SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

EXECUTION COPY

THIS SECOND AMENDED LOAN AND SECURITY AGREEMENT is made as of this 21st day of September, 2009, by and among HWC WIRE & CABLE COMPANY , a Delaware corporation (“ Borrower ”), with its chief executive office and principal place of business at 10201 N.  Loop East, Houston, Texas 77029; the lenders who are signatories hereto (“ Lenders ”) and BANK OF AMERICA, N.A. , (“ Bank of America ”), a national banking association with an office at 135 South LaSalle Street, 4 ^th Floor, Chicago, Illinois 60603, as agent for Lenders hereunder (Bank of America, in such capacity, being “ Agent ”).  Capitalized terms used in this Agreement have the meanings assigned to them in Appendix A, General Definitions.  Accounting terms not otherwise specifically defined herein shall be construed in accordance with GAAP consistently applied.

WHEREAS , Borrower (then known as Houston Wire & Cable Company), Agent’s predecessor-in-interest, Fleet Capital Corporation, and the lender signatories thereto entered into a certain Amended and Restated Loan and Security Agreement dated May 22, 2000 (said Amended and Restated Loan and Security Agreement as amended from time to time, the “2000 Loan Agreement”); and

WHEREAS , Borrower, Lenders and Agent desire to amend and restate the 2000 Loan Agreement pursuant to the terms and conditions hereof.

1.           CREDIT FACILITY

Subject to the terms and conditions of, and in reliance upon the representations and warranties made in, this Agreement and the other Loan Documents, Lenders agree to make a credit facility of up to Seventy-Five Million Dollars ($75,000,000) available upon Borrower’s request therefor, as follows:

1.1           Revolving Credit Loans .

1.1.1                   Loans and Reserves .  (A)   Loans and Reserves .  The aggregate amount of the Revolving Credit Loans to be made by each Lender (such Lender’s “Revolving Credit Loan Commitment”), pursuant to the terms hereof, shall be the amount set below such Lender’s name on the signature pages hereof.  The aggregate principal amount of the Revolving Credit Loan Commitments is Seventy-Five Million Dollars ($75,000,000).  The percentage equal to the quotient of (x) each Lender’s Revolving Credit Loan Commitment, divided by (y) the aggregate of all Revolving Credit Loan Commitments, is that Lender’s “Revolving Credit Percentage”.  Subject to all of the terms and conditions of this Agreement, each Lender agrees, for so long as no Default or Event of Default exists, to make Revolving Credit Loans to Borrower from time to time, as requested by Borrower in accordance with the terms of Section 3.1 hereof, up to a maximum principal amount at any time outstanding equal to the product of (A) the Borrowing Base at such time multiplied by (B) such Lender’s Revolving Credit Percentage.  It is expressly understood and agreed that Agent and Lenders may use the Borrowing Base as a maximum ceiling on Revolving Credit Loans outstanding to Borrower at any time.  If the unpaid balance of the Revolving Credit Loans should exceed the ceiling so determined or any other limitation set forth in this Agreement, such Revolving Credit Loans shall nevertheless constitute Obligations that are secured by the Collateral and entitled to all the benefits thereof.  In no event shall Lenders be required to make a Revolving Credit Loan at any time that there exists a Default or an Event of Default.  Agent shall have the right to establish reserves in such amounts, and with respect to such matters, as Agent shall deem necessary or appropriate in the reasonable exercise of Agent’s credit judgment, against the amount of Revolving Credit Loans which Borrower may otherwise request under this Section 1.1.1 , including, without limitation, with respect to (i) price adjustments, damages, unearned discounts, returned products or other matters for which credit memoranda are issued in the ordinary course of Borrower’s business; (ii) shrinkage, spoilage and obsolescence of Inventory; (iii) slow moving Inventory; (iv) other sums chargeable against Borrower’s Loan Account as Revolving Credit Loans under any section of this Agreement; (v) amounts owing by Borrower to any Person to the extent secured by a Lien on, or trust over, any Property of Borrower; and (vi) such other matters, events, conditions or contingencies from time to time hereunder as to which Agent, in its reasonable credit judgment, determines reserves should be established from time to time hereunder.

(B)           The Revolving Credit Loans shall be evidenced by promissory notes to be executed and delivered by Borrower at the time of the initial Revolving Credit Loan, the form of which is attached hereto and made a part hereof as Exhibit 1.1.1 (the “Revolving Credit Notes”).  Each Revolving Credit Note shall be payable to the order of a Lender and shall represent the obligation of Borrower to pay the amount of such Lender’s Revolving Credit Loan Commitment or, if less, the aggregate unpaid principal amount of all Revolving Credit Loans made by such Lender to Borrower with interest thereon as prescribed in Section 2.1.1 .

(C)           Insofar as Borrower may request and Lenders may be willing in their sole and absolute discretion to make Revolving Credit Loans to Borrower at a time when the unpaid balance of Revolving Credit Loans exceeds, or would exceed with the making of any such Revolving Credit Loan, the Borrowing Base (any such Loan or Loans being herein referred to individually as an “Overadvance” and collectively as “Overadvances”), Agent shall enter such Overadvances as debits in the Loan Account.  All Overadvances shall be repaid on demand, shall be secured by the Collateral and shall bear interest as provided in this Agreement for Revolving Credit Loans generally.  Any Overadvance to be made by Lenders pursuant to the terms hereof shall be made by Lenders ratably in accordance with their Revolving Credit Percentages.  Overadvances in the aggregate amount of Five Hundred Thousand Dollars ($500,000) or less may, unless a Default or Event of Default has occurred and is continuing, be made in the sole and absolute discretion of Agent.  Overadvances in an aggregate amount of more than Five Hundred Thousand Dollars ($500,000) but less than One Million Dollars ($1,000,000) may, unless a Default or an Event of Default has occurred and is continuing, be made in the sole and absolute discretion of Required Lenders.  Overadvances in an aggregate amount of One Million Dollars ($1,000,000) or more and Overadvances to be made after the occurrence and during the continuation of a Default or an Event of Default shall require the consent of all Lenders.  The forgoing notwithstanding, in no event, unless otherwise consented to by all Lenders, (x) shall any Overadvances be outstanding for more than sixty (60) consecutive days, (y) after all outstanding Overadvances have been repaid, shall Agent or Lenders make any additional Overadvances unless sixty (60) days or more have expired since the last date on which any Overadvances were outstanding or (z) shall Overadvances be outstanding on more than ninety (90) days within any one hundred eighty day (180) period.

1.1.2                   Swingline Loans .  In order to reduce the frequency of transfers from Lenders to Agent if there are more than one Lender, Agent, in its sole discretion, may, from its own funds, make Revolving Credit Loans on behalf of Lenders; provided that the aggregate amount of any such Revolving Credit Loans so made by Agent shall not at anytime exceed Three Million Dollars ($3,000,000).  Any such Revolving Credit Loan made by Agent on behalf of Lenders is sometimes hereinafter referred to as a “Swingline Loan.”  In such event, the Lenders on behalf of whom Agent made the Revolving Credit Loan shall reimburse Agent for the amount of Revolving Credit Loan so made on its behalf, on a weekly (or more frequent basis as determined by Agent, in its sole discretion) basis and the entire amount of interest attributable to such Revolving Credit Loan for the period from the date on which said Revolving Credit Loan was made by Agent on such Lender’s behalf until Agent is reimbursed by such Lender, shall be paid to Agent.  All Swingline Loans shall be included in the Base Rate Revolving Portion of the Loans and shall bear interest as provided in Section 2.1.1 thereof.

1.1.3                   Use of Proceeds .  The Revolving Credit Loans shall be used solely for Borrower’s general operating and capital needs and for other corporate purposes in a manner consistent with the provisions of this Agreement and all applicable laws.

