REVOLVING CREDIT LOAN AND SECURITY AGREEMENT

Revolving Credit Agreement

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CHAMPION PARTS INC

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Title: REVOLVING CREDIT LOAN AND SECURITY AGREEMENT
Governing Law: Illinois Date: 8/11/2004
Industry: Auto and Truck Parts Law Firm: Lord, Bissell & Brook LLP Sector: Consumer Cyclical

Exhibit 99.2

REVOLVING CREDIT LOAN

AND

SECURITY AGREEMENT

PNC BANK, NATIONAL ASSOCIATION
(AS LENDER AND AS AGENT)

WITH

CHAMPION PARTS, INC.
(BORROWER)

August 10, 2004

TABLE OF CONTENTS

(continued)

Page

DEFINITIONS

1.1

Accounting Terms

1.2

General Terms

1.3

Uniform Commercial Code Terms

1.4

Certain Matters of Construction

II.

ADVANCES, PAYMENTS

2.1

Revolving Advances; Discretionary Rights

(a)

Revolving Advances

(b)

Discretionary Rights

2.2

Procedure for Borrowing Advances

2.3

Disbursement of Advance Proceeds

2.4

Reserved

2.5

Reserved

2.6

Repayment of Advances

2.7

Repayment of Excess Advances

2.8

Statement of Account

2.9

Letters of Credit

2.10

Issuance of Letters of Credit

2.11

Requirements For Issuance of Letters of Credit

2.12

Additional Payments

2.13

Manner of Borrowing and Payment

2.14

Mandatory Prepayments

2.15

Use of Proceeds

2.16

Defaulting Lender

III.

INTEREST AND FEES

3.1

Interest

3.2

Letter of Credit Fees

3.3

Facility Fee

3.4

Collateral Monitoring Fee

3.5

Computation of Interest and Fees

TABLE OF CONTENTS

(continued)

Page

3.6

Maximum Charges

3.7

Increased Costs

3.8

Basis For Determining Interest Rate Inadequate or Unfair

3.9

Capital Adequacy

3.10

Replacement of Lenders

3.11

Tax Withholding

IV.

COLLATERAL: GENERAL TERMS

4.1

Security Interest in the Collateral

4.2

Perfection of Security Interest

4.3

Disposition of Collateral

4.4

Preservation of Collateral

4.5

Ownership of Collateral

4.6

Defense of Agent’s and Lenders’ Interests

4.7

Books and Records

4.8

Financial Disclosure

4.9

Compliance with Laws

4.10

Inspection of Premises

4.11

Insurance

4.12

Failure to Pay Insurance

4.13

Payment of Taxes

4.14

Payment of Leasehold Obligations

4.15

Receivables

(a)

Nature of Receivables

(b)

Solvency of Customers

(c)

Locations of Borrower

(d)

Collection of Receivables; Blocked Accounts

(e)

Notification of Assignment of Receivables

(f)

Power of Agent to Act on Borrower’s Behalf

(g)

No Liability

TABLE OF CONTENTS

(continued)

Page

(h)

Establishment of a Lockbox Account, Dominion Account

(i)

Adjustments

4.16

Inventory

4.17

Maintenance of Equipment

4.18

Exculpation of Liability

4.19

Environmental Matters

4.20

Financing Statements

REPRESENTATIONS AND WARRANTIES

5.1

Authority

5.2

Formation and Qualification

5.3

Survival of Representations and Warranties

5.4

Tax Returns

5.5

Financial Statements

5.6

Corporate Name

5.7

O.S.H.A. and Environmental Compliance

5.8

Solvency; No Litigation, Violation, Indebtedness or Default

5.9

Patents, Trademarks, Copyrights and Licenses

5.10

Licenses and Permits

5.11

Default of Indebtedness

5.12

No Default

5.13

No Burdensome Restrictions

5.14

No Labor Disputes

5.15

Margin Regulations

5.16

Investment Company Act

5.17

Disclosure

5.18

Swaps

5.19

Conflicting Agreements

5.20

Application of Certain Laws and Regulations

5.21

Business and Property of Borrower

iii

TABLE OF CONTENTS

(continued)

Page

5.22

Section 20 Subsidiaries

5.23

Anti-Terrorism Laws

(a)

General

(b)

Executive Order No. 13224

VI.

AFFIRMATIVE COVENANTS

6.1

Payment of Fees

6.2

Conduct of Business and Maintenance of Existence and Assets

6.3

Violations

6.4

Government Receivables

6.5

Fixed Charge Coverage Ratio

6.6

Execution of Supplemental Instruments

6.7

Payment of Indebtedness

6.8

Standards of Financial Statements

6.9

Tax Shelter Regulations

VII.

NEGATIVE COVENANTS

7.1

Merger, Consolidation, Acquisition and Sale of Assets

7.2

Creation of Liens

7.3

Guarantees

7.4

Investments

7.5

Loans

7.6

Capital Expenditures

7.7

Dividends

7.8

Indebtedness

7.9

Nature of Business

7.10

Transactions with Affiliates

7.11

Leases

7.12

Subsidiaries

7.13

Fiscal Year and Accounting Changes

7.14

Pledge of Credit

TABLE OF CONTENTS

(continued)

Page

7.15

Amendment of Articles of Incorporation, By-Laws

7.16

Compliance with ERISA

7.17

Prepayment of Indebtedness

VIII.

CONDITIONS PRECEDENT

8.1

Conditions to Initial Advances

(a)

Notes

(b)

Filings, Registrations and Recordings

(c)

Corporate Proceedings of Borrower

(d)

Incumbency Certificates of Borrower

(e)

Certificates

(f)

Good Standing Certificates

(g)

Legal Opinion

(h)

No Litigation

(i)

Financial Condition Certificates

(j)

Collateral Examination

(k)

Fees

(l)

Pro Forma Financial Statements

(m)

Insurance

(n)

Payment Instructions

(o)

Blocked Accounts

(p)

Consents

(q)

No Adverse Material Change

(r)

Leasehold Agreements

(s)

Closing Certificate

(t)

Borrowing Base

(u)

Undrawn Availability

(v)

Pledge Agreements

(w)

Other

8.2

Conditions to Each Advance

TABLE OF CONTENTS

(continued)

Page

(a)

Representations and Warranties

(b)

No Default

(c)

Maximum Advances

IX.

INFORMATION AS TO BORROWERS

9.1

Disclosure of Material Matters

9.2

Schedules

9.3

Environmental Reports

9.4

Litigation

9.5

Material Occurrences

9.6

Government Receivables

9.7

Annual Financial Statements

9.8

Quarterly Financial Statements

9.9

Monthly Financial Statements

9.10

Public Reporting

9.11

Additional Information

9.12

Projected Operating Budget

9.13

Variances From Operating Budget

9.14

Notice of Suits, Adverse Events

9.15

ERISA Notices and Requests

9.16

Additional Documents

EVENTS OF DEFAULT

XI.

