed, extended, or replaced).

“ Applicable Base Rate Margin ” shall have the meaning set forth in Section 3.1(b) hereof.

“ Applicable Letter of Credit Fee Percentage ” shall have the meaning set forth in Section 3.2(a) hereof.

“ Applicable Libor Rate Margin ” shall have the meaning set forth in Section 3.1(b) hereof.

“ Applicable Margin ” shall mean, as applicable: the Applicable Base Rate Margin or the Applicable Libor Rate Margin.

 

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“ Approved Fund ” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

“ Assignment and Assumption ” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 16.3), and accepted by the Agent, in substantially the form of Exhibit 16.3 or any other form approved by the Agent.

“ Authority ” shall have the meaning set forth in Section 4.18(d) hereof.

“ BHI ” shall mean Benchmark Holdings, Inc., a Delaware corporation and its successors and assigns.

“ Blocked Account Agreements ” shall mean, collectively, each of the Blocked Account Agreements in form and substance satisfactory to the Agent, entered into by the Borrowers, as applicable, the Agent and the applicable Lockbox Bank at which the applicable Collection Account is located, together with all amendments, supplements, modifications, substitutions and replacements thereto and thereof.

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

“ Borrower ” shall mean Radnor, SUL, WTL and WHI and any other Person who may hereafter become a party hereto as a borrower and “ Borrowers ” shall collectively mean all such Persons.

“ Borrowers’ Account ” shall have the meaning set forth in Section 2.7 hereof.

“ Borrowing Agent ” shall mean Radnor.

“ Borrowing Base Certificate ” shall mean a certificate duly executed by an officer of the Borrowing Agent appropriately completed and in substantially the form of Exhibit A hereto.

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

“ Capital Expenditures ” shall mean any expenditure made or liability incurred which is, determined in accordance with GAAP, treated as a capital expenditure and not as an expense item for the year in which it was made or incurred, as the case may be.

“ Cash Concentration Account ” shall mean, with respect to the Borrowers, that certain commercial deposit account at National City Bank, in the name of NCBC, designated as “National City Business Credit, Inc. (as Agent for the benefit of the Lenders and the Issuer) Radnor Cash Concentration Account”, which shall be: (a) maintained by the Agent with National

 

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City Bank pursuant to a Deposit Account Agreement, without liability by the Agent or National City Bank to pay interest thereon, (b) the funds within which shall be the sole and exclusive property of the Agent for the pro rata benefit of the Lenders and (c) from which account the Agent shall have the irrevocable and exclusive right to withdraw funds until all of the Obligations are paid, performed, satisfied and enforced in full and the commitments of the Lenders to make Advances hereunder and all Letters of Credit have terminated.

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

“ Change of Control ” shall mean (a) the occurrence of any event (whether in one or more transactions) which results in a transfer of control of (1) Radnor to a Person who is not an Original Owner (provided, however, if such transfer of control occurs solely as a result of the death of Michael T. Kennedy, such transfer of control will not be deemed a Change of Control hereunder until fifteen (15) days following the date of death of Michael T. Kennedy), or (2) any other Loan Party to a Person other than a Loan Party or (b) any merger or consolidation of or with any Loan Party in which a Loan Party is not the surviving party or sale of all or substantially all of the property or assets of any Loan Party. For purposes of this definition, “control” shall mean the power, direct or indirect (x) to vote fifty percent (50%) or more of the securities having ordinary voting power for the election of directors of any Loan Party or (y) to direct or cause the direction of the management and policies of any Loan Party by contract or otherwise.

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

“ CIP Regulations ” shall have the meaning assigned to such term in Section 14.11 hereof.

“ Closing Date ” shall mean December 29, 2005 or such other date as may be agreed to by the parties hereto.

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

“ Collateral ” shall mean and include:

(a) all Receivables;

(b) all General Intangibles;

 

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(c) all Inventory;

(d) all Investment Property (excluding all capital stock or other equity interest issued by any direct or indirect Subsidiary of Radnor);

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

(f) all of each Loan Party’s ledger sheets, ledger cards, files, correspondence, records, books of account, business papers, computer software (owned by any Loan Party or in which it has an interest and in which the granting of a security interest therein is not expressly prohibited), computer programs, tapes, disks and documents relating to (a), (b), (c), (d) or (e) of this Paragraph; and

(g) all proceeds and products of (a), (b), (c), (d), (e) and (f) in whatever form, including, but not limited to: cash, deposit accounts (whether or not comprised solely of proceeds), certificates of deposit, insurance proceeds (including hazard, flood and credit insurance), negotiable instruments and other instruments for the payment of money, chattel paper, security agreements, documents, eminent domain proceeds, condemnation proceeds and tort claim proceeds.

“ Collection Accounts ” shall have the meaning set forth in Section 4.15(g) hereof.

“ Commitment Percentage ” of any Lender shall mean the percentage set forth below such Lender’s name on the signature page hereof as same may be adjusted upon any assignment by a Lender pursuant to Section 16.3 hereof.

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

“ Continuing Directors ” means, as of any date of determination, any member of the Board of Directors of Radnor who: (i) was a member of such Board of Directors on the date hereof; or (ii) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board of Directors at the time of such nomination or election.

 

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“ Contract Rate ” shall mean, as of the date of determination, an interest rate per annum equal to (a) the sum of the Alternate Base Rate plus the Applicable Base Rate Margin with respect to Domestic Rate Loans and (b) the sum of the Libor Rate plus the Applicable LIBOR Rate Margin with respect to Libor Rate Loans.

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

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

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

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

“ Defaulting Lender ” shall have the meaning set forth in Section 2.15(a) hereof.

“ Deposit Account Agreement ” shall have the meaning set forth in Section 4.15(g) hereof.

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

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

“ Earnings Before Interest and Taxes ” shall mean for any fiscal period the sum of (i) net income (or loss) of Radnor and its Subsidiaries determined on a consolidated basis for such period (excluding extraordinary gains and losses and any non-cash charges or expenses other than a write-down of current assets), (ii) plus all interest expense of Radnor and its Subsidiaries determined on a consolidated basis for such period, and (iii) plus all charges against or minus credits to income of Radnor and its Subsidiaries determined on a consolidated basis for such period for federal, state and local taxes.

“ EBITDA ” shall mean for any fiscal period the sum of (i) Earnings Before Interest and Taxes for such period, (ii) plus depreciation expenses of the Radnor and its Subsidiaries on a consolidated basis for such period, and (iii) plus amortization expenses of Radnor and its Subsidiaries on a consolidated basis for such period.

“ Eligible Assignee ” shall mean any of the following Persons: (a) a Lender; (b) an Affiliate of a Lender; (c) an Approved Fund; and (d) any other Person (other than a natural person) approved by (i) the Agent, (ii) in the case of any assignment of a commitment to make Advances hereunder, the Issuer, and (iii) unless an Event of Default or Default has occurred and

 

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is continuing, the Borrowing Agent (each such approval not to be unreasonably withheld or delayed); provided that, notwithstanding the foregoing, “Eligible Assignee” shall not include any Loan Party or any of such Loan Party’s Affiliates or Subsidiaries and; provided , further, that, notwithstanding the foregoing, a Person shall only be an “Eligible Assignee” if (i) such Person shall have complied with the requirements of Section 16.17, and (ii) the assignment to or participation of such Person shall not constitute a “prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of the Code).

“ Eligible Inventory ” shall mean and include with respect to each Borrower, Inventory, excluding work in process (unless otherwise deemed eligible by the Agent), of each Borrower valued at the lower of cost or market value, determined on a first-in-first-out basis, which is not, in the Agent’s opinion, obsolete, slow moving or unmerchantable and which the Agent, in its sole and reasonable discretion, shall not deem ineligible Inventory, based on such considerations as the Agent may from time to time reasonably deem appropriate including, without limitation, whether the Inventory is subject to a perfected, first priority security interest in favor of the Agent and whether the Inventory conforms to all standards imposed by any governmental agency, division or department thereof which has regulatory authority over such goods or the use or sale thereof.

In addition, no Inventory of any Borrower shall be Eligible Inventory if it:

(a) is not owned by such Borrower free and clear of all Liens and rights of any other Person (including the rights of a purchaser that has made progress payments and the rights of a surety that has issued a bond to assure such Borrower’s performance with respect to that Inventory), except the Liens in favor of the Agent, on behalf of itself and the Lenders, and other Permitted Encumbrances (subject to reserves established by the Agent in accordance with the terms of this Agreement);

(b) (i) is not located on premises owned, leased or rented by such Borrower and set forth in Schedule 4.5 (as such Schedule may be updated from time to time), or (ii) is stored at a leased location, unless a reasonably satisfactory landlord waiver has been delivered to the Agent, or reserves reasonably satisfactory to the Agent have been established by the Agent with respect thereto or (iii) is stored with a bailee, warehouseman, processor or similar party unless a reasonably satisfactory warehouseman waiver, processing facility waiver or a reasonably satisfactory, acknowledged bailee letter has been received by the Agent or reserves reasonably satisfactory to the Agent have been established by the Agent with respect thereto, or (iv) is located at a location owned by a Borrower that is subject to a mortgage in favor of a lender other than the Agent unless a reasonably satisfactory mortgagee waiver has been delivered to the Agent, or reserves reasonably satisfactory to the Agent have been established by the Agent with respect thereto; provided, however, that a waiver or bailee letter shall not be required with respect to otherwise Eligible Inventory in an amount not to exceed Three Hundred Thousand and 00/100 Dollars ($300,000.00) at any time located at the Lee Correctional Institute in South Carolina;

(c) is in transit unless such otherwise Eligible Inventory is deemed eligible by Agent or is in transit from (i) a domestic location owned by a Borrower or (ii) a domestic location identified on Schedule 8.1(r) (as such Schedule may be updated from time to time) to a

 

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domestic location owned by a Borrower or a location identified on Schedule 8.1(r) (as such Schedule may be updated from time to time);