1.2           Intentionally Omitted .

1.3           Letters of Credit; LC Guaranties .

(A)           Subject to all of the terms and conditions of this Agreement, if requested to do so by Borrower, Agent shall, on behalf of Lenders, issue its, or cause to be issued Bank’s, Letters of Credit for the account of Borrower or shall execute LC Guaranties by which Lenders shall guaranty the payment or performance by Borrower of its reimbursement obligation with respect to Letters of Credit issued for Borrower’s account by Bank or Agent; provided that the aggregate face amount of all Letters of Credit and LC Guaranties outstanding at any time shall not exceed Ten Million Dollars ($10,000,000) and no Letter of Credit may have an expiration date that is after sixty days prior to the Commitment Termination Date, unless Borrower provides, on or prior to the Commitment Termination Date, Agent with cash collateral for said Letter of Credit or LC Guaranty, in a manner and amount acceptable to Agent.  Further, the expiration date of any Trade Letter of Credit shall be not more than 180 days after the issuance thereof and the expiration date of any Standby Letter of Credit shall not be more than one year after the date of issuance thereof (although any such Standby Letter of Credit shall be renewable for an additional one-year period in accordance with the terms hereof).  Any amounts paid by Agent or any Lender under any LC Guaranty or in connection with any Letter of Credit (i) shall become part of the Obligations, (ii) unless paid by Borrower pursuant to Section 1.3(C) below, shall be paid from the proceeds of a Revolving Credit Loan requested pursuant to Section 3.1.1 below, to the extent Lenders are required to make Revolving Credit Loans pursuant to the terms hereof and (iii) otherwise, shall be payable on demand.  In no event shall Agent, Bank or Lenders be required to issue or cause to be issued Letters of Credit or LC Guaranties at any time there exists a Default or an Event of Default.

(B)           Immediately upon the issuance of each Letter of Credit by Agent or Bank or LC Guaranty by Agent hereunder, each Lender shall be deemed to have automatically, irrevocably and unconditionally purchased from Agent an undivided interest and participation in and to such Letter of Credit or LC Guaranty, the obligations of Borrower in respect thereof and the liability of Agent thereunder in an amount equal to the amount available for drawing under such Letter of Credit or, in the case of a LC Guaranty, the amount guaranteed thereunder, multiplied by such Lender’s Revolving Credit Percentage.  Agent will notify each Lender promptly upon presentation to it of a draw under a Letter of Credit or a demand for payment under a LC Guaranty.  On a weekly basis, or more frequently if requested by Agent, each Lender shall make payment to Agent in immediately available funds, of an amount equal to such Lender’s pro rata share of the amount of any payment made by Agent in respect to any Letter of Credit or LC Guaranty.  The obligation of each Lender to reimburse Agent under this Section 1.3 shall be unconditional, continuing, irrevocable and absolute, except in respect of indemnity claims arising out of Agent’s willful misconduct.  In the event that any Lender fails to make payment to Agent of any amount due under this Section 1.3 , Agent shall be entitled to receive, retain and apply against such obligation the principal and interest otherwise payable to such Lender hereunder until Agent receives such payment from such Lender or such obligation is otherwise fully satisfied; provided , however , that nothing contained in this sentence shall relieve such Lender of its obligation to reimburse the Agent for such amount in accordance with this Section 1.3(B) .

(C)           Borrower agrees, unconditionally, irrevocably and absolutely, to pay immediately to Agent, for the account of Lenders, the amount drawn under a Letter of Credit or paid pursuant to a LC Guaranty.  If Borrower at any time fails to make such payment in accordance with the terms of this Agreement, Borrower shall be deemed to have elected to borrow from the Lenders on such date Revolving Credit Loans equal in aggregate amount to the amount paid by Agent or the issuing Lender, as the case may be, under such Letter of Credit or LC Guaranty.  The provisions of Section 1.3(A) and (B) notwithstanding, in the event that any Lender is prohibited by any Legal Requirement from issuing or participating in any LC Guaranty (or portion thereof), then Agent shall issue such LC Guaranty (or such Lender’s portion thereof) in lieu of such Lender and such Lender shall not be deemed to have a participation therein.  In such event, any payments received by Agent pursuant to Section 1.3(C) of the Loan Agreement which would otherwise be paid by Agent to such Lender shall be retained by Agent to reimburse Agent for any amounts paid by Agent in respect to the LC Guaranty (or portion thereof) Agent issued in lieu of such Lender.

(D)           Agent shall give prompt telephone, telex or facsimile notice to each Lender of each issuance of, or amendment to, a Letter of Credit specifying the effective date of the Letter of Credit or amendment, the amount, the beneficiary, and the expiration date of the Letter of Credit, in each case as established originally or through the relevant amendment, as applicable, each Lender’s pro rata participation in such Letter of Credit and whether Agent has classified the Letter of Credit as a commercial, performance, or financial letter of credit for regulatory reporting purposes.

2.           INTEREST, FEES AND CHARGES

2.1           Interest .

2.1.1                   Rate of Interest .  Interest shall accrue on the principal amount of the Base Rate Revolving Credit Portion outstanding at the end of each day at a fluctuating rate per annum equal to the Base Rate plus the Applicable Margin for the Base Rate Revolving Credit Portion.  Said rate of interest shall increase or decrease by an amount equal to any increase or decrease in the Base Rate, effective as of the opening of business on the day that such change in the Base Rate occurs.  If Borrower properly exercises the LIBOR Option as provided in Section 2.3 , interest shall accrue on the principal amount of the LIBOR Revolving Credit Portion outstanding at the end of each day at a rate per annum equal to the Applicable Margin plus the LIBOR Rate applicable to each LIBOR Revolving Credit Portion for the corresponding LIBOR Period.

2.1.2                   Default Rate of Interest .  At the option of Agent or Required Lenders, upon and after the occurrence of an Event of Default, and during the continuation thereof, the principal amount of all Loans shall bear interest at a rate per annum equal to 2.0% plus the interest rate otherwise applicable thereto (the “Default Rate”).

2.1.3                   Maximum Interest .  In no event whatsoever shall the aggregate of all amounts deemed interest hereunder or under the Revolving Credit Notes and charged or collected pursuant to the terms of this Agreement or pursuant to the Revolving Credit Notes exceed the highest rate permissible under any law which a court of competent jurisdiction shall, in a final determination, deem applicable hereto.  If any provisions of this Agreement or the Revolving Credit Notes are in contravention of any such law, such provisions shall be deemed amended to conform thereto.

2.2           Computation of Interest and Fees .  Interest, Letter of Credit and LC Guaranty fees and unused line fees hereunder shall be calculated daily and shall be computed on the actual number of days elapsed over a year of 360 days.  For the purpose of computing interest hereunder, all items of payment received by Agent shall be deemed applied by Agent on account of the Obligations (subject to final payment on such items) on the first Business Day after receipt by Agent of such items in Agent’s account located in New York, New York.

2.3           LIBOR Option .

(i)           Upon the conditions that:  (1) Agent shall have received a LIBOR Request from Borrower at least 3 Business Days prior to the first day of the LIBOR Period requested, (2) there shall have occurred no change in applicable law which would make it unlawful for any Lender to obtain deposits of U.S.  dollars in the London interbank foreign currency deposits market, (3) as of the date of the LIBOR Request and the first day of the LIBOR Period, there shall exist no Event of Default, (4) Agent is able to determine the LIBOR Rate in respect of the requested LIBOR Period or each Lender is able to obtain deposits of U.S.  dollars in the London interbank foreign currency deposits market in the applicable amounts and for the requested LIBOR Period, and (5) as of the first date of the LIBOR Period, there are no more than five outstanding LIBOR Portions including the LIBOR Portion being requested; then interest on the LIBOR Portion requested during the LIBOR Period requested will be based on the applicable LIBOR Rate.

(ii)           Each LIBOR Request shall be irrevocable and binding on Borrower.  Borrower shall indemnify Lenders for any loss, penalty or expense incurred by Lenders due to failure on the part of Borrower to fulfill, on or before the date specified in any LIBOR Request, the applicable conditions set forth in this Agreement or due to the prepayment of the applicable LIBOR Portion prior to the last day of the applicable LIBOR Period, including, without limitation, any loss (excluding loss of anticipated profits) or expense incurred by reason of the liquidation or redeployment of deposits or other funds acquired by Lenders to fund or maintain the requested LIBOR Portion.