LENDERS’ RIGHTS AND REMEDIES AFTER DEFAULT

11.1

Rights and Remedies

11.2

Agent’s Discretion

11.3

Setoff

11.4

Rights and Remedies not Exclusive

11.5

Allocation of Payments After Event of Default

XII.

WAIVERS AND JUDICIAL PROCEEDINGS

12.1

Waiver of Notice

TABLE OF CONTENTS

(continued)

Page

12.2

Delay

12.3

Jury Waiver

XIII.

EFFECTIVE DATE AND TERMINATION

13.1

Term

13.2

Termination

XIV.

REGARDING AGENT

14.1

Appointment

14.2

Nature of Duties

14.3

Lack of Reliance on Agent and Resignation

14.4

Certain Rights of Agent

14.5

Reliance

14.6

Notice of Default

14.7

Indemnification

14.8

Agent in its Individual Capacity

14.9

Delivery of Documents

14.10

Borrower’s Undertaking to Agent

XV.

MISCELLANEOUS

15.1

Governing Law

15.2

Entire Understanding

15.3

Successors and Assigns; Participations; New Lenders

15.4

Application of Payments

15.5

Indemnity

15.6

Notice

15.7

Survival

15.8

Severability

15.9

Expenses

15.10

Injunctive Relief

15.11

Consequential Damages

15.12

Captions

vii

TABLE OF CONTENTS

(continued)

Page

15.13

Counterparts; Telecopied Signatures

15.14

Construction

15.15

Confidentiality; Sharing Information

15.16

Publicity

viii

List of Exhibits and Schedules

Exhibits
Exhibit 2.1(a)	Revolving Credit Note
Exhibit 5.5(b)	Financial Projections
Exhibit 8.1(i)
Exhibit 9.8	Compliance Certificate
Exhibit 15.3	Commitment Transfer Supplement

Schedules
Schedule 1.2	Permitted Encumbrances
Schedule 4.5	Equipment and Inventory Locations
Schedule 4.15(c)	Location of Executive Offices
Schedule 4.19	Real Property
Schedule 5.2(a)	States of Qualification and Good Standing and Federal Tax Identification Number
Schedule 5.2(b)	Subsidiaries
Schedule 5.2(c)	Description of Certain Collateral
Schedule 5.6	Prior Names; Trade Names
Schedule 5.7	Environmental
Schedule 5.8(b)	Litigation
Schedule 5.8(d)	Plans
Schedule 5.9	Intellectual Property, Source Code Escrow Agreements
Schedule 5.10	Licenses and Permits
Schedule 5.14	Labor Disputes
Schedule 7.8	Certain Indebtedness as of the Closing Date

C:\Documents and Settings\D_Schoendorff\Desktop\#1172348 v8 - Loan Agreement - PNC-Champion.doc

REVOLVING CREDIT LOAN
AND
SECURITY AGREEMENT

Revolving Credit Loan and Security Agreement dated as of August 10, 2004 among Champion Parts, Inc., a corporation organized under the laws of the State of Illinois (“Borrower”), the financial institutions which are now or which hereafter become a party hereto (collectively, the “ Lenders ” and individually a “ Lender ”) and PNC BANK, NATIONAL ASSOCIATION (“ PNC ”), as agent for Lenders (PNC, in such capacity, the “ Agent ”).

IN CONSIDERATION of the mutual covenants and undertakings herein contained, Borrower, Lenders and Agent hereby agree as follows:

DEFINITIONS .

1.1

Accounting Terms . As used in this Agreement, the Notes, or any of the Other Documents made or delivered pursuant to this Agreement, accounting terms not defined in Section 1.2 or elsewhere in this Agreement and accounting terms partly defined in Section 1.2 to the extent not defined, shall have the respective meanings given to them under GAAP; provided , however , whenever such accounting terms are used for the purposes of determining compliance with financial covenants in this Agreement, such accounting terms shall be defined in accordance with GAAP as applied in preparation of the audited financial statements of Borrower for the fiscal year most recently ended.

1.2

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

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

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

“ 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 mean the power, direct or indirect, (x) to vote 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.

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

“ Base Rate ” shall mean the greater of (i) the interest rate per annum announced from time to time by the Agent at its principal office as its then prime rate, which rate may not be the lowest rate then being charged commercial borrowers by Agent, or (ii) the Federal Funds Open Rate plus 1/2 of 1% per annum.

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

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

“ Borrowing Base Certificate ” shall mean a certificate duly executed by Borrower appropriately completed and in the form provided by Agent.

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

“ 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 Pittsburgh, Pennsylvania and, if the applicable Business Day relates to any Eurodollar Rate Loans, such day must also be a day on which dealings are carried on in the London interbank market.

“ Capital Expenditures ” shall mean all payments, including, without limitation, payments for Capitalized Lease Obligations, for any fixed assets or improvements, or replacements, substitutions or additions thereto, that have a useful life of more than one year and which are required to be capitalized under GAAP.

“ Capitalized Lease ” shall mean, at any time, any lease which, in accordance with GAAP, is required to be capitalized on the balance sheet of Borrower at such time.

“ Capitalized Lease Obligations ” of Borrower at any time shall mean the aggregate amount which, in accordance with GAAP, is required to be reported as a liability on the balance sheet of Borrower at such time as lessee under Capitalized Leases.

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

“ Change of Control ” shall mean any merger or consolidation of or with Borrower or sale of all or substantially all of the property or assets of Borrower. For purposes of this definition, “ control of Borrower ” shall mean the power, direct or indirect (x) to vote 50% or more of the securities having ordinary voting power for the election of directors of Borrower or (y) to direct or cause the direction of the management and policies of Borrower 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 of any kind whatsoever,

together with any interest and any penalties, additions to tax or additional amounts, imposed by any taxing or other authority, domestic or foreign (including, without limitation, the PBGC or any environmental agency or superfund), upon the Collateral or Borrower.

“ Closing Date ” shall mean August 10, 2004 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 all property and rights in personal property in which a security interest is granted to Agent in this Agreement or in any of the Other Documents, including, without limitation, the following:

(a)

all Receivables;

(b)

all Equipment;

(c)

all General Intangibles;

(d)

all Inventory;

(e)

all Investment Property;

(f)

all Subsidiary Stock;

(g)

the Leasehold Interests;

(h)

all of Borrower’s right, title and interest in and to (i) its respective goods and other property including, but not limited to, all merchandise returned or rejected by Customers, relating to or securing any of the Receivables; (ii) all of Borrower’s rights as a consignor, a consignee, an unpaid vendor, mechanic, artisan, or other lien or, including stoppage in transit, setoff, detinue, replevin, reclamation and repurchase; (iii) all additional amounts due to Borrower from any Customer relating to the Receivables; (iv) other property, including warranty claims, relating to any goods securing this Agreement; (v) all of Borrower’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, letter of credit rights, and money; (vi) all commercial tort claims as described from time to time on Schedule 5.2(c) (whether now existing or hereafter arising); (vii) if and when obtained by Borrower, all personal property of third parties in which Borrower has been granted a lien or security interest as security for the payment or enforcement of Receivables; and (viii) any other goods, personal property or real property now owned or hereafter acquired in which Borrower has expressly granted a security interest or may in the future grant a security interest to Agent hereunder, or in any amendment or supplement hereto or thereto, or under any other agreement between Agent and Borrower;

(i)

all of Borrower’s ledger sheets, ledger cards, files, correspondence, records, books of account, business papers, computers, computer software (owned by Borrower

or in which it has an interest), computer programs, tapes, disks and documents relating to (a), (b), (c), (d), (e), (f), (g), (h) or (i) of this Paragraph; and

(j)

all proceeds and products of (a), (b), (c), (d), (e), (f), (g), (h), (i) and (j) 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.