(d) is covered by a negotiable document of title, unless such document has been delivered to the Agent with all necessary endorsements, free and clear of all Liens except those in favor of the Agent and the Lenders;

(e) is placed on consignment (or is being held pursuant to a consignment agreement);

(f) is excess, obsolete, unsalable, shopworn, seconds, damaged or unfit for sale;

(g) consists of goods which have been returned by the Customer, excluding goods returned for reprocessing in the ordinary course of business;

(h) consists of display items or packing or shipping materials, manufacturing supplies or replacement parts;

(i) is not of a type held for sale in the ordinary course of such Borrower’s business;

(j) breaches any of the representations or warranties pertaining to Inventory of such Borrower set forth in this Agreement or in any of the Other Documents;

(k) consists of any costs associated with “freight-in” charges;

(l) consists of any gross profit mark-up in connection with the sale and distribution thereof to any division of any Borrower or to any Affiliate of such Borrower;

(m) consists of Hazardous Substances or goods that can be transported or sold only with licenses that are not readily available;

(n) is not covered by casualty insurance reasonably acceptable to the Lender, as required by terms of this Agreement;

(o) was produced in violation of the Fair Labor Standards Act and subject to the “hot goods” provision contained in Title 29 U.S.C. Section 215(a)(1); or

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

“ Eligible Receivables ” shall mean and include with respect to each Borrower, each Receivable of such Borrower arising in the ordinary course of such Borrower’s business and which the Agent, in its sole and reasonable credit judgment, shall deem to be an Eligible Receivable, based on such considerations as the Agent may from time to time deem appropriate. A Receivable shall not be deemed eligible unless such Receivable is subject to the Agent’s first priority perfected security interest and no other Lien (other than Permitted Encumbrances), and is

 

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evidenced by an invoice or other documentary evidence satisfactory to the Agent. In addition, no Receivable of a Borrower shall be an Eligible Receivable if:

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

(b) it is due or unpaid more than ninety (90) days after the original invoice date;

(c) fifty percent (50%) or more of the Receivables from such Customer are not deemed Eligible Receivables hereunder;

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

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

(f) the sale is to a Customer outside the continental United States of America or Canada, unless the sale is on letter of credit, guaranty or acceptance terms, in each case acceptable to the Agent in its sole reasonable discretion;

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

(h) the Agent believes, in its sole reasonable judgment, that collection of such Receivable is insecure or that such Receivable may not be paid by reason of the Customer’s financial inability to pay;

(i) the Customer is the United States of America, any state or any department, agency or instrumentality of any of them, unless the applicable Borrower assigns its right to payment of such Receivable to the Agent pursuant to the Assignment of Claims Act of 1940, as amended (31 U.S.C. Sub-Section 3727 et seq. and 41 U.S.C. Sub-Section 15 et seq.) or has otherwise complied with other applicable laws and has complied with Section 6.4 hereof;

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

 

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

(l) the Receivable is subject to any offset (unless such Borrower has received a letter from the Customer in form and substance satisfactory to the Agent indicating that such Customer shall not exercise its right of offset), deduction, defense, dispute, or counterclaim, or is owed by a Customer that is also a creditor or supplier of a Borrower (but only to the extent of such Borrower’s obligations to such customer from time to time) or the Receivable is contingent in any respect or for any reason;

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

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

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

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

“ Environmental Complaint ” shall have the meaning set forth in Section 4.18(d) hereof.

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

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

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

“ Eurocurrency Reserve Percentage ” means, for any Interest Period in respect of any Libor Rate Loan, as of any date of determination, the aggregate of the then stated maximum reserve percentages (including any marginal, special, emergency or supplemental reserves), expressed as a decimal, applicable to such Interest Period (if more than one such percentage is applicable, the daily average of such percentages for those days in such Interest Period during which any such percentages shall be so applicable) by the Board of Governors of the Federal

 

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Reserve System, any successor thereto, or any other banking authority, domestic or foreign, to which the Agent or any Lender may be subject in respect to eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Federal Reserve Board) or in respect of any other category of liabilities including deposits by reference to which the interest rate on Libor Rate Loans is determined or any category of extension of credit or other assets that include the Libor Rate Loans. For purposes hereof, such reserve requirements shall include, without limitation, those imposed under Regulation D of the Federal Reserve Board and the Libor Rate Loans shall be deemed to constitute Eurocurrency Liabilities subject to such reserve requirements without benefit of credits for proration, exceptions or offsets which may be available from time to time to the Agent under said Regulation D.

“ Event of Default ” shall mean the occurrence of any of the events set forth in Article X hereof.

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

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

“ Federal Funds Effective Rate ” means, for any day, the rate per annum (rounded upwards, if necessary, to the nearest one hundredth of one percent (1/100th of 1%) equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided , however , that: (a) if the day for which such rate is to be determined is not a Business Day, the Federal Funds Rate for such day shall be such a rate on such transactions on the immediately preceding Business Day as so published on the next succeeding Business Day and (b) if such rate is not so published for any Business Day, the Federal Funds Rate for such Business Day shall be the average of quotations for such day on such transactions received by the Agent from three federal funds brokers of recognized standing selected by the Agent.

“ Financial Covenant Triggering Event ” shall mean (a) the occurrence of a Default or Event of Default that is continuing, or (b) the Borrowers’ Undrawn Availability is less than Eleven Million Two Hundred Fifty Thousand and 00/100 Dollars ($11,250,000.00) on any day, at which time the Borrowers shall comply with the terms of Section 6.5.

“ Fixed Charge Coverage Ratio ” shall mean and include, with respect to any fiscal period, the ratio of (a) EBITDA minus Capital Expenditures that were not specifically funded by Indebtedness (other than a Revolving Advance or Swing Loan) of Radnor and its Subsidiaries determined on a consolidated basis with respect to such period to (b) Fixed Charges.

“ Fixed Charges ” shall mean, with respect to any fiscal period, the sum of (a) interest expense of Radnor and its Subsidiaries determined on a consolidated basis with respect to such period (excluding non-cash (i) amortization of deferred financing fees, (ii) liquidation preference charges and (iii) accretion on equity or debt documents), plus (b) scheduled principal payments on Indebtedness of Radnor and its Subsidiaries determined on

 

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a consolidated basis with respect to such period, plus (c) dividends and distributions of Radnor and its Subsidiaries determined on a consolidated basis with respect to such period as permitted by Section 7.7 hereof, plus (d) cash taxes paid of Radnor and its Subsidiaries determined on a consolidated basis with respect to such period.

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

“ Fund ” shall mean any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business.

“ GAAP ” shall mean generally accepted accounting principles in the United States of America in effect from time to time.

“ General Intangibles ” shall mean and include as to each Loan Party all of such Loan Party’s general intangibles, whether now owned or hereafter acquired including, without limitation, all payment intangibles, choses in action, causes of action, corporate or other business records, inventions, designs, patents, patent applications, equipment formulations, manufacturing procedures, quality control procedures, trademarks, service marks, trade secrets, goodwill, copyrights, design rights, software, computer information, source codes, codes, records and dates, registration, licenses, franchises, customer lists, tax refunds, tax refund claims, computer programs, all claims under guaranties, security interests or other security, held by or granted to such Loan Party to secure payment of any of the Receivables by a Customer (other than to the extent covered by Receivables), all rights of indemnification and all other intangible property of every kind and nature (other than Receivables).

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

“ Guarantor ” shall mean RCC, SDI, SEDI, SGL, SLL, WEDI, WGL, WLL and any other Person who may hereafter guarantee payment or performance of the whole or any part of the Obligations and “ Guarantors ” means collectively all such Persons.

“ Guaranty ” shall mean any guaranty of the obligations of the Borrowers executed by a Guarantor in favor of the Agent for its benefit, the benefit of the Issuer and for the ratable benefit of the Lenders, together with all amendments, supplements, modifications, substitutions and replacements thereto and thereof.

“ Hazardous Discharge ” shall have the meaning set forth in Section 4.18(d) hereof.

“ Hazardous Substance ” shall mean, without limitation, any flammable explosives, radon, radioactive materials, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, petroleum and petroleum products, methane, hazardous materials, Hazardous Wastes, hazardous or Toxic Substances or related materials as defined in CERCLA, the Hazardous Materials Transportation Act, as amended (49 U.S.C. Sections 1801, et seq.), the Toxic Substances Control Act, as amended (TSCA) (15 U.S.C. Section 2601, et seq.), RCRA or any other applicable Environmental Law and in the regulations adopted pursuant thereto.

 

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

“ Hedging Contracts ” shall mean foreign exchange contracts, currency swap agreements, futures contracts, commodities hedges, interest rate protection agreements, interest rate future agreements, interest rate swap agreements, interest rate cap agreements, interest rate collar agreements, option agreements or any other similar hedging agreements or arrangements entered into by a Loan Party in the ordinary course of business and not for speculative purposes.

“ Hedging Obligations ” shall mean all liabilities of a Loan Party under Hedging Contracts.

“ Incentive Pricing Effective Date ” shall have the meaning set forth in Section 3.1(b) hereof.

“ Indebtedness ” of a Person at a particular date shall mean all obligations of such Person which in accordance with GAAP would be classified upon a balance sheet as liabilities (except capital stock including redeemable stock issued to SVEF and SVOF pursuant to the Purchase Agreement and surplus earned or otherwise) and in any event, without limitation by reason of enumeration, shall include all Hedging Obligations, indebtedness, debt and other similar monetary obligations of such Person whether direct or guaranteed, and all premiums, if any, due at the required prepayment dates of such indebtedness, and all indebtedness secured by a Lien on assets owned by such Person, whether or not such indebtedness actually shall have been created, assumed or incurred by such Person. Any indebtedness of such Person resulting from the acquisition by such Person of any assets subject to any Lien shall be deemed, for the purposes hereof, to be the equivalent of the creation, assumption and incurring of the indebtedness secured thereby, whether or not actually so created, assumed or incurred.

“ Ineligible Security ” shall mean any security which may not be underwritten or dealt in by member banks of the Federal Reserve System under Section 16 of the Banking Act of 1933 (12 U.S.C. Section 24, Seventh), as amended.