(iii)           If any Legal Requirement shall (1) make it unlawful for any Lender to fund through the purchase of U.S.  dollar deposits any LIBOR Portion or otherwise give effect to its obligations as contemplated under this Section 2.3 , or (2) shall impose on any Lender any costs based on or measured by the excess above a specified level of the amount of a category of deposits or other liabilities of such Lender which includes deposits by reference to which the LIBOR Rate is determined as provided herein or a category of extensions of credit or other assets of such Lender which includes any LIBOR Portion or (3) shall impose on such Lender any restrictions (not already taken into account under statutory reserves) on the amount of such a category of liabilities or assets which such Lender may hold, then, in each such case, Agent may, by notice thereof to Borrower, terminate the LIBOR Option.  Any LIBOR Portion subject thereto shall immediately bear interest thereafter at the rate and in the manner provided for Base Rate Portions pursuant to Section 2.1.1 .  Borrowers shall indemnify any such Lender against any loss, penalty or expense incurred by such Lender due to liquidation or redeployment of deposits or other funds acquired such Lender to fund or maintain any LIBOR Portion that is terminated under this paragraph.

(iv)           Each Lender shall receive payments of amounts of principal of and interest with respect to the LIBOR Portions free and clear of, and without deduction for, any Taxes.  If (1) any Lender shall be subject to any Tax in respect of any LIBOR Portion or any part thereof or (2) Borrower shall be required to withhold or deduct any Tax from any such amount, the LIBOR Rate applicable to such LIBOR Portion shall be adjusted by Agent to reflect all additional costs incurred by such Lender in connection with the payment by such Lender or the withholding by Borrower of such Tax and such Borrower shall provide Agent with a statement detailing the amount of any such Tax actually paid by Borrower.  Determination by Agent of the amount of such costs shall, in the absence of manifest error, be conclusive.  If after any such adjustment any part of any Tax paid by any such Lender is subsequently recovered by such Lender, such Lender shall reimburse Borrower to the extent of the amount so recovered.  A certificate of an officer of the effected Lender setting forth the amount of such recovery and the basis therefor shall, in the absence of manifest error, be conclusive.

(v)           Each Lender agrees to take such actions as may be commercially reasonable to mitigate the adverse effects to Borrower as provided in clauses (iii) and (iv) of Section 2.3 above or Section 2.10 below; provided that no Lender shall be required to incur any costs or expense in respect to any such mitigation.

2.4           Letter of Credit and LC Guaranty Fees .  (A) Borrower shall pay to Agent either for its own benefit or the ratable benefit of Lenders, as provided below:

(i)           for Standby Letters of Credit and LC Guaranties of Standby Letters of Credit, a fee equal to the annualized LC Percent of the aggregate face amount of such Letters of Credit and LC Guaranties outstanding from time to time during the term of this Agreement, plus all normal and customary charges associated with the issuance thereof as set forth on Exhibit 2.4 hereof, payable upon the issuance of such Letter of Credit or LC Guaranty and an additional fee equal to the annualized LC Percent of the face amount of such Letter of Credit or LC Guaranty payable upon each renewal or extension thereof.  All such fees and charges shall be deemed fully earned and shall be due and payable upon issuance, renewal or extension (as the case may be) of each such Letter of Credit or LC Guaranty and shall not be subject to rebate or proration upon the termination of this Agreement for any reason; and

(ii)           for Trade Letters of Credit and LC Guaranties of Trade Letters of Credit, a fee equal to the annualized LC Percent of the face amount of each such Letter of Credit or LC Guaranty, plus the normal and customary charges associated with the issuance thereof as set forth on Exhibit 2.4 hereof, payable upon the issuance of such Letter of Credit or execution of such LC Guaranty and an additional fee equal to the annualized LC Percent of the face amount of such Letter of Credit or LC Guaranty payable upon each renewal or extension thereof.  All of such fees and charges shall be fully earned and due and payable upon issuance, renewal or extension (as the case may be) of each such Letter of Credit or LC Guaranty, and shall not be subject to rebate or proration upon the termination of this Agreement for any reason.

(B)           Charges set forth on Exhibit 2.4 shall be paid to Agent for its own benefit.  All other fees payable in connection with Letters of Credit and LC Guaranties shall be paid to Agent for the ratable benefit of Lenders.

2.5           Unused Line Fee .  Borrower shall pay to Agent for the ratable benefit of Lenders a fee equal to the Applicable Margin per annum of the average monthly amount by which the Maximum Revolving Loan exceeds the sum of the outstanding principal balance of the Revolving Credit Loans (exclusive of Swingline Loans) plus the LC Amount.  The unused line fee shall be payable monthly in arrears on the first day of each calendar month hereafter.

2.6           Collection Charges .  If items of payment are received by Agent at a time when there are no Revolving Credit Loans outstanding, such items of payment shall be subject to a collection charge equal to one day’s interest on the amount thereof at the rate then applicable to Revolving Credit Loans, which collection charges shall be payable on the first Business Day of each month.

2.7           Audit and Appraisal Fees .  Borrower shall pay to Agent reasonable audit and appraisal fees in accordance with Agent’s current schedule of fees in effect from time to time (at Closing Date, $1,000 per day per person) in connection with audits and appraisals of Borrower’s books and records and such other matters as Agent shall deem reasonably appropriate, plus all out-of-pocket expenses incurred by Agent in connection with such audits and appraisals.  Audit fees shall be payable on the first day of the month following the date of issuance by Agent of a request for payment thereof to Borrower.

2.8           Reimbursement of Expenses .

2.8.1                  Administration and Enforcement Expenses.  If, at any time or times regardless of whether or not an Event of Default then exists, Agent, any Lender (in respect to clauses (iii) and (iv) only) incurs legal or accounting expenses or any other costs or out-of-pocket expenses in connection with (i) the negotiation and preparation of this Agreement or any of the other Loan Documents, any amendment of or modification of this Agreement or any of the other Loan Documents (ii) the administration of this Agreement or any of the other Loan Documents and the transactions contemplated hereby and thereby; (iii) any litigation, contest, dispute, suit, proceeding or action (whether instituted by Agent, any Lender, Borrower or any other Person) in any way relating to the Collateral, this Agreement or any of the other Loan Documents or Borrower’s affairs; (iv) any attempt to enforce any rights of Agent or any Lender against Borrower or any other Person which may be obligated to Agent or any Lender by virtue of this Agreement or any of the other Loan Documents, including, without limitation, the Account Debtors; or (v) any attempt to inspect, verify, protect, preserve, restore, collect, sell, liquidate or otherwise dispose of or realize upon the Collateral; then all such reasonable legal and accounting expenses, other reasonable costs and out-of-pocket expenses of Agent or any Lender shall be charged to Borrower.  All amounts chargeable to Borrower under this Section 2.8 shall be Obligations secured by all of the Collateral, shall be payable on demand to Agent or the applicable Lender, as the case may be, and shall bear interest from the date such demand is made until paid in full at the rate applicable to Base Rate Revolving Credit Portions from time to time.  Costs and expenses charged to Borrower pursuant to this Section 2.8.1 shall not be duplicative of costs and expenses charged to Borrowers pursuant to Section 2.7 above.  The foregoing notwithstanding, Borrower shall not be required to reimburse Agent or any Lender for any expenses or costs incurred by Agent or any Lender in any litigation, contest, dispute, suit, proceeding or action in which Borrower, pursuant to a final non-applicable order from a  court of competent jurisdiction, are the prevailing party.

2.8.2                   Collateral Protection Expenses .  All expenses of protecting, storing, warehousing, insuring, handling, maintaining and shipping the Collateral, any and all excise, property, sales, and use taxes imposed by any state, federal, or local authority on any of the Collateral or in respect of the sale thereof shall be borne and paid by Borrower.  If Borrower fails to promptly pay any portion thereof when due, Agent may, at its option, but shall not be required to, pay the same and charge Borrower therefor.

2.9           Bank Charges .  Borrower shall pay to Agent, on demand, any and all fees, costs or expenses which Agent or any Lender pays to a bank or other similar institution arising out of or in connection with (i) the forwarding to any Borrower or any other Person on behalf of Borrower, by Agent or any Lender, of proceeds of loans made by Lenders to Borrower pursuant to this Agreement and (ii) the depositing for collection, by Agent or any Lender of any check or item of payment received or delivered to Agent or any Lender on account of the Obligations.