“ 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 15.3(c) hereof.

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

“ Compliance Certificate ” shall have the meaning set forth in Section 9.8 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 Borrower’s business, including, without limitation, any Consents required under all applicable federal, state or other applicable law.

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

“ Current Assets ” at a particular date, shall mean all cash, cash equivalents, accounts and inventory of Borrower and all other items which would, in conformity with GAAP, be included under current assets on a balance sheet of Borrower as at such date; provided , however , that such amounts shall not include (a) any amounts for any Indebtedness owing by an Affiliate of any Borrower, unless such Indebtedness arose in connection with the sale of goods or rendition of services in the ordinary course of business and would otherwise constitute current assets in conformity with GAAP, (b) any shares of stock issued by an Affiliate of any Borrower, or (c) the cash surrender value of any life insurance policy.

“ 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 Borrower, pursuant to which Borrower is to deliver any personal property 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 hereof.

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

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

“ Document Checklist ” shall mean that certain Document Checklist prepared by Agent in connection with this Agreement.

“ Documents ” shall have the meaning set forth in Section 8.1(c) 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 Base Rate.

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

“ Earnings Before Interest and Taxes ” shall mean for any period the sum of (i) net income (or loss) of Borrower for such period (excluding extraordinary gains and losses), plus (ii) all interest expense of Borrower for such period, plus (iii) all charges against income of Borrower for such period for federal, state and local taxes, exclusive of tax refunds.

“ EBITDA ” shall mean for any period the sum of (i) Earnings Before Interest and Taxes for such period plus (ii) depreciation expenses for such period, plus (iii) amortization expenses for such period.

“ Eligible Inventory ” shall mean and include Inventory, with respect to Borrower valued at the lower of cost or market value, determined on a first-in-first-out basis, which is not, in Agent’s reasonable credit judgment, obsolete, slow moving or unmerchantable and which Agent, in its sole discretion exercised in a commercially reasonable manner, shall not deem ineligible Inventory, based on such considerations as Agent may from time to time deem appropriate including, without limitation, whether the Inventory is subject to a perfected, first priority security interest in favor of 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.

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

(a)

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

(b)

it is due or unpaid more than one hundred twenty (120) days after the original invoice date;

(c)

fifty percent (50%) or more of the Receivables from such Customer are not deemed Eligible Receivables hereunder. Such percentage may, in Agent’s sole discretion exercised in a commercially reasonable manner, be increased or decreased from time to time;

(d)

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

(e)

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

(f)

the sale is to a Customer outside the United States of America, or outside Canada (except Receivables from sales to Customers in the Province of Quebec shall not be Eligible Receivables), unless the sale is on letter of credit, guaranty or acceptance terms, in each case acceptable to Agent in its sole discretion;

(g)

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

(h)

Agent believes, in its sole judgment exercised in a commercially reasonable manner, 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 Borrower assigns its right to payment of such Receivable to 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 statutes or ordinances;

(j)

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

(k)

the Receivables of the Customer exceed a credit limit determined by Agent, in its sole discretion exercised in a commercially reasonable manner, to the extent such Receivable exceeds such limit;

(l)

the Receivable is subject to any offset, deduction, defense, dispute, or counterclaim, the Customer is also a creditor or supplier of Borrower (except to the extent that Borrower performs assembly or similar work with parts provided by a supplier) or the Receivable is contingent in any respect or for any reason;

(m)

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

(n)

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

(o)

such Receivable is not payable to Borrower; or

(p)

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

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

“ Environmental Laws ” shall mean all federal, state and local environmental, land use, zoning, health, chemical use, safety and sanitation laws, statutes, ordinances and codes relating to the protection of the environment and/or governing the use, storage, treatment, generation, transportation, processing, recycling, recovering, 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 all as now existing or subsequently enacted or amended.

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

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

“ Eurodollar Rate ” shall mean, with respect to any Eurodollar Rate Loan for any Interest Period, the interest rate per annum determined by Agent by dividing (the resulting quotient rounded upward to the nearest 1/100 of 1% per annum) (i) the rate of interest determined by Agent (which determination shall be conclusive absent manifest error) to be the average of the London interbank offered rates of interest per annum for U.S. Dollars set forth on Dow Jones Market Service display page 3750 or such other display page on the Dow Jones Market Service System as may replace such page to evidence the average of rates quoted by banks designated by the British Bankers’ Association (or appropriate successor or, if the British Bankers’ Association or its successor ceases to provide such quotes, a comparable replacement determined by Agent) at 11:00 a.m. (London time) two (2) Business Days prior to the first day of such Interest Period for an amount comparable to such Eurodollar Rate Loan and having a borrowing date and a

maturity comparable to such Interest Period by (ii) a number equal to 1.00 minus the Euro-Rate Reserve Percentage. The Eurodollar Rate may also be expressed by the following formula:

Eurodollar Rate	=	Dow Jones Market Service page 3750 quoted by British Bankers’ Association or appropriate successor
		1.00 - Euro Rate Reserve Percentage

Agent shall give prompt notice to Borrower and the Lenders of the Eurodollar Rate as determined or adjusted in accordance herewith, which determination shall be conclusive absent manifest error.

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

“ Euro-Rate Reserve Percentage ” shall mean the maximum percentage (expressed as a decimal rounded upward to the nearest 1/100 of 1%) as determined by Agent which is in effect during any relevant period, as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the reserve requirements (including supplemental, marginal and emergency reserve requirements) with respect to eurocurrency funding (currently referred to as “ Eurocurrency Liabilities ”) of a member bank in such System.

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

“ Federal Funds Open Rate ” for any day shall mean the rate per annum determined by Agent in accordance with its usual procedures (which determination shall be conclusive absent manifest error) to be the Open Rate for federal funds transactions as of the opening of business for federal funds transactions among members of the Federal Reserve System arranged by federal funds brokers on such day, as quoted by Garvin Guybutler, any successor entity thereto, or any other broker selected by Agent, as set forth on the applicable Telerate display page; provided, however, that if such day is not a Business Day, the Federal Funds Open Rate for such day shall be the Open Rate on the immediately preceding Business Day, or if no such rate shall be quoted by a federal funds broker at such time, such other rate as determined by the Agent in accordance with its usual procedures.