“ Intellectual Property Security Agreement ” shall mean the Patent and Trademark Security Agreement, dated of even date herewith, made by the Borrowers for the benefit of the Agent, together with all amendments, supplements, modifications, substitutions and replacements thereto and thereof.

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

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

 

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and all documents of title or other documents representing them; provided, however, spare parts, equipment and other fixed assets are not included in this definition.

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

“ Investment Property ” shall mean and include as to each Loan Party, all of such Loan Party’s now owned or hereafter acquired securities (whether certificated or uncertificated), securities entitlements, securities accounts, commodities contracts and commodities accounts.

“ Issuer ” means, with respect to any Letter of Credit, the issuer of such Letter of Credit and shall be, with respect to any Letter of Credit hereunder, National City Bank, or each other Lender that is requested by the Agent with the approval of the Borrowing Agent, and agrees to act as an Issuer, and each of their successors and assigns (and which may be replaced at the sole discretion of the Agent).

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

“ Letter of Credit Application ” shall have the meaning set forth in Section 2.9(a) hereof.

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

“ Letters of Credit ” shall have the meaning set forth in Section 2.8 hereof.

“ Libor Rate ” means, for any Interest Period with respect to a Libor Rate Loan, the quotient (rounded upwards, if necessary, to the nearest one sixteenth of one percent (1/16th of 1%) of: (x) the per annum rate of interest, determined by the Agent in accordance with its usual procedures (which determination shall be conclusive absent manifest error) as of approximately 12:00 noon (London time) two (2) Business Days prior to the beginning of such Interest Period pertaining to such Libor Rate Loan, as provided by Bloomberg’s or Reuters (or any other similar company or service that provides rate quotations comparable to those currently provided by such companies as the rate in the London interbank market), as determined by the Agent from time to time for purposes of providing quotations of interest rates applicable to deposits in Dollars or in the London interbank market) as the rate in the London interbank market for deposits in Dollars in immediately available funds with a maturity comparable to such Interest Period divided by (y) a number equal to 1.00 minus the Eurocurrency Reserve Percentage. In the event that such rate quotation is not available for any reason, then the rate (for purposes of clause (x) hereof) shall be the rate, determined by the Agent as of approximately 12:00 noon (London time) two (2) Business Days prior to the beginning of such Interest Period pertaining to such Libor Rate Loan, to be the average (rounded upwards, if necessary, to the nearest one sixteenth of one percent (1/16th of 1%)) of the per annum rates at which deposits in Dollars in immediately available funds in an amount comparable to such Libor borrowing and with a maturity comparable to such Interest Period are offered to the prime banks by leading banks in the London interbank market. The Libor Rate shall be adjusted automatically on and as of the effective date of any change in the Eurocurrency Reserve Percentage.

 

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

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

“ Loan Party ” or “ Loan Parties ” shall mean, singularly or collectively, as the context may require, each Borrower and each Guarantor.

“ Lockbox ” shall mean a post office box rented by and in the name of the Borrowing Agent (or any other Borrower acceptable to the Agent) as required by this Agreement and as to which only the applicable Lockbox Bank and the Agent have access pursuant to the requirements of this Agreement and which cannot be closed by the applicable Lockbox Bank without the consent of the Agent pursuant to the applicable Blocked Account Agreement.

“ Lockbox Agreement ” shall have the meaning set forth in Section 4.15(g) hereof.

“ Lockbox Bank ” shall mean National City Bank and, for such period as is acceptable to the Agent, any other financial institution acceptable to the Agent.

“ Management Services Agreement ” shall mean the Management Services Agreement, dated as of January 1, 1997, by and among RMI, Radnor, WHI, RCC, SUL and SCL, as amended by the Joinder, dated January 20, 1999.

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

“ Maximum Revolving Advance Amount ” shall mean Seventy Five Million and 00/100 Dollars ($75,000,000.00).

“ Measurement Quarter ” shall have the meaning set forth in Section 3.1(b) hereof.

“ Monthly Advances ” shall have the meaning set forth in Section 3.1(a) hereof.

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

 

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“ National City Bank ” shall mean National City Bank, a national banking association, and its successors and assigns.

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

“ Non-Consenting Lender ” shall have the meaning set forth in Section 16.3(h) hereof.

“ Note ” shall mean each Revolving Credit Note and the Swing Note and “ Notes ” shall collectively mean all of the Revolving Credit Notes and the Swing Note.

“ Obligations ” shall mean and include any and all loans, advances, debts, liabilities, obligations, covenants and duties (absolute, contingent, matured or unmatured) owing by the Loan Parties to the Lenders, the Issuer or the Agent or to any other direct or indirect subsidiary or affiliate of the Agent, the Issuer or any Lender of any kind or nature, present or future (including, without limitation, any interest accruing thereon after maturity, or after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding relating to any Loan Party, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding), whether or not evidenced by any note, guaranty or other instrument, arising under this Agreement or the Other Documents, whether or not for the payment of money, whether arising by reason of an extension of credit, opening of a letter of credit, loan or guarantee, or arising under any Hedging Contract or in connection with any cash management or treasury administration services or agreements, whether arising out of overdrafts or deposit or other accounts or electronic funds transfers (whether through automated clearing houses or otherwise) or out of the Agent’s, the Issuer’s or any Lender’s non-receipt of or inability to collect funds or otherwise not being made whole in connection with depository transfer check or other similar arrangements, whether direct or indirect, absolute or contingent, joint or several, due or to become due, now existing or hereafter arising, contractual or tortious, liquidated or unliquidated, regardless of how such indebtedness or liabilities arise, whether evidenced by any other agreement or instrument, including, but not limited to, any and all of any Loan Party’s Indebtedness and/or liabilities under this Agreement, the Other Documents or under any other agreement related thereto between the Agent, the Issuer or the Lenders and any Loan Party and any amendments, extensions, renewals or increases and all costs and expenses of the Agent, the Issuer and any Lender incurred in the documentation, negotiation, modification, enforcement, collection or otherwise in connection with any of the foregoing, including but not limited to, reasonable attorneys’ fees and expenses and all obligations of any Loan Party to the Agent, the Issuer or the Lenders to perform acts or refrain from taking any action.

“ Original Owner ” shall mean (i) each of Michael T. Kennedy, John P. McNiff and R. Radcliffe Hastings, (ii) any Affiliate controlled by any of the Persons described in clause (i), (iii) any trust created for the benefit of the Persons described in clause (i) or the spouse and children or grandchildren (including children or grandchildren by adoption) of such Persons, or (iv) any trust created for the benefit of any trust described in clause (iii).

“ Other Documents ” shall mean the Revolving Credit Notes, the Swing Note, the Questionnaire, the Letters of Credit, the Blocked Account Agreements, the Waivers, any

 

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Guaranty, the Intellectual Property Security Agreement and any and all other agreements, instruments and documents, including, without limitation, guaranties, pledges, powers of attorney, consents, and all other writings heretofore, now or hereafter executed by any Loan Party and/or delivered to the Agent, the Issuer or any Lender in respect of the transactions contemplated by this Agreement.

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

“ Participant ” shall mean have the meaning set forth in Section 16.3(d).

“ Payment Office ” shall mean initially 1965 East Sixth Street, 4 ^th Floor, Cleveland, Ohio 44114; thereafter, such other office of the Agent, if any, which it may designate by notice to the Borrowing Agent and to each Lender to be the Payment Office.

“ PBGC ” shall mean the Pension Benefit Guaranty Corporation.

“ Permitted Encumbrances ” shall mean (a) Liens in favor of the Agent for the benefit of the Agent and the Lenders; (b) Liens for taxes, assessments or other governmental charges not delinquent or being contested in good faith and by appropriate proceedings and with respect to which proper reserves have been taken by Radnor and its Subsidiaries in accordance with GAAP; provided, that, such Liens shall have no effect on the priority of the Liens in favor of the Agent or the value of the assets in which the Agent has such a Lien and a stay of enforcement of any such Lien shall be in effect; (c) deposits or pledges to secure obligations under worker’s compensation, social security or similar laws, or under unemployment insurance or general liability or product liability insurance; (d) deposits or pledges to secure bids, tenders, contracts (other than contracts for the payment of money), leases, statutory obligations, performance bonds, surety and appeal bonds and other obligations of like nature arising in the ordinary course of Radnor’s or such applicable Subsidiary’s business; (e) mechanics, workers, materialmen’s, warehousemen’s, common carriers, landlord’s or other like Liens arising in the ordinary course of Radnor’s or such applicable Subsidiary’s business with respect to obligations which are not due or which are being contested in good faith by Radnor or the applicable Subsidiary; (f) Liens placed upon equipment and real estate assets acquired to secure a portion of the purchase price thereof, provided that (x) any such lien shall not encumber any other property of Radnor and its Subsidiaries and (y) the aggregate amount of Indebtedness secured by such Liens incurred as a result of such purchases during any fiscal year shall not exceed the amount provided for in Section 7.6; (g) zoning restrictions, easements, encroachments, rights of way, restrictions, leases, licenses, restrictive covenants and other similar title exceptions or Liens affecting Real Property, none of which materially impairs the use of such Real Property or the value thereof, and none of which is violated in any material respect by existing or supporting structures or land use; (h) attachment and judgment liens which do not constitute an Event of Default under Section 10.6; (i) Liens disclosed on Schedule 1.2 provided that the principal amount secured thereby is not hereafter increased to an amount greater than the amount outstanding on the Closing Date, and no additional assets become subject to such Liens except as otherwise specifically identified on Schedule 1.2; (j) extensions, renewals and refinancings of

 

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any of the Liens described in this definition of Permitted Encumbrances, subject to the limitations set forth herein, provided that the aggregate amount of such extended, renewed or refinanced Liens is not increased and such extended or renewed Liens are on terms and conditions no more restrictive than the terms and conditions of the Liens being extended, renewed or refinanced; and (k) other Liens not described by any of the foregoing on assets (other than Collateral) provided that such Liens secure Indebtedness in an aggregate principal amount at any time outstanding not to exceed One Million and 00/100 Dollars ($1,000,000.00).