2.10           Capital Adequacy Charge .  In the event that any Lender (an “Affected Lender”) shall have determined that the adoption (effected after the date hereof) of any law, rule or regulation regarding capital adequacy, or any change therein or in the interpretation or application thereof or compliance by any such Affected Lender with any request or directive regarding capital adequacy (whether or not having the force of law) from any central bank or governmental authority, does or shall have the effect of reducing the rate of return on such Affected Lender’s capital as a consequence of its obligations hereunder to a level below that which such Affected Lender could have achieved but for such adoption, change or compliance (taking into  consideration such Affected Lender’s policies with respect to capital adequacy) by an amount deemed by such Affected Lender, in its reasonable discretion, to be material, then from time to time, after submission by such Affected Lender to Borrower of a written demand therefor, which demand shall be made within sixty (60) days of such reduction, Borrower shall pay to such Affected Lender such additional amount or amounts as will compensate such Affected Lender for such reduction.  A certificate of such Affected Lender claiming entitlement to payment as set forth above shall be conclusive in the absence of manifest error.  Such certificate shall set forth the nature of the occurrence giving rise to such payment, the additional amount or amounts to be paid to such Affected Lender, and the method by which such amounts were determined.  In determining such amount, such Affected Lender may use any reasonable averaging and attribution methods.  Each Lender and Agent agrees to allocate any such cost increase among its similarly situated customers in good faith and on an equitable basis; provided , however , that any such Affected Lender shall not be entitled to such amounts unless similar assessments are imposed by such Affected Lender on other comparable borrowers of such Affected Lender.  In the event that the provisions of this Section 2.10 or Section 2.3(iv) result in the effective interest rates being charged to Borrower being increased, on a per annum basis, by more than one quarter percent (1/4%), Borrower may require any such Affected Lender (other than Bank of America) or any Lender (other than Bank of America) subject to a Tax under Section 2.3(iv) to sell and transfer all its interest in this Agreement and its Revolving Credit Note and Revolving Credit Loan Commitments to a substitute Lender (who shall be reasonably acceptable to Agent and Borrower) for a price in cash equal to principal balance of such Affected or other Lender’s outstanding Loans plus all accrued but unpaid interest thereon plus all accrued but unpaid fees due any such Affected or other Lender under the terms hereof.  Any such sale and transfer shall be made pursuant to the terms of Section 12.3 hereof.  Any Lender who becomes an Affected Lender or who incurs additional Taxes in respect to Section 2.3(iii) or 2.3(iv) above, shall give Borrower prompt written notice of such fact.

2.11           Payment of Charges .  All amounts chargeable to Borrower under Section 2 and under Section 6.1.3 hereof shall be Obligations secured by all of the Collateral, shall be payable on demand and shall bear interest from the date such advance was made until paid in full at the rate applicable to Base Rate Revolving Credit Portions from time to time.

3.            LOAN ADMINISTRATION.

3.1           Manner of Borrowing Revolving Credit Loans .  Borrowings under the credit facility established pursuant to Section 1 hereof shall be as follows:

3.1.1                   Loan Requests .  (A) A request for a Revolving Credit Loan shall be made, or shall be deemed to be made, in the following manner:  (i) Borrower may give Agent a Notice of Revolving Credit Loan, in which notice Borrower shall specify the amount of the proposed borrowing and the proposed borrowing date, provided , however , that no such request may be made at a time when there exists a Default or an Event of Default; and (ii) the becoming due of any amount required to be paid under this Agreement, whether as interest or for any other Obligation, shall be deemed irrevocably to be a request for a Revolving Credit Loan on the due date in the amount required to pay such interest or other Obligation.  As an accommodation to Borrower, Agent may permit telephonic requests for loans and electronic transmittal of instructions, authorizations, agreements or reports to Agent by Borrower.  Unless Borrower specifically directs Agent in writing not to accept or act upon telephonic or electronic communications from Borrower, Agent shall have no liability to Borrower for any loss or damage suffered by any Borrower as a result of Agent’s honoring of any requests, execution of any instructions, authorizations or agreements or reliance on any reports communicated to it telephonically or electronically and purporting to have been sent to Agent by Borrower and Agent shall have no duty to verify the origin of any such communication or the authority of the person sending it.  Except as otherwise provided in Section 2.3 and subject to the provisions of Section 1.1.2 , each Revolving Credit Loan shall be made on notice, given not later than 11:00 a.m. (Milwaukee time) on the Business Day of the proposed Revolving Credit Loan by Borrower to Agent, which shall give to each Lender prompt written notice thereof by telecopier, telex or cable.  Each such notice (a “Notice of Revolving Credit Loan”) shall be in writing or by telephone to Agent at (262) 207-3347, confirmed immediately in writing, specifying therein the requested date and amount of such Revolving Credit Loan.  Each Lender shall, not later than 2:00 p.m. (Milwaukee time) on each requested date, wire to a bank designated by Agent the amount of that Lender’s Revolving Credit Percentage of the requested Revolving Credit Loan.  Agent shall, before 2:30 P.M. (Milwaukee time) on the date of the proposed Revolving Credit Loan, subject to the provisions hereof, wire to a bank designated by Borrower and reasonably acceptable to Agent, the amount of such Revolving Credit Loan to the extent received from the Lenders.  The failure of any Lender to make the Revolving Credit Loan to be made by it shall not relieve any other Lender of its obligation hereunder to make its Revolving Credit Loan.  Neither Agent nor any other Lender shall be responsible for the failure of any other Lender to make the Revolving Credit Loan to be made by such other Lender.

(B)            Defaulting Lender .  Agent may (but shall not be required to), in its discretion, retain payments or other funds received by Agent that are to be provided to a Defaulting Lender hereunder, and may apply such funds to such Lender’s defaulted obligations or readvance the funds to Borrower in accordance with this Agreement.  The failure of any Lender to fund a Loan, to make any payment in respect of any Letter of Credit or LC Guaranty or to otherwise perform its obligations hereunder shall not relieve any other Lender.  Lenders and Agent agree (which agreement is solely among the, and not for the benefit of or enforceable by Borrower) that, solely for purposes of determining a Defaulting Lender’s right to vote on matters relating to the Loan Documents and to share in payments, fees and Collateral proceeds thereunder, a Defaulting Lender shall not be deemed to be a “Lender” until all its defaulted obligations have been cured.

3.1.2                   Disbursement .  Borrower hereby irrevocably authorizes Agent to disburse the proceeds of each Revolving Credit Loan requested, or deemed to be requested, pursuant to this Section 3.1.2 as follows:  (i) the proceeds of each Revolving Credit Loan shall be disbursed by Agent in lawful money of the United States of America in immediately available funds by wire transfer to such bank account as may be agreed upon by Borrower and Agent from time to time or elsewhere if pursuant to a written direction from Borrower; and (ii) the proceeds of each Revolving Credit Loan requested under Section 3.1.1(ii) shall be disbursed by Agent by way of direct payment of the relevant interest or other Obligation.

3.1.3                   Letter of Credit and LC Guaranty Requests .  A request for a Letter of Credit or LC Guaranty shall be made in the following manner:  Borrower may give Agent and Bank a written notice of its request for the issuance of a Letter of Credit or LC Guaranty, not later than 11:00 a.m. Milwaukee time, one Business Day before the proposed issuance date thereof, in which notice Borrower shall specify the proposed issuer and issuance date; provided , that no such request may be made at a time when there exists a Default or Event of Default.  Such request shall be accompanied by an executed application and reimbursement agreement in form and substance satisfactory to the Person being asked to issue the Letter of Credit or LC Guaranty, as well as any required corporate resolutions.

3.2           Payments .  Except where evidenced by notes or other instruments issued or made by Borrower to Lenders and accepted by Lenders specifically containing payment provisions which are in conflict with this Section 3.2 (in which event the conflicting provisions of said notes or other instruments shall govern and control), the Obligations shall be payable as follows:

3.2.1                   Principal .  Principal payable on account of Revolving Credit Loans shall be payable by Borrower to Agent for the ratable benefit of Lenders immediately upon the earliest of (i) the receipt by Agent or Borrower of any proceeds of any of the Collateral, to the extent of said proceeds, except that, so long as no Default or Event of Default exists, if, after application of the proceeds to the Base Rate Revolving Credit Portion, any remaining  Loans outstanding at the time of receipt by any Borrower or Agent of any such proceeds are LIBOR Revolving Portions outstanding, then Borrower may at its option direct that such proceeds be held by Agent in a non-interest bearing cash collateral account maintained by Agent to be applied to the payment of principal on the last day of the LIBOR Period applicable to each LIBOR Portion in the order of maturity or Borrower  may place such proceeds in an interest bearing account provided that such account is pledged to Agent, for its benefit and the ratable benefit of Lenders, in a manner reasonably satisfactory to Agent; (ii) the occurrence of an Event of Default in consequence of which Agent or Required Lenders elect(s) to accelerate the maturity and payment of the Obligations, or (iii) termination of this Agreement pursuant to Section 4 hereof; provided , however , that if an Overadvance shall exist at any time, Borrowers shall, on demand, repay the Overadvance.