“ Fee Letter ” shall mean the fee letter dated as of the Closing Date between Borrower and PNC.

“ Fixed Charge Coverage Ratio ” shall mean and include, with respect to any fiscal period, the ratio of (a) EBITDA minus Capital Expenditures (excluding amounts thereof financed in accordance with Section 7.8 hereof) minus cash taxes actually paid made during such period to (b) all Senior Debt Payments plus all Subordinated Debt Payments during such period, plus all Vendor Earn-Out Payments.

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

“ 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 Borrower all of Borrower’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 data, registrations, 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 Borrower 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 any Person who may hereafter guarantee payment or performance of the whole or any part of the Obligations and “ Guarantors ” means collectively all such Persons. As of the Closing Date, no Guarantor exists.

“ Guarantor Security Agreement ” shall mean any Security Agreement executed by any Guarantor in favor of Agent securing the Guaranty of such Guarantor.

“ Guaranty ” shall mean any guaranty of the obligations of Borrower executed by a Guarantor in favor of Agent for its benefit and for the ratable benefit of Lenders.

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

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

“ Hazardous Wastes ” shall mean all Hazardous Substance or 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 or amended relating to hazardous waste disposal.

“ 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 and surplus earned or otherwise) and in any event, without limitation by reason of enumeration, shall include all indebtedness, debt and other similar monetary obligations of such Person whether direct or guaranteed, and all premiums, if any, due at the required prepayment dates of such indebtedness, and all indebtedness secured by a Lien on assets owned by such Person, whether or not such indebtedness actually shall have been created, assumed or incurred by such Person. 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.

“ Information Certificate ” shall mean that certain Information Certificate of Borrowers executed and delivered to Agent in connection with this Agreement.

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

“ Interest Rate Protection Agreement ” shall mean any interest rate swap, cap, collar or similar interest rate hedging strategy or agreement now existing or hereafter entered into by any Person.

“ Inventory ” shall mean and include as to Borrower all of Borrower’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 Borrower’s business or used in selling or furnishing such goods, merchandise and other personal property, and all documents of title or other documents representing them.

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

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

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

“ Leasehold Interests ” shall mean all of Borrower’s right, title and interest in and to the leasehold premises at any time leased by Borrower.

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

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

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

“ Loan Documents ” shall mean, collectively, this Agreement and the Other Agreements.

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

“ Maximum Loan Amount ” shall mean $14,000,000.

“ Maximum Revolving Advance Amount ” shall mean $14,000,000.

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

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

“ Net Orderly Liquidation Value ” shall mean the aggregate net realizable value of Borrower’s Eligible Inventory, by category, recoverable in an orderly liquidation thereof (net of all liquidation expenses), as determined by a certified appraiser satisfactory to Agent.

“ Notes ” shall mean collectively the Revolving Credit Note and all replacements and substitutions for each such Note.

“ Obligations ” shall mean and include any and all loans, advances, debts, liabilities, obligations, covenants and duties (including, without limitation, obligations under any Interest Rate Protection Agreement) owing by Borrower to Lenders or Agent or to any other direct or indirect subsidiary or affiliate of Agent or any Lender of any kind or nature, present or future (including, without limitation, any interest accruing thereon after maturity, or after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding relating to Borrower, whether or not a claim for post-filing or post-petition interest is

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

“ Other Documents ” shall mean the Notes, the Information Certificate, any Guaranty, any Guarantor Security Agreement, any Mortgages and any and all other agreements, instruments and documents, including, without limitation, guaranties, pledges, powers of attorney, consents, interest or currency swap agreements, intercreditor agreements, subordination agreements or other similar agreements and all other writings heretofore, now or hereafter executed by Borrower or any Guarantor and/or delivered to Agent 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 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 each Person who shall be granted the right by any Lender to participate in any of the Advances and who shall have entered into a participation agreement in form and substance satisfactory to such Lender.

“ Payment Office ” shall mean initially One South Wacker Drive, Suite 2980, Chicago, Illinois 60606; thereafter, such other office of Agent, if any, which it may designate by notice to Borrower and to each Lender to be the Payment Office.

“ PBGC ” shall mean the Pension Benefit Guaranty Corporation.

“ Permitted Encumbrances ” shall mean (a) Liens in favor of Agent for the benefit of Agent and 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 Borrower; provided , that , the Lien shall have no effect on the priority of the Liens in favor of Agent or the value of the assets in which Agent has such a Lien and a stay of enforcement of any such Lien shall be in effect; (c) Liens disclosed in the financial statements referred to in Section 5.5, the existence of which Agent has consented to in writing; (d) deposits or pledges to secure obligations under worker’s compensation, social security or similar laws, or under unemployment insurance; (e) deposits or pledges to secure bids, tenders, contracts (other than contracts for the payment of money), leases, statutory obligations, surety and appeal bonds and other obligations of like nature arising in the ordinary course of Borrower’s business; (f) judgment Liens that have been stayed or bonded and mechanics’, workers’, materialmen’s or other like Liens arising in the ordinary course of Borrower’s business with respect to obligations which are not due or which are being contested in good faith by Borrower; (g) Liens placed upon fixed assets hereafter acquired to secure a portion of the purchase price thereof, provided that (x) any such lien shall not encumber any other property of Borrower 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 7.8; (h) other Liens incidental to the conduct of Borrower’s business or the ownership of their property (such as easements and minor title restrictions) and assets which were not incurred in connection with the borrowing of money or the obtaining of advances or credit, and which do not in the aggregate materially detract from Agent’s or Lenders’ rights in and to the Collateral or the value of Borrower’s property or assets or which do not materially impair the use thereof in the operation of Borrower’s business; (i) any mortgage loans on Borrower’s real property, and any refinancings or replacements thereof, and (j) Liens existing on the Closing Date and disclosed on Schedule 1.2.

“ 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 Borrower or any member of the Controlled Group or any such Plan to which Borrower or any member of the Controlled Group is required to contribute on behalf of any of its employees.

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

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

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

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

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

“ Real Property ” shall mean all of Borrower’s right, title and interest in and to any owned and leased premises.

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

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

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

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

“ Required Lenders ” shall mean (i) so long as two (2) Lenders are a party to this Agreement, Lenders holding one hundred percent (100%) of the Advances and, if no Advances are outstanding, Lenders holding one hundred percent (100%) of the Commitment Percentages, and (ii) so long as more than two (2) Lenders are a party to this Agreement, Lenders holding at least fifty-one percent (51%) of the Advances and, if no Advances are outstanding, Lenders holding fifty-one percent (51%) of the Commitment Percentages.

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

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

“ Revolving Credit Note ” shall mean the promissory note referred to in Section 2.1(a) hereof.

“ Revolving Interest Rate ” shall mean an interest rate per annum equal to (a) the sum of the Base Rate plus one-quarter of one percent (1/4%) with respect to Domestic Rate Loans, and (b) the sum of the Eurodollar Rate plus three and one-quarter percent (3.25%) with respect to Eurodollar Rate Loans.