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

“ Plan ” shall mean any employee benefit plan within the meaning of Section 3(3) of ERISA, maintained for employees of the Loan Parties or any member of the Controlled Group or any such Plan to which any Loan Party or any member of the Controlled Group is required to contribute on behalf of any of its employees.

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

“ Purchase Agreement ” shall mean that certain Purchase Agreement, dated October 27, 2005, by and among Radnor, SVEF and SVOF.

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

“ Radnor ” shall mean Radnor Holdings Corporation, a Delaware corporation and its successors and assigns.

“ RAMI ” shall mean Radnor Asset Management, Inc., a Delaware corporation and its successors and assigns.

“ RCC ” shall mean Radnor Chemical Corporation, a Delaware corporation and its successors and assigns.

“ RD2I ” shall mean Radnor Delaware II, Inc., a Delaware corporation and its successors and assigns.

“ Real Property ” shall mean all real property, both owned and leased, of the Loan Parties.

“ Receivables ” shall mean and include, as to each Loan Party, all of such Loan Party’s accounts, contract rights, instruments (including those evidencing indebtedness owed to the Loan Parties by their Affiliates), documents, chattel paper (including electronic chattel paper), general intangibles relating to accounts, drafts and acceptances, credit card receivables, and all other forms of obligations owing to such Loan Party arising out of or in connection with the sale or lease of Inventory or the rendition of services (including, but not limited to, tolling

 

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arrangements), all supporting obligations, guarantees and other security therefor, whether secured or unsecured, now existing or hereafter created, and whether or not specifically sold or assigned to the Agent hereunder.

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

“ Register ” shall have the meaning set forth in Section 16.3(c) hereof.

“ Regulations ” shall have the meaning set forth in Section 16.16 hereof.

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

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

“ Reporting Quarter ” shall have the meaning set forth in Section 3.1(b) hereof.

“ Required Lenders ” shall mean the Lenders holding at least fifty one percent (51%) of the Advances (excluding Swing Loans) and, if no Advances (excluding Swing Loans) are outstanding, shall mean the Lenders holding fifty one percent (51%) of the Commitment Percentages.

“ Revolving Advances ” shall mean Advances made other than Letters of Credit and Swing Loans.

“ Revolving Credit Note ” or “ Revolving Credit Notes ” shall mean, singularly or collectively, as the context may require, the promissory notes referred to in Section 2.1(a) hereof, together with all amendments, restatements, extensions, renewals, replacements, refinancings or refundings thereof in whole or in part.

“ RII ” shall mean Radnor Investments, Inc., a Delaware corporation and its successors and assigns.

“ RIL ” shall mean Radnor Investments, L.L.C., a Delaware limited liability company and its successors and assigns.

“ RI2I ” shall mean Radnor Investments II, Inc., a Delaware corporation and its successors and assigns.

“ RI3I ” shall mean Radnor Investments III, Inc., a Delaware corporation and its successors and assigns.

“ RMDI ” shall mean Radnor Management Delaware, Inc., a Delaware corporation and its successors and assigns.

“ RMI ” shall mean Radnor Management, Inc., a Delaware corporation and its successors and assigns.

 

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“ SCL ” shall mean StyroChem Canada, Ltd., a Quebec corporation and its successors and assigns.

“ SDI ” shall mean StyroChem Delaware, Inc., a Delaware corporation and its successors and assigns.

“ SEC ” shall mean the United States Securities and Exchange Commission, or any successor governmental entity charged with the supervision and oversight of the federal securities laws.

“ Section 20 Subsidiary ” shall mean the Subsidiary of the bank holding company controlling NCBC, which Subsidiary has been granted authority by the Federal Reserve Board to underwrite and deal in certain Ineligible Securities.

“ SEDI ” shall mean StyroChem Europe Delaware, Inc., a Delaware corporation and its successors and assigns.

“ Senior Notes ” shall mean the Senior Notes in the aggregate principal amount of One Hundred Thirty Five Million and 00/100 Dollars ($135,000,000.00), due 2010 and issued on March 11, 2003 pursuant to the Senior Notes Indenture.

“ Senior Notes Documentation ” shall mean collectively, the Senior Notes Indenture, the Senior Notes and all related material agreements, documents and instruments.

“ Senior Notes Indenture ” shall mean the Indenture dated as of March 11, 2003 by and among Radnor, RCC, RD2I, RMDI, RMI, SDI, SUDI, SUL, SGL, SLL, WEDI, WGL, WLL, WTL WHI and Wachovia Bank, National Association, as trustee, with respect to the issuance by Radnor of the Senior Notes in the aggregate principal amount of One Hundred Thirty Five Million and 00/100 Dollars ($135,000,000.00).

“ Settlement Date ” shall mean the Closing Date and thereafter Wednesday of each week unless such day is not a Business Day in which case it shall be the next succeeding Business Day.

“ SGL ” shall mean StyroChem GP, L.L.C., a Delaware limited liability company and its successors and assigns.

“ SLL ” shall mean StyroChem LP, L.L.C., a Delaware limited liability company and its successors and assigns.

“ Subsidiary ” shall mean a corporation or other entity of whose shares of stock or other ownership interests having ordinary voting power (other than stock or other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the directors of such corporation, or other Persons performing similar functions for such entity, are owned, directly or indirectly, by such Person.

“ SUL ” shall mean StyroChem U.S., Ltd., a Texas limited partnership and its successors and assigns.

 

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“ Supermajority Lenders ” shall mean Lenders holding at least sixty-six and 2/3 percent (66 2/3%) of the Advances (excluding Swing Loans) and, if no Advances (excluding Swing Loans) are outstanding, shall mean Lenders holding sixty-six and 2/3 percent (66 2/3%) of the Commitment Percentages.

“ SVEF ” shall mean Special Value Expansion Fund, LLC, a Delaware limited liability company.

“ SVOF ” shall mean Special Value Opportunities Fund, LLC, a Delaware limited liability company.

“ Swing Loan Commitment ” shall mean NCBC’s commitment to make Swing Loans to the Borrowers pursuant to Section 2.16 hereof in an aggregate principal amount up to Ten Million and 00/100 Dollars ($10,000,000.00).

“ Swing Loan Request ” shall mean a request for Swing Loans made in accordance with Section 2.16 hereof.

“ Swing Loans ” shall mean collectively and “ Swing Loan ” shall mean separately all Swing Loans or any Swing Loan made by NCBC to the Borrowers pursuant to 2.16 hereof.

“ Swing Note ” shall mean the promissory note referred to in Section 2.16 hereof, together with all amendments, restatements, extensions, renewals, replacements, refinancings or refundings thereof in whole or in part.

“ Tennenbaum ” shall mean Tennenbaum Capital Partners, LLC and its successors and assigns.

“ Tennenbaum Credit Agreement ” shall mean the Credit Agreement dated as of December 1, 2005 by and among Radnor, as the borrower, RCC, RMDI, RMI, SDI, SEDI, SUL, SGL, SLL, WEDI, WGL, WLL, WTL, WHI and RD2I, all as guarantors, the Tennenbaum Lenders, each as a lender, and Tennenbaum, as agent and collateral agent, with respect to loans made by the Tennenbaum Lenders to Radnor in the aggregate principal amount of Ninety-Five Million and 00/100 Dollars ($95,000,000.00), as amended from time to time.

“ Tennenbaum Lenders ” shall mean collectively, Special Value Expansion Fund, LLC, a Delaware limited liability company and Special Value Opportunities Fund, LLC, a Delaware limited liability company, and each of their respective successors and assigns.

“ Tennenbaum Loan Documents ” shall mean collectively, the Tennenbaum Credit Agreement and all related material agreements, documents and instruments.

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

“ Termination Event ” shall mean (i) a Reportable Event with respect to any Plan or Multiemployer Plan; (ii) the withdrawal of any Loan Party or any member of the Controlled Group from a Plan during a plan year in which such entity was a “substantial employer” as defined in Section 4001(a)(2) of ERISA; (iii) the providing of notice of intent to terminate a Plan

 

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in a distress termination described in Section 4041(c) of ERISA; (iv) the institution by the PBGC of proceedings to terminate a Plan or Multiemployer Plan; (v) any event or condition (a) which might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan or Multiemployer Plan, or (b) that may result in termination of a Multiemployer Plan pursuant to Section 4041A of ERISA; or (vi) the partial or complete withdrawal within the meaning of Sections 4203 and 4205 of ERISA, of any Loan Party or any member of the Controlled Group from a Multiemployer Plan.

“ Toxic Substance ” shall mean and include any material present on the Real Property which has been shown to have significant adverse effect on human health or which is subject to regulation under the Toxic Substances Control Act (TSCA), 15 U.S.C. Sections 2601 et seq., applicable state law, or any other applicable Federal or state laws now in force or hereafter enacted relating to toxic substances. “Toxic Substance” includes but is not limited to asbestos, polychlorinated biphenyls (PCBs) and lead-based paints.

“ UCP ” shall have the meaning set forth in Section 2.9(b) hereof.

“ Undrawn Availability ” shall mean, at a particular date, an amount equal to (a) the lesser of (i) the Formula Amount or (ii) the Maximum Revolving Advance Amount, minus the aggregate amount of outstanding Letters of Credit, minus (b) the sum of (w) the outstanding amount of Revolving Advances plus (x) the outstanding amounts of Swing Loans plus (y) all amounts due and owing to the Borrowers’ trade creditors which are outstanding sixty (60) days or more beyond the due date (without duplication with respect to any such amount deducted from the Formula Amount), plus (z) fees and expenses for which the Borrowers are liable but which have not been paid or charged to the Borrowers’ Account.

“ Uniform Commercial Code ” shall mean the Uniform Commercial Code or other similar law of the Commonwealth of Pennsylvania as in effect on the date of this Agreement and as amended from time to time.