3.2.2                   Interest .

(i)            Base Rate Portion .  Interest accrued on Base Rate Portions shall be due and payable on the earliest of (1) the first calendar day of each month (for the immediately preceding month), computed through the last calendar day of the preceding month, (2) the occurrence of an Event of Default in consequence of which Agent or Required Lenders elect(s) to accelerate the maturity and payment of the Obligations or (3) termination of this Agreement pursuant to Section 4 hereof.

(ii)            LIBOR Portion .  Interest accrued on each LIBOR Portion shall be due and payable on each LIBOR Interest Payment Date and on the earliest of (1) the last day of the LIBOR Period applicable to such LIBOR Portion, (2) the occurrence of an Event of Default in consequence of which Agent or Required Lenders elect to accelerate the maturity and payment of the Obligations or (3) termination of this Agreement pursuant to Section 4 hereof.

3.2.3                   Costs, Fees and Charges .  Costs, fees and charges payable pursuant to this Agreement shall be payable by Borrowers as and when provided in Section 2 hereof, to Agent for its benefit and/or the ratable benefit of Lenders or to any other Person designated by Lender in writing.

3.2.4                   Other Obligations .  The balance of the Obligations requiring the payment of money, if any, shall be payable by Borrowers to Agent for its benefit and/or the ratable benefit of Lenders as and when provided in this Agreement, the Notes, the Other Agreements or the Security Documents, or on demand, whichever is later.

3.3           Mandatory and Voluntary Prepayments .

3.3.1                   Proceeds of Sale, Loss, Destruction or Condemnation of Collateral .  Except as provided below or in Section 6.4.2 hereof, if Borrower sells any of the Collateral, or if any of the Collateral is lost or destroyed or taken by condemnation, Borrower shall pay to Agent for the ratable benefit of Lenders, unless otherwise agreed by Required Lenders, as and when received by Borrower and as a mandatory prepayment of the Loans, as herein provided, a sum equal to the net cash proceeds (including insurance payments) received by Borrower from such sale, loss, destruction or condemnation.  The applicable prepayment shall be applied to reduce the outstanding principal balance of the Revolving Credit Loans.

3.3.2                   Other Mandatory Prepayments .  (A) Except as provided below, if Borrower receives any proceeds from any tax refunds, indemnity payments or pension reversions, Borrower shall pay to Agent for the ratable benefit of Lenders, as and when received by Borrower and as a mandatory prepayment of the Loans, a sum equal to the proceeds of such tax refund, indemnity payment or pension reversion so received by Borrower.  The foregoing notwithstanding, if Borrower receives any indemnity payment which effectively reimburses Borrower for a cost or expense incurred or to be incurred by Borrower, then the proceeds of such indemnity payment paid over to Agent pursuant to the preceding sentence shall be applied against outstanding Revolving Credit Loans.

(B)           Borrower shall make a mandatory prepayment of the Loans in the amount of the net proceeds received by Borrower from any offering or sale of its debt or equity Securities.

(C)           Any applicable prepayment made pursuant to Section 3.3.2(a) or (b) above shall be applied to reduce the outstanding principal balance of the Revolving Credit Loans.

3.3.3                   Voluntary Prepayments .  Borrower may voluntarily prepay, without penalty, premium or other charge, other than LIBOR breakage fees or administrative fees, any of the Loans at any time during the Original Term.

3.4           Application of Payments and Collections .  All items of payment received by Agent by 12:00 noon, Chicago time, on any Business Day shall be deemed received on that Business Day.  All items of payment received after 12:00 noon, Chicago time, on any Business Day shall be deemed received on the following Business Day.  For the purpose of computing interest hereunder, all items of payment received by Agent shall be deemed applied by Agent on an account of the Obligations (subject to final payment of such items) on the first Business Day after receipt of such item in immediately good funds.  Borrower irrevocably waives the right to direct the application of any and all payments and collections at any time or times hereafter received by Agent from or on behalf of Borrower, and Borrower does hereby irrevocably agree that Agent shall, after the occurrence and during the continuation of an Event of Default, have the continuing exclusive right to apply and reapply any and all such payments and collections received at any time or times hereafter by Agent or its agent against the Obligations, in such manner as Agent may deem advisable, notwithstanding any entry by Agent upon any of its books and records.  If as the result of collections of Accounts as authorized by Section 6.2.6 hereof a credit balance exists in the Loan Account, such credit balance shall not accrue interest in favor of Borrower, but shall be available to Borrower at any time or times for so long as no Default or Event of Default exists.

3.5           All Loans to Constitute One Obligation .  The Loans shall constitute one general Obligation of Borrower, and shall be secured by Agent’s Lien for its benefit and the ratable benefit of Lenders upon all of the Collateral.

3.6           Loan Account .  Agent shall enter all Loans as debits to the Loan Account and shall also record in the Loan Account all payments made by Borrower on any Obligations and all proceeds of Collateral which are finally paid to Agent or any Lender, and may record therein, in accordance with customary accounting practice, other debits and credits, including interest and all charges and expenses properly chargeable to Borrower.

3.7           Statements of Account .  Agent will account to Borrower monthly with a statement of Loans, charges and payments made pursuant to this Agreement, and such account rendered by Agent shall be deemed final, binding and conclusive, absent demonstrable error, upon Borrower unless Agent is notified by Borrower in writing to the contrary within 45 days of the date each accounting is mailed to Borrower.  Such notice shall only be deemed an objection to those items specifically objected to therein.

4.            TERM AND TERMINATION

4.1           Term of Agreement .  Subject to Agent’s and Lender’s right to cease making Loans to Borrower upon or after the occurrence of any Default or Event of Default, this Agreement shall be in effect for a period of four years from the date hereof, through and including September 21, 2013 (the “Original Term”), unless terminated as provided in Section 4.2 hereof.

4.2           Termination .

4.2.1                   Termination by Lender .  Agent or Required Lenders may terminate this Agreement with notice (or in respect to Events of Default arising under Section 10.1.10 without notice) after the occurrence of an Event of Default resulting in the Obligations being declared due and payable.

4.2.2                   Termination by Borrower .  Upon at least 10 days prior written notice to Agent, Borrower may, at its option, terminate this Agreement; provided , however , no such termination shall be effective until Borrower have paid all of the Obligations in immediately available funds and all Letters of Credit and LC Guaranties have expired or have been cash collateralized to Agent’s satisfaction.  Any notice of termination given by Borrower shall be irrevocable unless Required Lenders otherwise agree in writing, and Lenders shall have no obligation to make any Loans or issue or procure any Letters of Credit or LC Guaranties on or after the termination date stated in such notice.  Borrower may elect to terminate this Agreement in its entirety only.  No section of this Agreement or type of Loan available hereunder may be terminated singly.

4.2.3                   Effect of Termination .  All of the Obligations shall be immediately due and payable upon the termination date stated in any notice of termination of this Agreement.  All undertakings, agreements, covenants, warranties and representations of Borrowers contained in the Loan Documents shall survive any such termination and Agent shall retain its Liens in the Collateral and all of its rights and remedies under the Loan Documents notwithstanding such termination until Borrower has paid the Obligations to Agent and Lenders, in full, in immediately available funds.  Notwithstanding the payment in full of the Obligations, Agent shall not be required to terminate its security interests in the Collateral unless, with respect to any loss or damage Agent or any Lender may incur as a result of dishonored checks or other items of payment received by Agent or any Lender from any Borrower or any Account Debtor and applied to the Obligations, Agent shall, at its option, (i) have received a customary written indemnity and release agreement, executed by Borrower and by any Person whose loans or other advances to Borrower are used in whole or in part to satisfy the Obligations, indemnifying Agent and Lenders from any such loss or damage; or (ii) have retained such monetary reserves for such period of time as Agent, in its reasonable discretion, may deem necessary to protect Agent and Lenders from any such loss or damage.