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

“ Senior Debt Payments ” shall mean and include all cash actually expended by Borrower to make (a) interest payments on any Advances hereunder, plus (b) payments for all fees,

commissions and charges set forth herein and with respect to any Advances, plus (c) capitalized lease payments, plus (d) payments with respect to any other Indebtedness for borrowed money.

“ 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.

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

“ Subordinated Indebtedness ” shall mean all Indebtedness of Borrower at any time outstanding which is subordinated in right of payment to the prior payment of the Obligations, pursuant to a Subordination Agreements acceptable to Agent, including, without limitation, the ACEDP Indebtedness.

“ Subordination Agreement ” shall mean, individually and collectively, all subordination agreements, intercreditor agreements, consent and similar agreements among the Borrower, Agent, for itself and the Lenders and any holder of Indebtedness, whether entered into on or prior to the date hereof or from time to time hereafter, together with all modifications, amendments and restatements of any of the foregoing.

“ 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 entity, or other Persons performing similar functions for such entity, are owned, directly or indirectly, by such Person.

“ Subsidiary Stock ” shall mean all of the issued and outstanding shares of stock owned by Borrower of each of its Subsidiaries.

“ 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 Borrower or any member of the Controlled Group from a Plan or Multiemployer Plan during a plan year in which such entity was a “substantial employer” as defined in Section 4001(a)(2) of ERISA; (iii) the providing of notice of intent to terminate a Plan 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 Borrower or any member of the Controlled Group from a Multiemployer Plan.

“ Toxic Substance ” shall mean and include any material present on the Real Property or the Leasehold Interests which has been shown to have significant adverse effect on human health or which is subject to regulation under the Toxic Substances Control Act (TSCA), 15 U.S.C. §§ 2601 et seq. , applicable state law, or any other applicable Federal or state laws now in force

or hereafter enacted or amended relating to toxic substances. “Toxic Substance” includes but is not limited to asbestos, polychlorinated biphenyls (PCBs) and lead-based paints.

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

“ Type of Organization ” shall mean the type of entity of a Borrower, such as corporation or limited liability company.

“ Undrawn Availability ” at a particular date shall mean an amount equal to (a) the lesser of (i) the Formula Amount or (ii) the Maximum Loan Amount, minus (b) the sum of (i) the outstanding amount of Advances plus (ii) all amounts due and owing to Borrower’s trade creditors which are outstanding beyond normal trade terms, plus (iii) fees and expenses for which Borrower is liable but which have not been paid or charged to Borrower’s Account.

“ UCC ” means the Uniform Commercial Code as in effect in the State of Illinois on the date of this Agreement, as may be amended or otherwise modified hereafter, including, without limitation, by the revisions to Article 9 and other Articles of the Uniform Commercial Code, as adopted by the State of Illinois, effective July 1, 2001; provided that, as used in Section 11.1 hereof, “UCC” shall mean the Uniform Commercial Code as in effect from time to time in any applicable jurisdiction.

“ Vendor Earn-Out Payments ” shall mean payments made by Borrower in connection with any payment arrangements relating to the 1995 and 1996 vendor payment agreements of Borrower.

“ 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.

1.3

Uniform Commercial Code Terms . All terms used herein and defined in the UCC 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 UCC, 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 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; Discretionary Rights .

(a)

Revolving Advances . 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 Borrower in aggregate amounts outstanding at any time equal to such Lender’s Commitment Percentage of the lesser of (x) the Maximum Loan Amount less the aggregate amount of outstanding Letters of Credit or (y) an amount equal to the sum of:

(i)

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

(ii)

up to the lesser of (A) $6,500,000 in the aggregate at any one time, or (B) 90% of the Net Orderly Liquidation Value of Eligible Inventory (the “ Inventory Advance Rate ; the Receivables Advance Rate and the Inventory Advance Rate shall be referred to collectively as the “ Advance Rates ”), subject to the provisions of Section 2.1(b), provided that Eligible Inventory consisting of raw core Inventory shall not exceed an aggregate amount of to $2,000,000, which amount shall be reduced by $62,500 at the end of each calendar quarter after the Closing Date; minus

(iii)

an amount equal to $250,000; minus

(iv)

the aggregate amount of outstanding Letters of Credit, minus

(v)

such reserves as Agent may reasonably deem proper and necessary from time to time in its reasonable credit judgment.

The amount derived from the sum of (x) Sections 2.1(a)(y)(i) and (ii) minus (y) Section 2.1(a)(y)(iii), (iv) and (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 . The Advance Rates may be increased or decreased by Agent at any time and from time to time in the exercise of its reasonable credit judgment. 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 Borrower. Agent shall use reasonable efforts to give Borrower five (5) days prior written notice of its intention to decrease the Advance Rates.

2.2

Procedure for Borrowing Advances .

(a)

Borrower may notify Agent prior to (i) 12 Noon (Chicago time) as to Advances bearing interest at the Base Rate, and (ii) 11:00 A.M. (Chicago time) as to Eurodollar Rate Loans, on a Business Day of Borrower’s request to incur, on that day (subject to Section 2.2(b)), a Revolving Advance hereunder. Should any amount required to be paid as interest hereunder, or as fees or other charges under this Agreement or any other agreement with

Agent or Lenders, or with respect to any other Obligation, become due, same shall be deemed a request for a Revolving Advance as of the date such payment is due, in the amount required to pay in full such interest, fee, charge or Obligation under this Agreement or any other agreement with Agent or Lenders, and such request shall be irrevocable.

(b)

Notwithstanding the provisions of subsection (a) above, in the event Borrower desires to obtain a Eurodollar Rate Loan, Borrower shall give Agent at least three (3) Business Days’ prior written notice, specifying (i) the date of the proposed borrowing (which shall be a Business Day), (ii) the type of borrowing and the amount on the date of such Advance to be borrowed, which amount shall be in a minimum amount of $100,000 and in integral multiples of $100,000 thereafter, and (iii) the duration of the first Interest Period therefor. Interest Periods for Eurodollar Rate Loans shall be for one, two, three or six months; provided , if an Interest Period would end on a day that is not a Business Day, it shall end on the next succeeding Business Day unless such day falls in the next succeeding calendar month in which case the Interest Period shall end on the next preceding Business Day. No Eurodollar Rate Loan shall be made available to Borrower during the continuance of a Default or an Event of Default.

(c)

Each Interest Period of a Eurodollar Rate Loan shall commence on the date such Eurodollar Rate Loan is made and shall end on such date as Borrower may elect as set forth in 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.

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

(d)

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

(e)

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

(f)

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

(g)

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

2.3

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

federal funds or other immediately available funds or, with respect to Revolving Advances deemed to have been requested by Borrower, be disbursed to Agent to be applied to the outstanding Obligations giving rise to such deemed request.

2.4

Reserved .

2.5

Reserved .