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

“ Waivers ” shall mean, collectively, any and all Landlord’s Waivers, Warehouseman’s Waivers, Creditor’s Waivers, Landlord’s Waiver and Agreements, Mortgagee Waivers and Processing Facility Waivers, executed and delivered in connection with this Agreement, in form and substance satisfactory to the Agent, together with all amendments, supplements, modifications, substitutions and replacements thereto and thereof.

“ Website Posting ” shall have the meaning set forth in Section 16.6 hereof.

“ WEDI ” shall mean WinCup Europe Delaware, Inc., a Delaware corporation and its successors and assigns.

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

 

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“ WGL ” shall mean WinCup GP, L.L.C., a Delaware limited liability company and its successors and assigns.

“ WHI ” shall mean Wincup Holdings, Inc., a Delaware corporation and its successors and assigns.

“ WLL ” shall mean WinCup LP, L.L.C., a Delaware limited liability company and its successors and assigns.

“ WRL ” shall mean WinCup R.E. LLC, a Delaware limited liability company and its successors and assigns.

“ WTL ” shall mean WinCup Texas, Ltd., a Texas limited partnership and its successors and assigns.

1.3 Uniform Commercial Code Terms .

All terms used herein and defined in the Uniform Commercial Code as adopted in the Commonwealth of Pennsylvania from time to time shall have the meaning given therein unless otherwise defined herein. To the extent the definition of any category or type of Collateral is expanded by any amendment, modification or revision to the Uniform Commercial Code, such expanded definition will apply automatically as of the date of such amendment, modification or revision.

1.4 Certain Matters of Construction .

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

II. ADVANCES, PAYMENTS .

2.1 Revolving Advances .

(a) Subject to the terms and conditions set forth in this Agreement including, without limitation, Section 2.1(b), each Lender, severally and not jointly, will make Revolving Advances to the Borrowers in aggregate amounts outstanding at any time equal to such Lender’s Commitment Percentage of the lesser of (x) the Maximum Revolving Advance Amount less the aggregate amount of outstanding Letters of Credit and Swing Loans or (y) an amount equal to the sum of:

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

 

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(ii) up to the lesser of (A) sixty percent (60%), subject to the provisions of Section 2.1(b) hereof (“Inventory Advance Rate”) (the Receivables Advance Rate and the Inventory Advance Rate shall be referred to collectively, as the “Advance Rates”), of the value of Eligible Inventory (the Receivables Advance Rate and the Inventory Advance Rate shall be referred to collectively, as the “Advance Rates”), or (B) Forty Million and 00/100 Dollars ($40,000,000.00) in the aggregate at any one time, minus

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

(iv) the aggregate amount of outstanding Swing Loans, minus

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

The amount derived from the sum of Sections 2.1(a)(y)(i) and (ii) minus the sum of Section 2.1(a)(y)(iii) through (v) at any time and from time to time shall be referred to as the “Formula Amount”. The Revolving Advances shall be evidenced by one or more secured promissory notes (collectively, the “Revolving Credit Note”) substantially in the form attached hereto as Exhibit 2.1(a) .

(b) Discretionary Rights . Subject to Section 16.2(b)(vii), the Advance Rates may be increased or decreased by the Agent at any time and from time to time in the exercise of its reasonable discretion. Each Borrower consents to any such increases or decreases and acknowledges that decreasing the Advance Rates or increasing the reserves may limit or restrict Advances requested by the Borrowing Agent.

2.2 Procedure for Borrowing Advances .

(a) The Borrowing Agent on behalf of any Borrower may notify the Agent prior to 12:00 p.m. (Cleveland, Ohio time) on a Business Day of a Borrower’s request to incur, on that day, a Revolving Advance hereunder. Should any amount required to be paid as interest hereunder, or as fees or other charges under this Agreement or any Other Document, or with respect to any other Obligation, become due, same shall be deemed a request for a Revolving Advance as of the date such payment is due, in the amount required to pay in full such interest, fee, charge or Obligation under this Agreement or any Other Document, and such request shall be irrevocable.

(b) Notwithstanding the provisions of (a) above, in the event any Borrower desires to obtain a Libor Rate Loan, the Borrowing Agent shall notify the Agent in writing no later than 10:00 a.m. (Cleveland, Ohio time) at least three (3) Business Days’ prior to the date of such proposed borrowing, specifying (i) the date of the proposed borrowing (which shall be a Business Day), (ii) the amount of such Revolving Advance to be borrowed, which amount shall be in a minimum amount of One Million and 00/100 Dollars ($1,000,000.00) and in integral multiples of Five Hundred Thousand and 00/100 Dollars ($500,000.00) thereafter, and (iii) the duration of the first Interest Period therefor. Interest Periods for Libor Rate Loans shall be for

 

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one (1), two (2), three (3) or six (6) months; provided, (A) if an Interest Period would end on a day that is not a Business Day, it shall end on the next succeeding Business Day unless such day falls in the next succeeding calendar month in which case the Interest Period shall end on the next preceding Business Day and (B) the Borrowing Agent shall not select, convert to or renew any Interest Period for any portion of the Revolving Advances that ends after the last day of the Term. No Libor Rate Loan shall be made available to a Borrower during the continuance of a Default or an Event of Default.

(c) Each Interest Period of a Libor Rate Loan shall commence on the date such Libor Rate Loan is made and shall end on such date as the Borrowing Agent may elect as set forth in subsection (b)(iii) above provided that the exact length of each Interest Period shall be determined in accordance with the practice of the interbank market for offshore Dollar deposits and no Interest Period shall end after the last day of the Term.

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

(d) Any Borrower may, on the last Business Day of then current Interest Period applicable to any outstanding Libor Rate Loan, or on any Business Day with respect to Domestic Rate Loans, convert any such loan into a loan of another type in the same aggregate principal amount provided that any conversion of a Libor Rate Loan shall be made only on the last Business Day of then current Interest Period applicable to such Libor Rate Loan. If a Borrower desires to convert a loan, the Borrowing Agent shall give the Agent not less than three (3) Business Days’ prior written notice to convert from a Domestic Rate Loan to a Libor Rate Loan or one (1) Business Day’s prior written notice to convert from a Libor Rate Loan to a Domestic Rate Loan, specifying the date of such conversion, the loans to be converted and if the conversion is from a Domestic Rate Loan to any other type of loan, the duration of the first Interest Period therefor; provided, however, a Borrower shall not be permitted to convert a Domestic Rate Loan to a Libor Rate Loan or continue to select a Libor Rate Loan during the continuance of a Default or an Event of Default. After giving effect to each such conversion, there shall not be outstanding more than seven (7) Libor Rate Loans, in the aggregate.

(e) At its option and upon three (3) Business Days’ prior written notice, any Borrower may prepay the Libor Rate Loans in whole at any time or in part from time to time, without premium or penalty, but with accrued interest on the principal being prepaid to the date of such repayment. Such Borrower shall specify the date of prepayment of Advances which are Libor Rate Loans and the amount of such prepayment. In the event that any prepayment of a Libor Rate Loan is required or permitted on a date other than the last Business Day of then current Interest Period with respect thereto, such Borrower shall indemnify the Agent and the Lenders therefor in accordance with Section 2.2(f) hereof.

 

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

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

2.3 Disbursement of Advance Proceeds .

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

 

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2.4 Maximum Advances .

Subject to Section 16.2(b), the aggregate balance of outstanding Advances outstanding at any time shall not exceed the lesser of (a) the Maximum Revolving Advance Amount or (b) the Formula Amount (without duplication with respect to Letters of Credit and Swing Loans).

2.5 Repayment of Advances .

(a) The Revolving Advances shall be due and payable in full on the last day of the Term subject to earlier prepayment as herein provided.

(b) Each Borrower recognizes that the amounts evidenced by checks, notes, drafts or any other items of payment relating to and/or proceeds of Collateral may not be collectible by the Agent on the date deposited to any Collection Account or the Cash Concentration Account. For the purpose of calculating the aggregate Revolving Advances outstanding and the resulting Undrawn Availability, all such items of payment shall be credited to the Borrowers on the Business Day on which the Agent has received notice of the deposit of the proceeds of such Collateral into the Cash Concentration Account. For the purposes of calculating interest and other charges on the Obligations, and in consideration of the Agent’s agreement to conditionally credit the Borrowers’ Account as of the Business Day on which the Agent receives those items of payment, each Borrower agrees that all items of payment shall be deemed applied by the Agent on account of the Obligations one (1) Business Day after the Business Day the Agent receives notice of the deposit of the proceeds of such Collateral into the Cash Concentration Account. The Agent is not, however, required to credit the Borrowers’ Account for the amount of any item of payment which is unsatisfactory to the Agent and the Agent may charge the Borrowers’ Account for the amount of any item of payment which is returned to the Agent unpaid.

(c) All payments of principal, interest and other amounts payable hereunder, or under any of the Other Documents shall be made to the Agent at the Payment Office not later than 11:00 A.M. (Cleveland, Ohio time) on the due date therefor in lawful money of the United States of America in federal funds or other funds immediately available to the Agent. The Agent shall have the right to effectuate payment on any and all Obligations due and owing hereunder by charging the Borrowers’ Account or by making Advances as provided in Section 2.2 hereof.

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

2.6 Repayment of Excess Advances .

The aggregate balance of outstanding Advances at any time in excess of the maximum amount of such Advances permitted hereunder shall be immediately due and payable without the necessity of any demand, at the Payment Office, whether or not a Default or Event of Default has occurred.

 

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2.7 Statement of Account .