5.            SECURITY INTERESTS

5.1           Security Interest in Collateral .  To secure the prompt payment and performance to Agent and Lenders of the Obligations, Borrower hereby grants to Agent for its benefit and the ratable benefit of Lenders a continuing Lien upon all of Borrower’s assets (excluding the real Property at 10201 North Loop East, Houston, Texas), including all of the following Property and interests in Property of Borrower, whether now owned or existing or hereafter created, acquired or arising and wheresoever located:

Notwithstanding the foregoing, Collateral shall not include:  (1) any licenses or permits, the encumbrance of which would violate any law, statute or regulation; or (2) any material contract rights (including, without limitation, any contracts or leases), the encumbrance of which would violate the terms of the agreements establishing such rights; provided that Borrower shall use reasonable good faith efforts to obtain any necessary consent to enable any such contract right to be included within the Collateral.

5.2           Lien Perfection; Further Assurances .  Borrower shall execute such UCC financing statements as are required by the Code and such other instruments, assignments or documents as are necessary to perfect Agent’s Lien upon any of the Collateral and shall take such other action as may be required to perfect or to continue the perfection of Agent’s Lien upon the Collateral.  Unless prohibited by applicable law, Borrower hereby authorizes Agent to execute and file any such financing statement on Borrower’s behalf.  The parties agree that a carbon, photographic or other reproduction of this Agreement shall be sufficient as a financing statement and may be filed in any appropriate office in lieu thereof.  At Agent’s request, Borrower shall also promptly execute or cause to be executed and shall deliver to Agent any and all documents, instruments and agreements deemed necessary by Agent to give effect to or carry out the terms or intent of the Loan Documents.

5.3           Safekeeping of Collateral .  Agent shall not be liable or responsible in any way for the safekeeping of any of the Collateral or for any loss or damage thereto (except for reasonable care in the custody thereof while any Collateral is in Agent’s actual possession) or for any diminution in the value thereof, or for any act or default of any warehouseman, carrier, forwarding agency, or other person whomsoever, but the same shall be at Borrower’s sole risk.

5.4           Lien on Realty .  Agent and Lender agree to release its Lien created by the Mortgage.  If Borrower shall acquire at any time or times hereafter any interest in other real Property (other than leasehold interests in sales offices and the real Property hereto date subject to the Mortgage), Borrower agrees promptly to execute and deliver to Agent, for its benefit and the ratable benefit of Lenders, as additional security and Collateral for the Obligations, deeds of trust, security deeds, mortgages or other collateral assignments reasonably satisfactory in form and substance to Agent and its counsel (herein collectively referred to as “New Mortgages”) covering such real Property.  Each New Mortgage shall be duly recorded (at Borrower’s expense) in each office where such recording is required to constitute a valid Lien on the real Property covered thereby.  In respect to each New Mortgage, Borrower shall deliver to Agent, at Borrower’s expense, mortgagee title insurance policies issued by a title insurance company reasonably satisfactory to Agent insuring Agent, as mortgagee; such policies shall be in form and substance reasonably satisfactory to Agent and shall insure a valid first Lien in favor of Agent for its benefit and the ratable benefit of Lenders, on the Property covered thereby, subject only to those exceptions reasonably acceptable to Agent and its counsel.  Borrower shall also deliver to Agent such other documents, including, without limitation, ALTA Surveys, as Agent and its counsel may reasonably request relating to the real Property subject to any such New Mortgage.

6.            COLLATERAL ADMINISTRATION

6.1           General .

6.1.1                   Location of Collateral .  All Collateral, other than Inventory in transit, Equipment being repaired in the ordinary course of business consistent with past practice at outside locations and motor vehicles, will at all times be kept by Borrower and its Subsidiaries at one or more of the locations set forth in Exhibit 6.1.1 hereto and shall not, without the prior written approval of Agent, be moved therefrom except, prior to an Event of Default and Agent’s or Required Lenders’ acceleration of the maturity of the Obligations in consequence thereof, for (i) sales of Inventory in the ordinary course of business; and (ii) removals in connection with dispositions of Equipment that are authorized by Section 6.4.2 hereof.

6.1.2                   Insurance of Collateral .  Borrower shall maintain and pay for insurance upon all Collateral wherever located and with respect to Borrower’s business, covering casualty, hazard, public liability and such other risks in such amounts and with such insurance companies as are reasonably satisfactory to Agent.  Borrower shall deliver the originals (or reasonable facsimiles thereof) of such policies to Agent with satisfactory lender’s loss payable endorsements, naming Agent as loss payee, assignee or additional insured, as appropriate.  Each policy of insurance or endorsement shall contain a clause requiring the insurer to give not less than 30 days prior written notice to Agent in the event of cancellation of the policy for any reason whatsoever and a clause specifying that the interest of Agent shall not be impaired or invalidated by any act or neglect of Borrower or the owner of the Property or by the occupation of the premises for purposes more hazardous than are permitted by said policy.  If Borrower fails to provide and pay for such insurance, Agent may, at its option, but shall not be required to, procure the same and charge Borrower therefor.  Borrower agrees to deliver to Agent, promptly as rendered, true copies of all reports made in any reporting forms to insurance companies.

6.1.3            Protection of Collateral .  All expenses of protecting, storing, warehousing, insuring, handling, maintaining and shipping the Collateral, any and all excise, property, sales, and use taxes imposed by any state, federal, or local authority on any of the Collateral or in respect of the sale thereof shall be borne and paid by Borrower.  If Borrower fails to promptly pay any portion thereof when due, Agent may, at its option, but shall not be required to, pay the same and charge Borrower therefor.

6.2           Administration of Accounts .

6.2.1            Borrowing Base Certificate .  On or before the 25 ^th day of each month from and after the date hereof, Borrower shall deliver to Agent a Schedule of Accounts and a Borrowing Base Certificate, which Borrowing Base Certificate shall be in the form attached hereto as Exhibit 6.2.1 , as of the last day of the immediately preceding month, with such supporting materials as Agent shall reasonably request.  If Borrower deems advisable, Borrower shall execute and deliver to Agent Borrowing Base Certificates more frequently than monthly.  In the event that Borrower is required to furnish Borrower Base Certificates more frequently than monthly, Agent and Lenders acknowledge that Inventory and Eligible Inventory amounts shall only be updated monthly.  “Schedule of Accounts” shall mean an aged trial balance of Accounts in a form reasonably acceptable to Agent.

6.2.2            Discounts, Allowances, Disputes .  If Borrower grants any discounts, allowances or credits that are not shown on the face of the invoice for the Account involved, Borrower shall report such discounts, allowances or credits, as the case may be, to Agent as part of the next required Schedule of Accounts.  If any amounts due and owing in excess of $100,000 are in dispute between Borrower and any Account Debtor, Borrower shall provide Agent with written notice thereof at the time of submission of the next Schedule of Accounts, explaining in detail the reason for the dispute, all claims related thereto and the amount in controversy.  Upon and during the continuation of an Event of Default, Agent shall have the right to settle or adjust all disputes and claims directly with the Account Debtor and to compromise the amount or extend the time for payment of the Accounts upon such terms and conditions as Agent may deem advisable, and to charge the costs and expenses thereof, including attorney’s fees, to Borrower.

6.2.3            Taxes .  If an Account includes a charge for any tax payable by Borrower to any governmental taxing authority, Agent is authorized, in its sole discretion, to pay the amount thereof to the proper taxing authority for the account of Borrower and to charge Borrower therefor, provided , however that Agent shall not be liable for any taxes to any governmental taxing authority that may be due by Borrower.

6.2.4            Account Verification .  Whether or not a Default or an Event of Default has occurred, any of Agent’s officers, employees or agents shall have the right, at any time or times hereafter, in the name of Agent, any designee of Agent or Borrower, to verify the validity, amount or any other matter relating to any Accounts by mail, telephone, telegraph or otherwise.  Borrower shall cooperate fully with Agent in an effort to facilitate and promptly conclude any such verification process.  Agent agrees to conduct any such verification in a commercially reasonable manner.