2.6

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)

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 Agent on the date received. In consideration of Agent’s agreement to conditionally credit Borrower’s Account as of the Business Day on which Agent receives those items of payment, Borrower agrees that, in computing the charges under this Agreement, all items of payment shall be deemed applied by Agent on account of the Obligations one (1) Business Day after the Business Day Agent receives such payments via wire transfer or electronic depository check. Agent is not, however, required to credit Borrower’s Account for the amount of any item of payment which is unsatisfactory to Agent and Agent may charge Borrower’s Account for the amount of any item of payment which is returned to Agent unpaid.

(c)

All payments of principal, interest and other amounts payable hereunder, or under any of the Other Documents shall be made to Agent at the Payment Office not later than 12 Noon (Chicago time) on the due date therefor in lawful money of the United States of America in federal funds or other funds immediately available to Agent. Agent shall have the right to effectuate payment on any and all Obligations due and owing hereunder by charging Borrower’s Account or by making Advances as provided in Section 2.2 hereof.

(d)

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

2.7

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

2.8

Statement of Account . Agent shall maintain, in accordance with its customary procedures, a loan account (“ Borrower’s Account ”) in the name of Borrower in which shall be recorded the date and amount of each Advance made by Agent and the date and amount of each payment in respect thereof; provided , however , the failure by Agent to record the date and amount of any Advance shall not adversely affect Agent or any Lender. Each month, Agent shall send to Borrower a statement showing the accounting for the Advances made, payments made or credited in respect thereof, and other transactions between Agent and Borrower, during such month. The monthly statements shall be deemed correct and binding upon Borrower in the

absence of manifest error and shall constitute an account stated between Lenders and Borrower unless Agent receives a written statement of Borrower’s specific exceptions thereto within thirty (30) days after such statement is received by Borrower. The records of Agent with respect to the loan account shall be conclusive evidence absent manifest error of the amounts of Advances and other charges thereto and of payments applicable thereto.

2.9

Letters of Credit . On or after the Closing Date, Agent may in its sole discretion, subject to the terms and conditions hereof, issue or cause the issuance of Letters of Credit (“ Letters of Credit ”) on behalf of Borrower; provided , however , that Agent 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) outstanding Letters of Credit to exceed the lesser of (x) the Maximum Revolving Advance Amount or (y) the Formula Amount; provided , further , however , that Agent 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 issued for Borrower would then cause the sum of (i) the outstanding Revolving Advances to Borrower plus (ii) the outstanding Letters of Credit issued or caused to be issued on behalf of Borrower to exceed the lesser of (x) Borrower’s Individual Maximum Revolving Advance Amount or (y) Borrower’s Individual Formula Amount. The maximum amount of outstanding Letters of Credit shall not exceed $1,000,000 in the aggregate at any time. All disbursements or payments related to Letters of Credit shall be deemed to be Domestic Rate Loans consisting of Revolving Advances and shall bear interest at the Revolving Interest Rate for Domestic Rate Loans; Letters of Credit that have not been drawn upon shall not bear interest.

2.10

Issuance of Letters of Credit .

(a)

Borrower may request Agent to issue or cause the issuance of a Letter of Credit by delivering to Agent at the Payment Office, Agent’s form of Letter of Credit Application (the “ Letter of Credit Application ”) completed to the satisfaction of Agent; and, such other certificates, documents and other papers and information as Agent may reasonably request. Borrower also has the right to give instructions and make agreements with respect to any application, any applicable letter of credit and security agreement, any applicable letter of credit reimbursement agreement and/or any other applicable agreement, any letter of credit and the disposition of documents, disposition of any unutilized funds, and to agree with Agent upon any amendment, extension or renewal of any Letter of Credit.

(b)

Each Letter of Credit shall, among other things, (i) provide for the payment of sight drafts or acceptances of issuance 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 twelve (12) months after such Letter of Credit’s date of issuance and in no event later than the last day of the Term. Each 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 revision thereof adhered to by the Issuer and, to the extent not inconsistent therewith, the laws of the State of Illinois.

(c)

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

2.11

Requirements For Issuance of Letters of Credit .

(a)

In connection with the issuance of any Letter of Credit Borrower shall indemnify, save and hold Agent, each Lender and each Issuer harmless from any loss, cost, expense or liability, including, without limitation, payments made by Agent, any Lender or any Issuer and expenses and reasonable attorneys’ fees incurred by Agent, any Lender or Issuer arising out of, or in connection with, any Letter of Credit to be issued or created for Borrower. Borrower shall be bound by Agent’s or any Issuer’s regulations and good faith interpretations of any Letter of Credit issued or created for Borrower’s Account, although this interpretation may be different from its own; and, neither 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 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 Agent’s, any Lender’s, any Issuer’s or such correspondents’ gross negligence or willful misconduct.

(b)

Each Letter of Credit Application shall be submitted to Agent by Borrower not later than 10:00 A.M. (Chicago time) five (5) Business Days prior to the proposed date of issuance of any Letter of Credit. Borrower shall authorize and direct any Issuer to name Borrower as the “Applicant” or “Account Party” of each Letter of Credit. If Agent is not the Issuer of any Letter of Credit, Borrower shall authorize and direct the Issuer to deliver to Agent all instruments, documents, and other writings and property received by the Issuer pursuant to the Letter of Credit and to accept and rely upon Agent’s instructions and agreements with respect to all matters arising in connection with the Letter of Credit, the application therefor or any acceptance therefor.

(c)

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

exceed, with the making of such disbursement, the lesser of the Maximum Revolving Advance Amount or the Formula Amount, and such disbursement is not reimbursed by Borrower within two (2) Business Days, Agent shall promptly notify each Lender and upon Agent’s demand each Lender shall pay to Agent such Lender’s proportionate share of such unreimbursed disbursement together with such Lender’s proportionate share of Agent’s unreimbursed costs and expenses relating to such unreimbursed disbursement. Upon receipt by Agent of a repayment from Borrower of any amount disbursed by Agent for which Agent had already been reimbursed by Lenders, 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) Agent 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) all Persons (other than Borrower) have been fully reimbursed for all payments made under or relating to Letters of Credit.

2.12

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

2.13

Manner of Borrowing and Payment .

(a)

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

(b)

Each payment (including each prepayment) by Borrower on account of the principal of and interest on the Revolving Advances, shall be applied to the Revolving Advances pro rata according to the applicable Commitment Percentages of Lenders. Except as expressly provided herein, all payments (including prepayments) to be made by Borrower on account of principal, interest and fees shall be made without set off or counterclaim and shall be made to Agent on behalf of the Lenders to the Payment Office, in each case on or prior to 12 Noon, Chicago time, in Dollars and in immediately available funds.