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

2.8 Letters of Credit .

Subject to the terms and conditions hereof, the Issuer shall (a) issue or cause the issuance of Letters of Credit (“Letters of Credit”) on behalf of any Borrower; provided, however, that the Issuer will not be required to issue or cause to be issued any Letters of Credit to the extent that the face amount of such Letters of Credit would then cause the sum of (i) the outstanding Revolving Advances plus (ii) the outstanding amount of Letters of Credit plus (iii) the outstanding Swing Loans to exceed the lesser of (x) the Maximum Revolving Advance Amount or (y) the Formula Amount (without duplication with respect to Letters of Credit and Swing Loans). The maximum amount of the amount of Letters of Credit outstanding shall not exceed Ten Million and 00/100 Dollars ($10,000,000.00) in the aggregate at any time. All disbursements or payments related to Letters of Credit shall be deemed to be Domestic Rate Loans (in Dollars) consisting of Revolving Advances and shall bear interest at the Alternate Base Rate; Letters of Credit that have not been drawn upon shall not bear interest.

2.9 Issuance of Letters of Credit .

(a) The Borrowing Agent, on behalf of any Borrower, may request the Issuer to issue or cause the issuance of a Letter of Credit by delivering to the Issuer at the Payment Office, the Issuer’s form of Letter of Credit Application (the “Letter of Credit Application”) completed to the satisfaction of the Issuer; and, such other certificates, documents and other papers and information as the Issuer may reasonably request no later than 12:00 noon (Cleveland, Ohio time) at least three (3) Business Days’ prior to the date of such proposed issuance. The Borrowing Agent, on behalf of the Borrowers, also has the right to give instructions and make agreements with respect to any application, any applicable letter of credit and security agreement, any applicable letter of credit reimbursement agreement and/or any other applicable agreement, any letter of credit and the disposition of documents, disposition of any unutilized funds, and to agree with the Issuer upon any amendment, extension or renewal of any Letter of Credit.

 

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(b) Each Letter of Credit shall, among other things, (i) provide for the payment of sight drafts or other forms of written demand for payment or, acceptances of usance drafts when presented for honor thereunder in accordance with the terms thereof and when accompanied by the documents described therein and (ii) have an expiry date not later than the earlier of one (1) year from the date of issuance or the last day of the Term. Each trade Letter of Credit shall be subject to the Uniform Customs and Practice for Documentary Credits (1993 Revision), International Chamber of Commerce Publication No. 500, and any amendments or revisions thereof adhered to by the Issuer (the “UCP”). Each standby Letter of Credit shall be subject to the International Standby Practices 1998, International Chamber of Commerce Publication 590 and any amendments or revisions thereof adhered to by the Issuer (the “ISP”) or the UCP, as determined by the Issuer. Each Letter of Credit shall be governed, to the extent not inconsistent with the UCP or the ISP, as applicable, by the laws of the Commonwealth of Pennsylvania (provided, however, upon the request of the Borrowing Agent and the consent of the Issuer, a Letter of Credit may be governed by the laws of a state other than Pennsylvania).

(c) The Agent shall notify the Lenders of the request by the Borrowing Agent for a Letter of Credit hereunder within a reasonable time after receiving such request.

(d) The Issuer shall have absolute discretion whether to accept any draft. Without in any way limiting the Issuer’s absolute discretion whether to accept any draft, the Borrowing Agent will not present for acceptance any draft, and the Issuer will generally not accept any drafts (i) that arise out of transactions involving the sale of goods by any Borrower not in the ordinary course of its business, (ii) that involve a sale to an Affiliate of any Borrower, (iii) that involve any purchase for which the Issuer has not received all related documents, instruments and forms requested by the Issuer, or (iv) that is not eligible for discounting with Federal Reserve Banks pursuant to paragraph 7 of Section 13 of the Federal Reserve Act, as amended.

2.10 Requirements For Issuance of Letters of Credit .

(a) In connection with the issuance of any Letter of Credit, the Borrowers shall indemnify, save and hold the Agent, each Lender and each Issuer harmless from any loss, cost, expense or liability, including, without limitation, payments made by the Agent, any Lender or any Issuer and expenses and reasonable attorneys’ fees incurred by the Agent, any Lender or Issuer arising out of, or in connection with, any Letter of Credit to be issued or created for any Borrower. The Borrowers shall be bound by the Agent’s or any Issuer’s regulations and good faith interpretations of any Letter of Credit issued or created for the Borrowers’ Account, although this interpretation may be different from its own; and, neither the Agent, nor any Lender, nor any Issuer nor any of their correspondents shall be liable for any error, negligence, or mistakes, whether of omission or commission, in following the Borrowing Agent’s or any Borrower’s instructions or those contained in any Letter of Credit or of any modifications, amendments or supplements thereto or in issuing or paying any Letter of Credit, except for the Agent’s, any Lender’s, any Issuer’s or such correspondents’ gross negligence or willful misconduct.

(b) The Borrowing Agent shall authorize and direct any Issuer to name the applicable Borrower as the “Applicant” or “Account Party” of each Letter of Credit. The

 

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Borrowing Agent shall authorize and direct the Issuer to deliver to the Agent all instruments, documents, and other writings and property received by the Issuer pursuant to the Letter of Credit and to accept and rely upon the Agent’s instructions and agreements with respect to all matters arising in connection with the Letter of Credit, the application therefor or any acceptance therefor.

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

(d) Each Lender shall to the extent of the percentage amount equal to the product of such Lender’s Commitment Percentage times the aggregate amount of all unreimbursed reimbursement obligations arising from disbursements made or obligations incurred with respect to the Letters of Credit be deemed to have irrevocably purchased an undivided participation in each such unreimbursed reimbursement obligation. In the event that at the time a disbursement is made the unpaid balance of Advances exceeds or would exceed, with the making of such disbursement, the lesser of the Maximum Revolving Advance Amount or the Formula Amount (without duplication with respect to Letters of Credit and Swing Loans), and such disbursement is not reimbursed by the Borrowers within two (2) Business Days, the Agent shall promptly notify each Lender and upon the Agent’s demand each Lender shall pay to the Agent such Lender’s proportionate share of such unreimbursed disbursement together with such Lender’s proportionate share of the Agent’s reasonable unreimbursed costs and expenses relating to such unreimbursed disbursement. In the event the Issuer makes a disbursement in respect of a Letter of Credit, each Lender shall pay to such Issuer, upon such Issuer’s demand, such Lender’s proportionate share of such disbursement together with such Lender’s proportionate share of such Issuer’s reasonable unreimbursed costs and expenses relating to such disbursement. Upon receipt by the Agent of a repayment from any Borrower of any amount disbursed by the Agent for which the Agent had already been reimbursed by the Lenders, the Agent shall deliver to each Lender that Lender’s pro rata share of such repayment. Each Lender’s participation commitment shall continue until the last to occur of any of the following events: (A) the Issuer ceases to be obligated to issue or cause to be issued Letters of Credit hereunder; (B) no Letter of Credit issued hereunder remains outstanding and uncancelled or (C) the Issuer has been fully reimbursed for all payments made under or relating to Letters of Credit.

 

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2.11 Additional Payments .

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

2.12 Manner of Borrowing and Payment .

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

(b) Each payment (including each prepayment) by the Borrowers on account of the principal of and interest on the Revolving Advances, shall be applied to the Revolving Advances pro rata according to the applicable Commitment Percentages of the Lenders.

(c) Except as expressly provided herein, all payments (including prepayments) to be made by any Borrower on account of principal, interest and fees shall be made without set off or counterclaim and shall be made to NCBC with respect to Swing Loans and to the Agent on behalf of the Lenders to the Payment Office with respect to Revolving Advances, in each case on or prior to 1:00 P.M. (Cleveland, Ohio time) in Dollars and in immediately available funds.

(d) (i) Notwithstanding anything to the contrary contained in Sections 2.12(a) and 2.12(b) hereof, commencing with the first Business Day following the Closing Date, each borrowing of Revolving Advances shall be advanced by the Agent and each payment by any Borrower on account of Revolving Advances shall be applied first to those Revolving Advances advanced by the Agent. On or before 1:00 P.M. (Cleveland, Ohio time) on each Settlement Date commencing with the first Settlement Date following the Closing Date, the Agent and the Lenders shall make certain payments as follows: (I) if the aggregate amount of new Revolving Advances made by the Agent during the preceding Week (if any) exceeds the aggregate amount of repayments applied to outstanding Revolving Advances during such preceding Week, then each Lender shall provide the Agent with funds in an amount equal to its applicable Commitment Percentage of the difference between (w) such Revolving Advances and (x) such repayments and (II) if the aggregate amount of repayments applied to outstanding Revolving Advances during such Week exceeds the aggregate amount of new Revolving Advances made during such Week, then the Agent shall provide each Lender with funds in an amount equal to its applicable Commitment Percentage of the difference between (y) such repayments and (z) such Revolving Advances.

(ii) Each Lender shall be entitled to earn interest at the applicable Contract Rate on outstanding Advances (other than Swing Loans) which it has funded.

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

 

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

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

2.13 Reserved .

2.14 Use of Proceeds .

The Borrowers shall apply the proceeds of Advances (i) to repay existing Indebtedness owed to PNC Bank, National Association, (ii) to pay fees and expenses relating to the transaction contemplated by this Agreement, (iii) for general corporate purposes and (iv) to provide for working capital needs.

 

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2.15 Defaulting Lender .

(a) Notwithstanding anything to the contrary contained herein, in the event any Lender (x) has refused (which refusal constitutes a breach by such Lender of its obligations under this Agreement) to make available its portion of any Advance (other than a Swing Loan) or (y) notifies either the Agent or the Borrowing Agent that it does not intend to make available its portion of any Advance (other than a Swing Loan) (if the actual refusal would constitute a breach by such Lender of its obligations under this Agreement) (each, a “Lender Default”), all rights and obligations hereunder of such Lender (a “Defaulting Lender”) as to which a Lender Default is in effect and of the other parties hereto shall be modified to the extent of the express provisions of this Section 2.15 while such Lender Default remains in effect.