6.2.5            Maintenance of Dominion Account .  Borrower shall maintain a Dominion Account pursuant to a lockbox or other arrangement acceptable to Agent with Bank.  Borrower shall issue to any such banks an irrevocable letter of instruction directing such banks to deposit all payments or other remittances received in the lockbox to the Dominion Account for application on account of the Obligations.  All funds deposited in the Dominion Account shall immediately become the property of Agent and Borrower shall obtain the agreement by such banks in favor of Agent to waive any offset rights against the funds so deposited.  Agent assumes no responsibility for such lockbox arrangement, including, without limitation, any claim of accord and satisfaction or release with respect to deposits accepted by any bank thereunder.

6.2.6            Collection of Accounts, Proceeds of Collateral .  To expedite collection, Borrower shall endeavor in the first instance to make collection of its Accounts for Agent.  All remittances received by Borrower on account of Accounts, together with the proceeds of any other Collateral, shall be held as Agent’s property by Borrower as trustee of an express trust for Agent’s benefit and Borrower shall immediately deposit same in kind in the Dominion Account.  Agent retains the right at all times after the occurrence of a Default or an Event of Default to notify Account Debtors that Accounts have been assigned to Agent and to collect Accounts directly in its own name and to charge the collection costs and expenses, including attorneys’ fees to Borrower.

6.3           Administration of Inventory .

6.3.1            Records and Reports of Inventory .  Borrower shall keep accurate and complete records of its Inventory.  Borrower shall furnish to Agent Inventory reports in form and detail satisfactory to Agent at such times as Agent may request not later than the 25 ^th day of such month.  Said Inventory reports shall be included within the Borrowing Base Certificates.  Borrower shall conduct a physical inventory no less frequently than annually and shall provide to Agent a report based on each such physical inventory promptly thereafter, together with such supporting information as Agent shall reasonably request.

6.4           Administration of Equipment .

6.4.1            Records and Schedules of Equipment .  Borrower shall keep accurate records itemizing and describing the kind, type, quality and quantity of its Equipment and all dispositions made in accordance with Section 6.4.2 hereof, and shall furnish Agent with a current schedule containing the foregoing information on at least an annual basis and more often if requested by Agent.  Immediately on request therefor by Agent, Borrower shall deliver to Agent any and all evidence of ownership, if any, of any of the Equipment.

6.4.2            Dispositions of Equipment .  Borrower will not sell, lease or otherwise dispose of or transfer any of the Equipment or any part thereof without the prior written consent of Required Lenders; provided , however , that the foregoing restriction shall not apply, for so long as no Default or Event of Default exists, to (i) dispositions of Equipment which, in the aggregate during any consecutive twelve-month period, has a fair market value or book value, whichever is less, of $100,000 or less, provided that all proceeds thereof are remitted to Agent for application to the Loans as provided in Section 3.3.1 , or (ii) replacements of Equipment that is substantially worn, damaged or obsolete with Equipment of like kind, function and value or with better or more efficient Equipment, provided that the replacement Equipment shall be acquired not later than 180 days after the disposition of the Equipment that is to be replaced, the replacement Equipment shall be free and clear of Liens other than Permitted Liens that are not Purchase Money Liens, and Borrower shall have given Agent at least 5 days prior written notice of such disposition.

6.5           Payment of Charges .  All amounts chargeable to Borrower under Section 6 hereof shall be Obligations secured by all of the Collateral, shall be payable on demand and shall bear interest from the date such advance was made until paid in full at the rate applicable to Revolving Credit Loans from time to time.

7.            REPRESENTATIONS AND WARRANTIES

7.1           General Representations and Warranties .  To induce Agent and Lenders to enter into this Agreement and to make advances hereunder, Borrower warrants, represents and covenants to Agent and Lenders that:

7.1.1            Organization and Qualification .  Each of Borrower and its Subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation.  Each of Borrower and its Subsidiaries is duly qualified and is authorized to do business and is in good standing as a foreign corporation in each state or jurisdiction listed on Exhibit 7.1.1 hereto and in all other states and jurisdictions where the character of its Properties or the nature of its activities make such qualification necessary in which the failure of Borrower or any of its Subsidiaries to be so qualified would have a material adverse effect on the financial condition, business or Properties of Borrower or any of its Subsidiaries.

7.1.2            Corporate Power and Authority .  Each of Borrower and its Subsidiaries is duly authorized and empowered to enter into, execute, deliver and perform this Agreement and each of the other Loan Documents to which it is a party.  The execution, delivery and performance of this Agreement and each of the other Loan Documents have been duly authorized by all necessary corporate action and do not and will not (i) require any consent or approval of the shareholders of Borrower or any of its Subsidiaries; (ii) contravene Borrower’s or any of its Subsidiaries’ charter, articles or certificate of incorporation or by-laws; (iii) violate, or cause Borrower or any of its Subsidiaries to be in default under, any provision of any law, rule, regulation, order, writ, judgment, injunction, decree, determination or award in effect having applicability to Borrower or any of its Subsidiaries; (iv) result in a breach of or constitute a default under any material indenture or loan or credit agreement or any other agreement, lease or instrument to which Borrower or any of its Subsidiaries is a party or by which it or its Properties may be bound or affected; or (v) result in, or require, the creation or imposition of any Lien (other than Permitted Liens) upon or with respect to any of the Properties now owned or hereafter acquired by Borrower or any of its Subsidiaries.

7.1.3            Legally Enforceable Agreement .  This Agreement is, and each of the other Loan Documents when delivered under this Agreement will be, a legal, valid and binding obligation of each of Borrower and its Subsidiaries enforceable against it in accordance with its respective terms except as may be provided under applicable bankruptcy, insolvency, reorganization, moratorium, equity or redemption or similar laws affecting creditors’ rights generally, and the discretion of the court before which any proceeding thereof may be brought or general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law), including the availability of specific equitable remedies.

7.1.4            Capital Structure .   Exhibit 7.1.4 hereto states (i) the correct name of each of the Subsidiaries of Borrower, its jurisdiction of incorporation and the percentage of its Voting Stock owned by Borrower, (ii) the name of each of Borrower’s corporate or joint venture Affiliates and the nature of the affiliation excluding Affiliates that are unrelated to Borrower’s business or operations, (iii) the number, nature and holder of all outstanding Securities of Borrower and each Subsidiary of Borrower and (iv) the number of authorized, issued and treasury shares of Borrower and each Subsidiary of Borrower.  Borrower has good title to all of the shares it purports to own of the stock of each of its Subsidiaries, free and clear in each case of any Lien other than Permitted Liens.  All such shares have been duly issued and are fully paid and non-assessable.  Except as set forth on Exhibit 7.1.4 , there are no outstanding options to purchase, or any rights or warrants to subscribe for, or any commitments or agreements to issue or sell, or any Securities or obligations convertible into, or any powers of attorney relating to, shares of the capital stock of Borrower or any of its Subsidiaries.

7.1.5            Corporate Names .  Neither Borrower nor any of its Subsidiaries has been known as or used any corporate, fictitious or trade names except those listed on Exhibit 7.1.5 hereto.  Within the last five years, except as set forth on Exhibit 7.1.5 or in respect to the Acquisition, neither Borrower nor any of its Subsidiaries has been the surviving corporation of a merger or consolidation or acquired all or substantially all of the assets of any Person.

7.1.6            Business Locations; Agent for Process .  Each of Borrower’s and its Subsidiaries’ chief executive office and other places of business are as listed on Exhibit 6.1.1 hereto.  During the preceding one-year period, neither Borrower nor any of its Subsidiaries has had an office, place of business or agent for service of process other than as listed on Exhibit 6.1.1 .  Except as shown on Exhibit 6.1.1 , no Inventory is stored with a bailee, warehouseman or similar party, nor is any Inventory consigned to any Person.

7.1.7            Title to Properties; Priority of Liens .  Each of Borrower and its Subsidiaries has good, indefeasible and marketable title to and fee simple ownership of, or valid and subsisting leasehold interests in, all of its real Property (other than the real Property commonly known as 10201 North Loop East (10201 NLE), Houston, Texas and good title to all of the Collateral and all of its other Property, in each case, free and clear of all Liens except Permitted Liens.  Borrower has paid or discharged all lawful claims in accordance with good business practice which, if unpaid, might become a Lien against any of Borrower’s Properties that is not a Permitted Lien.  The Liens granted to Lender under Section 5 hereof are first priority Liens, subject only to Permitted Liens or as otherwise provided in Section 5.4 .