(c)

(i)

Notwithstanding anything to the contrary contained in Sections 2.13(a) and (b) hereof, commencing with the first Business Day following the Closing Date, each borrowing of Revolving Advances shall be advanced by Agent and each payment by Borrower on account of Revolving Advances shall be applied first to those Revolving Advances advanced by Agent. On or before 12:00 Noon, Chicago time, on each Settlement Date commencing with the first Settlement Date following the Closing Date, Agent and Lenders shall make certain payments as follows: (I) if the aggregate amount of new Revolving Advances made by Agent during the preceding Week (if any) exceeds the aggregate amount of repayments applied to outstanding Revolving Advances during such preceding Week, then each Lender shall provide Agent with 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 Agent

shall provide each Lender with funds in an amount equal to its applicable Commitment Percentage of the difference between (y) such repayments and (z) such Revolving Advances.

(i)

Each Lender shall be entitled to earn interest at the applicable Revolving Interest Rate on the principal amount outstanding to such Lender of the Advances which it has funded.

(ii)

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

(d)

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

(e)

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

2.14

Mandatory Prepayments . Subject to Section 4.3 hereof, when Borrower sells or otherwise disposes of any Collateral other than Inventory in the ordinary course of business or other dispositions permitted under Section 4.3 hereof, Borrower shall repay the Advances in an amount equal to the net proceeds of such sale (i.e., gross proceeds less the reasonable costs of such sales or other dispositions), such repayments to be made promptly but in no event more than one (1) Business Day following receipt of such net proceeds, and until the date of payment, such proceeds shall be held in trust for Agent. The foregoing shall not be deemed to be implied consent to any such sale otherwise prohibited by the terms and conditions hereof. Such repayments shall be applied to the Obligations then due and payable in such order as Agent may determine, subject to Borrower’s ability to reborrow Revolving Advances in accordance with the terms hereof.

2.15

Use of Proceeds . Borrower shall apply the proceeds of Advances to (i) repay existing indebtedness owed to Congress Financial Corporation (Southern), (ii) pay fees and expenses relating to this transaction, and (iii) to provide for its working capital needs.

2.16

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

(b)

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

(c)

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

(d)

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

(e)

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

III.

INTEREST AND FEES .

3.1

Interest . Interest on Advances shall be payable in arrears on the first day of each month with respect to Domestic Rate Loans and, with respect to Eurodollar Rate Loans, at the end of each Interest Period or, for Eurodollar Rate Loans with an Interest Period in excess of three months, at the earlier of (a) each three months on the anniversary date of the commencement of such Eurodollar Rate Loan or (b) the end of the Interest Period. Interest charges shall be computed on the actual principal amount of Advances outstanding during the month (the “ Monthly Advances ”) at a rate per annum equal to, with respect to Revolving Advances, the applicable Revolving Interest Rate. Whenever, subsequent to the date of this Agreement, the Base Rate is increased or decreased, the Revolving Interest 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 Base Rate during the time such change or changes remain in effect. The Eurodollar Rate shall be adjusted with respect to Eurodollar Rate Loans without notice or demand of any kind on the effective date of any change in the Reserve Percentage as of such effective date. Upon and after the occurrence of an Event of Default, and during the continuation thereof, (i) the Obligations other than Eurodollar Rate Loans shall bear interest at the applicable Revolving Interest Rate for Domestic Loans plus two percent (2%) per annum and (ii) Eurodollar Rate Loans shall bear interest at the Revolving Interest Rate for Eurodollar Rate Loans plus two percent (2%) per annum (as applicable, the “ Default Rate ”).

3.2

Letter of Credit Fees .

(a)

Borrower shall pay (x) to Agent, for the benefit of 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 three and one-quarter percent (3.25%) per annum, 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 month and on the last day of the Term and (y) to the Issuer, any and all fees and expenses as agreed upon by the Issuer and Borrower in connection with any Letter of Credit, including, without limitation, in connection with the opening, amendment or renewal of any such Letter of Credit and any acceptances created thereunder and shall reimburse Agent for any and all such fees and expenses, if any, paid by Agent to the Issuer (all of the foregoing fees, the “ Letter of Credit Fees ”). All such charges shall be deemed earned in full on the date when the same are due and payable hereunder and shall not be subject

to rebate or proration upon the termination of this Agreement for any reason. Any such charge in effect at the time of a particular transaction shall be the charge for that transaction, notwithstanding any subsequent change in the Issuer’s prevailing charges for that type of transaction. All Letter of Credit Fees payable hereunder shall be deemed earned in full on the date when the same are due and payable hereunder and shall not be subject to rebate or proration upon the termination of this Agreement for any reason.

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

3.3

Facility Fee . If, for any month during the Term, the average daily unpaid balance of the Advances for each day of such month does not equal the Maximum Loan Amount, then Borrower shall pay to Agent for the ratable benefit of Lenders a fee at a rate equal to one-quarter of one percent (.25%) per annum on the amount by which the Maximum Revolving Advance Amount exceeds such average daily unpaid balance. Such fee shall be payable to Agent in arrears on the last day of each month. Borrower may permanently reduce the Maximum Loan Amount in integral multiples of $100,000 upon at least five (5) Business Days’ written notice to Agent not to exceed an aggregate permanent reduction in excess of $2,000,000 during the Term.

3.4

Collateral Monitoring Fee . Borrower shall pay to Agent on the first day of each month following any month in which Agent performs any collateral monitoring - namely any field examination, collateral analysis or other business analysis, the need for which is to be determined by Agent and which monitoring is undertaken by Agent or for Agent’s benefit - a collateral monitoring fee in an amount equal to $750 per day for each person (other than Agent’s management personnel) employed to perform such monitoring and in an amount equal to $750 per day for each manager of Agent performing such monitoring, plus all reasonable costs and disbursements incurred by Agent in the performance of such examination or analysis. Notwithstanding the foregoing, so long as no Default or Event of Default exists, Borrower will not be charged for more than four (4) audits per year and will not be charged more than $25,000 per year.

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 Revolving Interest Rate for Domestic Rate Loans during such extension.

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 Borrower, and if the then remaining excess amount is greater than the previously unpaid principal balance, Lenders shall promptly refund such excess amount to Borrower and the provisions hereof shall be deemed amended to provide for such permissible rate.

3.7

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

(a)

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

(b)

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

(c)

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

and the result of any of the foregoing is to increase the cost to Agent or any Lender of making, renewing or maintaining its Advances hereunder by an amount that Agent or such Lender deems to be material or to reduce the amount of any payment (whether of principal, interest or otherwise) in respect of any of the Advances by an amount that Agent or such Lender deems to be material, then, in any case Borrower shall promptly pay Agent or such Lender, upon its demand, such additional amount as will compensate Agent or such Lender for such additional cost or such reduction, as the case may be. Agent or such Lender shall certify the amount of such additional cost or reduced amount to Borrower, and such certification shall be conclusive absent manifest error.