(b) Advances (other than a Swing Loan) shall be incurred pro rata from the Lenders (the “Non-Defaulting Lenders”) which are not Defaulting Lenders based on their respective Commitment Percentages, and no Commitment Percentage of any Lender or any pro rata share of any Advances (other than a Swing Loan) required to be advanced by any Lender shall be increased as a result of such Lender Default. Amounts received in respect of principal of any type of Advances (other than a Swing Loan) shall be applied to reduce the applicable Advances (other than a Swing Loan) of each Lender pro rata based on the aggregate of the outstanding Advances (other than a Swing Loan) of that type of all Lenders at the time of such application; provided, that, such amount shall not be applied to any Advances (other than a Swing Loan) of a Defaulting Lender at any time when, and to the extent that, the aggregate amount of Advances (other than a Swing Loan) of any Non-Defaulting Lender exceeds such Non-Defaulting Lender’s Commitment Percentage of all Advances (other than a Swing Loan) then outstanding. Notwithstanding any of the foregoing, each borrowing or payment or pre-payment by the Borrowers of principal, interest, fees or other amounts from the Borrowers with respect to Swing Loans shall be made by or to NCBC according to Section 2.16.

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

(d) Other than as expressly set forth in this Section 2.15, the rights and obligations of a Defaulting Lender (including the obligation to indemnify the Agent) and the other parties hereto shall remain unchanged. Nothing in this Section 2.15 shall be deemed to release any Defaulting Lender from its obligations under this Agreement and the Other Documents, shall alter such obligations, shall operate as a waiver of any default by such Defaulting Lender hereunder, or shall prejudice any rights which any Borrower, the Agent or any Lender may have against any Defaulting Lender as a result of any default by such Defaulting Lender hereunder.

(e) In the event a Defaulting Lender retroactively cures to the satisfaction of the Agent the breach which caused a Lender to become a Defaulting Lender, such Defaulting

 

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Lender shall no longer be a Defaulting Lender and shall be treated as a Lender under this Agreement.

2.16 Swing Loans .

(a) Subject to the terms and conditions hereof and relying upon the representations and warranties herein set forth, and in order to facilitate advances and repayments between Settlement Dates, NCBC may, at its option, cancelable at any time for any reason whatsoever, make swing loans (the “Swing Loans”) (which shall be Domestic Rate Loans only) to the Borrowers at any time or from time to time after the date hereof to, but not including, the last day of the Term, in an aggregate principal amount up to but not in excess of Ten Million and 00/100 Dollars ($10,000,000.00) (the “Swing Loan Commitment”), provided that the aggregate principal amount of NCBC’s Swing Loans and the Revolving Advances of all the Lenders shall not exceed the lesser of (x) the Maximum Revolving Advance Amount less the aggregate amount of outstanding Letters of Credit or (y) the Formula Amount (without duplication with respect to Swing Loans). Within such limits of time and amount and subject to the other provisions of this Agreement, the Borrowers may borrow, repay and reborrow pursuant to this Section 2.16.

(b) Except as otherwise provided herein, the Borrowing Agent may from time to time prior to the last day of the Term request NCBC to make Swing Loans by delivery to NCBC not later than 10:00 a.m. (Cleveland, Ohio time) or such later time as agreed to by NCBC on the proposed borrowing date of a duly completed request therefor in writing or a request by telephone immediately confirmed in writing by letter, facsimile or telex (each, a “Swing Loan Request”), it being understood that NCBC may rely on the authority of any individual making such a telephonic request without the necessity of receipt of such written confirmation. Each Swing Loan Request shall be irrevocable and shall specify the proposed borrowing date and the principal amount of such Swing Loan, which shall be in integral multiples of Five Hundred Thousand and 00/100 Dollars ($500,000.00) and not less than One Million and 00/100 Dollars ($1,000,000.00).

(c) So long as NCBC elects to make Swing Loans, NCBC shall, after receipt by it of a Swing Loan Request pursuant to Section 2.16(b), fund such Swing Loan to the Borrowing Agent in U.S. Dollars and immediately available funds by way of credit to the Borrowing Agent’s operating account at National City Bank or other place that NCBC may designate from time to time prior to 2:00 p.m. (Cleveland, Ohio time) on the borrowing date.

(d) The obligation of the Borrowers to repay the aggregate unpaid principal amount of the Swing Loans made to the Borrowing Agent by NCBC, together with interest thereon, shall be evidenced by a secured promissory note (the “Swing Note”) substantially in the form of Exhibit 2.16(d) hereto, dated the Closing Date payable to the order of NCBC in a face amount equal to the Swing Loan Commitment.

(e) NCBC may, at its option, exercisable at any time for any reason whatsoever but not less frequently than on each Settlement Date, request repayment of the Swing Loans from the Lenders, and each Lender shall make a Revolving Advance in an amount equal to such Lender’s Commitment Percentage of the aggregate principal amount of the outstanding

 

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Swing Loans, plus, if NCBC so requests, accrued interest thereon, provided that no Lender shall be obligated in any event to make Advances in excess of its commitment to make Advances. Revolving Advances made pursuant to the preceding sentence shall bear interest at the applicable Contract Rate for Domestic Rate Loans and shall be deemed to have been properly requested in accordance with Section 2.2 without regard to any of the requirements of that provision. NCBC shall provide notice to the Lenders (which may be telephonic or written notice by letter, facsimile or telex) that such Revolving Advances are to be made under this Section 2.16(e) and of the apportionment among the Lenders, and the Lenders shall be unconditionally obligated to fund such Revolving Advances (whether or not (i) the conditions specified in Section 8.2 are then satisfied or (ii) a Default or an Event of Default has occurred and is continuing unless, prior to the time such Swing Loans were made, the Required Lenders shall have directed the Agent not to make Advances to the Borrowers) by the time NCBC so requests, which shall not be earlier than 3:00 p.m. (Cleveland, Ohio time) on the next Business Day after the date the Lenders receive such notice from NCBC.

III. INTEREST AND FEES .

3.1 Interest .

(a) Interest on Advances shall be payable in arrears on the first (1st) day of each calendar month with respect to Domestic Rate Loans and on the last day of the Term and, with respect to Libor Rate Loans, at the end of each Interest Period or, for Libor Rate Loans with an Interest Period in excess of three (3) months, at the earlier of (a) each three (3) months on the anniversary date of the commencement of such Libor Rate Loan or (b) the end of the Interest Period. Interest charges shall be computed on the actual principal amount of Advances outstanding during the calendar month (the “Monthly Advances”). On the Closing Date through the day immediately preceding the first (1st) Incentive Pricing Effective Date, (x) Domestic Rate Loans shall bear interest for each day at a rate per annum equal to the Alternate Base Rate plus one quarter of one percent (.25%), and (y) Libor Rate Loans shall bear interest for each applicable Interest Period at a rate per annum equal to the Libor Rate plus two percent (2.00%).

(b) Subject to the terms and conditions of this Agreement, during each fiscal quarter of the Borrowers, in accordance with Section 9.8 hereof, the Borrowers shall submit to the Agent quarterly financial statements (the fiscal quarter in which such financial statements are required to be received by the Agent is the “Reporting Quarter”) as of the last day of the fiscal quarter immediately preceding such Reporting Quarter (with respect to any Reporting Quarter, the fiscal quarter immediately preceding such Reporting Quarter is the “Measurement Quarter”). Upon receipt of such quarterly financial statements by the Agent in accordance with Section 9.8 as of the Measurement Quarter ending June 30, 2006 and as of the last day of each Measurement Quarter thereafter, the Fixed Charge Coverage Ratio shall be calculated as provided for in Section 6.5 hereof and from the first (1st) day of the first (1st) full calendar month following the Agent’s receipt of such quarterly financial statements (the “Incentive Pricing Effective Date”) until the next Incentive Pricing Effective Date, (x) Domestic Rate Loans shall bear interest for each day at a rate per annum equal to the Alternate Base Rate plus the Applicable Base Rate Margin determined by reference to the Fixed Charge Coverage Ratio (the “Applicable Base Rate Margin”) set forth below and (y) Libor Rate Loans shall bear interest during each applicable Interest Period at a rate per annum equal to the Libor Rate plus the Applicable Libor Rate

 

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Margin determined by reference to the Fixed Charge Coverage Ratio (the “Applicable Libor Rate Margin”) set forth below:

 

(c) Subject to the terms and conditions of this Agreement, in the event that the Borrowers fail to timely deliver the quarterly financial statements in accordance with Section 9.8 hereof, the Applicable Margin and the Applicable Letter of Credit Fee Percentage shall be the amount corresponding to Tier III until the delivery of such financial statements.

(d) Whenever, subsequent to the date of this Agreement, the Alternate Base Rate is increased or decreased, the Contract Rate for Domestic Rate Loans shall be similarly changed without notice or demand of any kind by an amount equal to the amount of such change in the Alternate Base Rate during the time such change or changes remain in effect. The Libor Rate shall be adjusted with respect to Libor Rate Loans without notice or demand of any kind on the effective date of any change in the Eurocurrency Reserve Percentage as of such effective date. Upon and after the occurrence of an Event of Default, and during the continuation thereof, the Obligations shall bear interest at the applicable Contract Rate plus two percent (2.00%) per annum (the “Default Rate”).

3.2 Letter of Credit Fees .

(a) The Borrowers shall pay (x) to the Agent, for the ratable benefit of the Lenders, fees for each Letter of Credit for the period from and excluding the date of issuance of same to and including the date of expiration or termination, equal to the average daily face amount of each outstanding Letter of Credit multiplied by (i) until the first (1st) Incentive Pricing Effective Date, two percent (2.00%) per annum and (ii) on and after the first (1st) Incentive Pricing Effective Date, the applicable percentage per annum determined by reference to the Fixed Charge Coverage Ratio as set forth in Section 3.1(b) hereof (the “Applicable Letter of Credit Fee Percentage”), such fees to be calculated on the basis of a 360-day year for the actual number of days elapsed and to be payable monthly in arrears on the first day of each calendar month and on the last day of the Term and (y) to the Issuer, for its own account, fees for each Letter of Credit for the period from and excluding the date of issuance of same to and including the date of expiration or termination, equal to the average daily face amount of each outstanding Letter of Credit multiplied by one-quarter of one percent (0.25%) per annum, such fees to be calculated on the basis of a three hundred sixty (360) day year for the actual number of days elapsed and to be payable monthly in arrears on the first (1st) day of each calendar month and on the last day of the Term and (z) to the Issuer, for its own account, any and all fees and expenses as agreed upon by the Issuer and the Borrowing Agent in connection with any Letter of Credit, including, without limitation, in connection with the opening, amendment or renewal of any such Letter of Credit and any acceptances created thereunder and shall reimburse the Agent for any and all fees and expenses, if any, paid by the Agent to the Issuer (all of the foregoing fees, the

 

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“Letter of Credit Fees”). Any such charge in effect at the time of a particular transaction shall be the charge for that transaction, notwithstanding any subsequent change in the Issuer’s prevailing charges for that type of transaction. All Letter of Credit Fees payable hereunder shall be deemed earned in full on the date when the same are due and payable hereunder and shall not be subject to rebate or proration upon the termination of this Agreement for any reason. Upon and after the occurrence of an Event of Default, and during the continuation thereof, the Letter of Credit Fees otherwise applicable pursuant to this Section 3.2 shall be increased by two percent (2.0%) per annum.

(b) Immediately upon the request of the Agent after the occurrence and during the continuance of a Default or an Event of Default, the Borrowers will cause cash to be deposited and maintained in an account with the Agent, as cash collateral, in an amount equal to one hundred five percent (105%) of the outstanding amount of Letters of Credit, and each Borrower hereby irrevocably authorizes the Agent, in its discretion, on such Borrower’s behalf and in such Borrower’s name, to open such an account and to make and maintain deposits therein, or in an account opened by such Borrower, in the amounts required to be made by such Borrower, out of the proceeds of Receivables or other Collateral or out of any other funds of such Borrower coming into any Lender’s possession at any time. The Agent will invest such cash collateral (less applicable reserves) in such short-term money-market items as to which the Agent and such Borrower mutually agree and the net return on such investments shall be credited to such account and constitute additional cash collateral. So long as such Default or Event of Default is continuing, no Borrower may withdraw amounts credited to any such account except upon payment and performance in full of all Obligations and termination of this Agreement.

3.3 Unused Facility Fee .

If, for any calendar month during the Term, the average daily unpaid balance of the Advances for each day of such calendar month does not equal the Maximum Revolving Advance Amount (for purposes of this computation, NCBC’s Swing Loans shall be deemed to be borrowed amounts under its commitment to make Revolving Advances), then the Borrowers shall pay to the Agent for the ratable benefit of the Lenders a fee at a rate per annum equal to one-quarter of one percent (0.25%) multiplied by the amount by which the Maximum Revolving Advance Amount exceeds such average daily unpaid balance, such fees shall be payable to the Agent in arrears on the first (1st) day of each calendar month after the date hereof until the termination hereof and on the earlier of (i) such termination date or (ii) the last day of the Term.

3.4 Reserved .

3.5 Computation of Interest and Fees .

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

 

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3.6 Maximum Charges .

In no event whatsoever shall interest and other charges charged hereunder exceed the highest rate permissible under law. In the event interest and other charges as computed hereunder would otherwise exceed the highest rate permitted under law, such excess amount shall be first applied to any unpaid principal balance owed by the Borrowers, and if then remaining excess amount is greater than the previously unpaid principal balance, the Lenders shall promptly refund such excess amount to the Borrowers and the provisions hereof shall be deemed amended to provide for such permissible rate.

3.7 Increased Costs .

In the event that, (a) the introduction after the date of this Agreement of any law, treaty, rule or regulation, or any change therein after the date of this Agreement, (b) any change after the date of this Agreement in the interpretation or administration of any law, treaty, rule or regulation by any central bank or other governmental authority or (c) the compliance by the Agent, any Lender or the Issuer with any guideline, request or directive from any central bank or other governmental authority (whether or not having the force of Law) after the date of this Agreement (for purposes of this Section 3.7, the term “Lender” shall include the Agent or any Lender and any corporation or bank controlling the Agent or any Lender) and the office or branch where the Agent or any Lender (as so defined) makes or maintains any Libor Rate Loans shall:

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

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

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

and the result of any of the foregoing is to increase the cost to the Agent or any Lender of making, renewing or maintaining its Advances hereunder by an amount that the Agent or such Lender deems to be material or to reduce the amount of any payment (whether of principal, interest or otherwise) in respect of any of the Advances by an amount that the Agent or such Lender deems to be material, then, in any case the Borrowers shall promptly pay the Agent or such Lender, upon its demand, such additional amount as will compensate the Agent or such Lender for such additional cost or such reduction, as the case may be, provided that the foregoing shall not apply to increased costs which are reflected in the Libor Rate. The Agent or such

 

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Lender shall certify the amount of such additional cost or reduced amount to the Borrowers, and such certification shall be presumed correct absent manifest error.

3.8 Basis For Determining Interest Rate Inadequate or Unfair .

In the event that the Agent or any Lender shall have determined that:

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

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

then the Agent shall give the Borrowing Agent prompt written, telephonic or telegraphic notice of such determination. If such notice is given, (i) any such requested Libor Rate Loan shall be made as a Domestic Rate Loan, unless the Borrowing Agent shall notify the Agent no later than 10:00 a.m. (Cleveland, Ohio time) two (2) Business Days prior to the date of such proposed borrowing, that its request for such borrowing shall be cancelled or made as an unaffected type of Libor Rate Loan, (ii) any Domestic Rate Loan or Libor Rate Loan which was to have been converted to an affected type of Libor Rate Loan shall be continued as or converted into a Domestic Rate Loan, or, if the Borrowing Agent shall notify the Agent, no later than 10:00 a.m. (Cleveland, Ohio time) two (2) Business Days prior to the proposed conversion, shall be maintained as an unaffected type of Libor Rate Loan, and (iii) any outstanding affected Libor Rate Loans shall be converted into a Domestic Rate Loan, or, if the Borrowing Agent shall notify the Agent, no later than 10:00 a.m. (Cleveland, Ohio time) two (2) Business Days prior to the last Business Day of then current Interest Period applicable to such affected Libor Rate Loan, shall be converted into an unaffected type of Libor Rate Loan, on the last Business Day of then current Interest Period for such affected Libor Rate Loans. Until such notice has been withdrawn, the Lenders shall have no obligation to make an affected type of Libor Rate Loan or maintain outstanding affected Libor Rate Loans and no Borrower shall have the right to convert a Domestic Rate Loan or an unaffected type of Libor Rate Loan into an affected type of Libor Rate Loan.

3.9 Capital Adequacy .

(a) In the event that the Agent or any Lender shall have determined that, (a) the introduction after the date of this Agreement of any law, treaty, rule or regulation, or any change therein after the date of this Agreement, (b) any change after the date of this Agreement in the interpretation or administration of any law, treaty, rule or regulation by any central bank or other governmental authority or (c) the compliance by the Agent, any Lender or the Issuer with any guideline, request or directive from any central bank or other governmental authority (whether or not having the force of Law) after the date of this Agreement (for purposes of this Section 3.9, the term “Lender” shall include the Agent or any Lender and any corporation or bank controlling the Agent or any Lender) and the office or branch where the Agent or any Lender (as so defined) makes or maintains any Libor Rate Loans, has or would have the effect of

 

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reducing the rate of return on the Agent or any Lender’s capital as a consequence of its obligations hereunder to a level below that which the Agent or such Lender could have achieved but for such adoption, change or compliance (taking into consideration the Agent’s and each Lender’s policies with respect to capital adequacy) by an amount deemed by the Agent or any Lender to be material, then, from time to time, the Borrowers shall pay upon demand to the Agent or such Lender such additional amount or amounts as will compensate the Agent or such Lender for such reduction. In determining such amount or amounts, the Agent or such Lender may use any reasonable averaging or attribution methods. The protection of this Section 3.9 shall be available to the Agent and each Lender regardless of any possible contention of invalidity or inapplicability with respect to the applicable law, regulation or condition.

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

3.10 Gross Up for Taxes .

(a) If any Borrower shall be required by applicable law to withhold or deduct any taxes from or in respect of any sum payable under this Agreement or any of the Other Documents, (a) the sum payable to Agent or such Lender shall be increased as may be necessary so that, after making all required withholding or deductions, Agent or such Lender (as the case may be) receives an amount equal to the sum it would have received had no such withholding or deductions been made, (b) such Borrower shall make such withholding or deductions, and (c) such Borrower shall pay the full amount withheld or deducted to the relevant taxation authority or other authority in accordance with applicable law.

(b) Each of the Borrowers, on a joint and several basis, shall indemnify the Agent and each Lender against, and reimburse the Agent and each Lender on demand for, any withholding or similar taxes and reasonable legal fees, that the Agent or such Lender may incur at any time arising out of or in connection with any failure of any Borrower to make any payment of such taxes when due.

(c) The Borrowers shall furnish to the Agent, upon the request of any Lender (through the Agent), together with sufficient certified copies for distribution to each Lender requesting the same (identifying the Lenders that so requested), original official tax receipts in respect of each payment of taxes required under this Section 3.10 or other available documentation reasonably satisfactory to the Agent evidencing such payment of taxes, within thirty (30) days after the date such payment is made, and the Borrowers shall promptly furnish to the Agent at its request or at the request of any Lender (through the Agent) any other available information, documents and receipts that the Agent or such Lender may reasonably require to establish to its satisfaction that full and timely payment has been made of all taxes required to be paid under this Section 3.10.

 

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IV. COLLATERAL: GENERAL TERMS .

4.1 Security Interest in the Collateral .

To secure the prompt payment and performance to the Agent, the Issuer and each Lender of the Obligations, each Loan Party hereby assigns, pledges and grants to the Agent for its benefit and for the ratable benefit of each Lender and the Issuer a continuing security interest in and to all of its Collateral, whether now owned or existing or hereafter acquired or arising and wheresoever located. Each Loan Party shall promptly provide the Agent with written notice of all commercial tort claims, such notice to contain the case title together with the applicable court and a bri