3.8

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

(a)

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

(b)

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

then Agent shall give Borrower prompt written, telephonic or telegraphic notice of such determination. If such notice is given, (i) any such requested Eurodollar Rate Loan shall be made as a Domestic Rate Loan, unless Borrower shall notify Agent no later than 9:00 a.m. (Chicago time) two (2) Business Days prior to the date of such proposed borrowing, that its request for such borrowing shall be cancelled or made as an unaffected type of Eurodollar Rate Loan, (ii) any Domestic Rate Loan or Eurodollar Rate Loan which was to have been converted to an affected type of Eurodollar Rate Loan shall be continued as or converted into a Domestic Rate Loan, or, if Borrower shall notify Agent, no later than 9:00 a.m. (Chicago time) two (2) Business Days prior to the proposed conversion, shall be maintained as an unaffected type of Eurodollar Rate Loan, and (iii) any outstanding affected Eurodollar Rate Loans shall be converted into a Domestic Rate Loan, or, if Borrower shall notify Agent, no later than 9:00 a.m. (Chicago time) two (2) Business Days prior to the last Business Day of the then current Interest Period applicable to such affected Eurodollar Rate Loan, shall be converted into an unaffected type of Eurodollar Rate Loan, on the last Business Day of the then current Interest Period for such affected Eurodollar Rate Loans. Until such notice has been withdrawn, Lenders shall have no obligation to make an affected type of Eurodollar Rate Loan or maintain outstanding affected Eurodollar Rate Loans and Borrower shall not have the right to convert a Domestic Rate Loan or an unaffected type of Eurodollar Rate Loan into an affected type of Eurodollar Rate Loan.

3.9

Capital Adequacy .

(a)

In the event that Agent or any Lender shall have determined that any applicable law, rule, regulation or guideline regarding capital adequacy, or any change therein, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by Agent or any Lender (for purposes of this Section 3.9, the term “Lender” shall include Agent or any Lender and any corporation or bank controlling Agent or any Lender) and the office or branch where Agent or any Lender (as so defined) makes or maintains any Eurodollar Rate Loans with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on Agent or any Lender’s capital as a consequence of its obligations hereunder to a level below that which Agent or such Lender could have achieved but for such adoption, change or compliance (taking into consideration Agent’s and each Lender’s policies with respect to capital adequacy) by an amount deemed by Agent or any Lender to be material, then, from time to time, Borrower shall pay upon demand to Agent or such Lender such additional amount or amounts as will compensate Agent or such Lender for such reduction. In determining such amount or amounts, Agent or such Lender may use any reasonable averaging or attribution methods. The protection of this Section 3.9 shall be available to Agent and each Lender regardless of any possible contention of invalidity or inapplicability with respect to the applicable law, regulation or condition.

(b)

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

3.10

Replacement of Lenders . If any Lender (an “ Affected Lender ”) (a) makes demand upon Borrower for (or if Borrower is otherwise required to pay) amounts pursuant to Section 3.7 or 3.9, (b) is unable to make or maintain Eurodollar Rate Loans as a result of a condition described in Section 2.2(g) or (c) is a Defaulting Lender, Borrower may, within ninety (90) days of receipt of such demand, notice (or the occurrence of such other event causing the Borrower to be required to pay such compensation or causing Section 2.2(g) to be applicable), or Lender Default, as the case may be, by notice (a “ Replacement Notice ”) in writing to Agent and such Affected Lender (i) request the Affected Lender to cooperate with Borrower in obtaining a replacement Lender satisfactory to Agent and Borrower (the “ Replacement Lender ”); (ii) request the non-Affected Lenders to acquire and assume all of the Affected Lender’s Revolving Advances and Commitment Percentage as provided herein, but none of such Lenders shall be under an obligation to do so; or (iii) designate a Replacement Lender approved by Agent, such approval not to be unreasonably withheld or delayed. If any satisfactory Replacement Lender shall be obtained, and/or if any one or more of the non-Affected Lenders shall agree to acquire and assume all of the Affected Lender’s Revolving Advances and Commitment Percentage, then such Affected Lender shall assign, in accordance with Section 15.3, all of its Revolving Advances and Commitment Percentage and other rights and obligations under this Agreement and the Other Documents to such Replacement Lender or non-Affected Lenders, as the case may be, in exchange for payment of the principal amount so assigned and all interest and fees accrued on the amount so assigned, plus all other Obligations then due and payable to the Affected Lender; provided , however , that (A) such assignment shall be without recourse, representation or warranty and shall be on terms and conditions reasonably satisfactory to such Affected Lender and such Replacement Lender and/or non-Affected Lenders, as the case may be, and (B) prior to any such assignment, Borrower shall have paid to such Affected Lender all amounts properly demanded and unreimbursed under Section 3.7 and 3.9. Upon the effective date of such assignment, Borrower shall issue a replacement Revolving Credit Note to such Replacement Lender and/or non-Affected Lenders, as the case may be, and such institution(s) shall become a “Lender” for all purposes under this Agreement and the other Documents.

3.11

Tax Withholding . Each Lender or assignee or participant of a Lender that is not incorporated under the Laws of the United States of America or a state thereof (and, upon the written request of Agent, each other Lender or assignee or participant of a Lender) agrees that it will deliver to each of the Borrower and Agent two (2) duly completed appropriate valid Withholding Certificates (as defined under §1.1441-1(c)(16) of the Income Tax Regulations (“ Regulations ”)) certifying its status (i.e., U.S. or foreign person) and, if appropriate, making a claim of reduced, or exemption from, U.S. withholding tax on the basis of an income tax treaty or an exemption provided by the Internal Revenue Code. The term “Withholding Certificate” means a Form W-9; a Form W-8BEN; a Form W-8ECI; a Form W-81MY and the related statements and certifications as required under §1.1441-1(e)(3) of the Regulations; a statement described in §1.871-14(c)(2)(v) of the Regulations; or any other certificates under the Code or Regulations that certify or establish the status of a payee or beneficial owner of a U.S. or foreign person. Each Lender, assignee or participant required to deliver to the Borrower and Agent a

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

IV.

COLLATERAL: GENERAL TERMS .

4.1

Security Interest in the Collateral . To secure the prompt payment and performance to Agent and each Lender of the Obligations, Borrower hereby assigns, pledges and grants to Agent for its benefit and for the ratable benefit of each Lender a continuing security interest in and to all of its Collateral, whether now owned or existing or hereafter acquired or arising and wheresoever located. Borrower shall mark its books and records as may be necessary or appropriate to evidence, protect and perfect Agent’s security interest and shall cause its financial statements to reflect such security interest. Borrower shall promptly provide Agent with notice of all Commercial Tort Claims as required by Section 4.2(b). Upon delivery of each such notice, Borrower shall be deemed to hereby grant to Agent a security interest and lien in and to such commercial tort claims and all proceeds thereof. Notwithstanding the fact that Equipment is included in the “Collateral” under the terms of this Agreement, Agent and Lenders agree that they will not unreasonably withhold their consent, upon written request to Agent after that date that is six (6) months following the Closing Date, to the release of the security interest in Equipment if Borrower requests to separately finance the Equipment on terms and conditions satisfactory to Agent and the Lenders.

4.2

Perfection of Security Interest .

(a)

Borrower shall take all action that may be necessary or desirable, or that Agent may request, so as at all times to maintain the validity, perfection, enfor

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