7.1.8            Accounts .  Agent may rely, in determining which Accounts are Eligible Accounts, on all statements and representations made by Borrower with respect to any Account or Accounts.  Unless otherwise indicated in writing to Agent, with respect to each Account:

(i)           It is genuine and in all respects what it purports to be, and it is not evidenced by a judgment;

(ii)          It arises out of a completed, bona fide sale and delivery of goods or rendition of services by Borrower in the ordinary course of its business and in accordance with the terms and conditions of all purchase orders, contracts or other documents relating thereto and forming a part of the contract between Borrower and the Account Debtor;

(iii)         It is for a liquidated amount maturing as stated in the duplicate invoice covering such sale or rendition of services, a copy or computer disc or file of which has been furnished or is available to Agent;

(iv)         Such Account, and Lender’s security interest therein, is not, and will not (by voluntary act or omission of Borrower) be in the future, subject to any offset, Lien, deduction, defense, dispute, counterclaim or any other adverse condition except for disputes resulting in returned goods where the amount in controversy is deemed by Agent to be immaterial, and each such Account is absolutely owing to Borrower and is not contingent in any respect or for any reason;

(v)          Borrower has made no agreement with any Account Debtor thereunder for any extension, compromise, settlement or modification of any such Account or any deduction therefrom, except discounts or allowances which are granted by Borrower in the ordinary course of its business for prompt payment and which are reflected in the calculation of the net amount of each respective invoice related thereto and are reflected in the Schedules of Accounts submitted to Agent pursuant to Section 6.2.1 hereof;

(vi)         There are no facts, events or occurrences which in any way impair the validity or enforceability of any Accounts or tend to reduce the amount payable thereunder from the face amount of the invoice and statements delivered to Agent with respect thereto;

(vii)        To the best of Borrower’s knowledge, the Account Debtor thereunder (1) had the capacity to contract at the time any contract or other document giving rise to the Account was executed and (2) such Account Debtor is Solvent; and

(viii)       To the best of Borrower’s knowledge, there are no proceedings or actions which are threatened or pending against any Account Debtor thereunder which might result in any material adverse change in such Account Debtor’s financial condition or the collectibility of such Account.

7.1.9            Equipment .  The Equipment is in good operating condition and repair, and all necessary replacements of and repairs thereto shall be made so that the value and operating efficiency of the Equipment shall be maintained and preserved, in all material respects, reasonable wear and tear excepted.  Borrower will not permit any of the Equipment to become affixed to any real Property leased to Borrower so that an interest arises therein under the real estate laws of the applicable jurisdiction unless the landlord of such real Property has executed a landlord waiver or leasehold mortgage in favor of and in form acceptable to Agent, and Borrower will not permit any of the Equipment to become an accession to any personal Property other than Equipment that is subject to first priority (except for Permitted Liens) Liens in favor of Agent for its benefit and the ratable benefit of Lenders.

7.1.10          Financial Statements; Fiscal Year .  The Consolidated and consolidating balance sheets of Guarantor and such other Persons described therein (including the accounts of Guarantor and all Subsidiaries of Guarantor (including Borrower) for the respective periods during which a Subsidiary relationship existed) as of December 31, 2008 and June 30, 2009, and the related statements of income, changes in stockholder’s equity, and changes in financial position for the periods ended on such dates, have been prepared in accordance with GAAP, and present fairly the financial positions of Guarantor, Borrower and such Persons at such dates and the results of Guarantor’s, Borrower’s and such Person’s operations for such periods.  The fiscal year of Guarantor and each of its Subsidiaries (including Borrower) ends on December 31 of each year.

7.1.11          Full Disclosure .  The financial statements referred to in Section 7.1.10 hereof do not, nor does this Agreement or any other written statement of Borrower to Agent, contain any untrue statement of a material fact or omit a material fact necessary to make the statements contained therein or herein not misleading.  As of the Closing Date, there is no fact which Borrower has failed to disclose to Agent in writing which materially affects adversely or so far as Borrower can now reasonably foresee, will materially affect adversely the Properties, business, prospects, profits or condition (financial or otherwise) of Borrower or any of its Subsidiaries or the ability of Borrower or its Subsidiaries to perform this Agreement or the other Loan Documents.

7.1.12          Solvent Financial Condition .  Each of Borrower and its Subsidiaries is now and, after giving effect to the Loans to be made, at all times will be, Solvent.  The Acquisition and other transactions contemplated hereby do not constitute a “fraudulent conveyance” or other voidable transactions under any applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally.

7.1.13          Surety Obligations .  Neither Borrower nor any of its Subsidiaries is obligated as surety or indemnitor under any surety or similar bond or other contract issued or entered into any agreement to assure payment, performance or completion of performance of any undertaking or obligation of any Person, except as provided in Exhibit 7.1.13 or with respect to performance bonds given in the ordinary course of business so long as the amount of Indebtedness (contingent or otherwise) (a) with respect to any such bonds does not at any time exceed $5,000,000 with respect to any one bond or related series of bonds or (b) the greater of (x) $25,000,000 and (y) an amount equal to ten percent (10%) of Borrower’s net sales for the most recently ended four fiscal quarters, in the aggregate.

7.1.14          Taxes .  Borrower’s federal tax identification number is 74-2400498.  The federal tax identification number of each of Borrower’s Subsidiaries is shown on Exhibit 7.1.14 hereto.  Borrower and each of its Subsidiaries has filed all federal, state and local tax returns and other reports it is required by law to file and has paid, or made provision for the payment of, all taxes, assessments, fees, levies and other governmental charges upon it, its income and Properties as and when such taxes, assessments, fees, levies and charges that are due and payable, unless and to the extent any thereof are being actively contested in good faith and by appropriate proceedings and Borrower maintains reasonable reserves on its books therefor.  The provision for taxes on the books of Borrower and its Subsidiaries are adequate for all years not closed by applicable statutes, and for its current fiscal year.

7.1.15          Brokers .  There are no claims for brokerage commissions, finder’s fees or investment banking fees in connection with the transactions contemplated by this Agreement.

7.1.16          Patents, Trademarks, Copyrights and Licenses .  Each of Borrower and its Subsidiaries owns or possesses all the patents, trademarks, service marks, trade names, copyrights and licenses necessary for the present and planned future conduct of its business without any known conflict with the rights of others.  All such patents, trademarks, service marks, trade names, registered copyrights and licenses are listed on Exhibit 7.1.16 hereto.

7.1.17          Governmental Consents .  Each of Borrower and its Subsidiaries has, and is in good standing with respect to, all governmental consents, approvals, licenses, authorizations, permits, certificates, inspections and franchises necessary to continue to conduct its business as heretofore or proposed to be conducted by it and to own or lease and operate its Properties as now owned or leased by it.

7.1.18          Compliance with Laws .  Each of Borrower and its Subsidiaries has duly complied with and its Properties, business operations and leaseholds are in compliance with, the provisions of all federal, state and local laws, rules and regulations applicable to Borrower or such Subsidiary, as applicable, its Properties or the conduct of its business except where the failure to so comply would not reasonably be expected to have a material adverse effect on Borrower’s business, assets or prospects, and there have been no citations, notices or orders of noncompliance issued to Borrower or any of its Subsidiaries under any such law, rule or regulation, which in any case would reasonably be expected to have a material adverse effect on Borrower’s business, assets or prospects.  Each of Borrower and its Subsidiaries has established and maintains an adequate monitoring system to insure that it remains in compliance with all federal, state and local laws, rules and regulations applicable to it.  No Inventory has been produced in violation of the Fair Labor Standards Act (29 U.S.C. §201 et seq .) as amended.

7.1.19          Restrictions .  To the best of Borrower’s knowledge, neither Borrower nor any of its Subsidiaries is a party or subject to any contract, agreement, or charter or other corporate restriction, which materially and adversely affects its business or the use or ownership of any of its Properties.  Neither Borrower nor any of its Subsidiaries is a party or subject to any contract or agreement which restricts its right or ability to incur Indebtedness, other than as set forth on Exhibit 7.1.19 hereto, none of which prohibit the execution of or compliance with this Agreement or the other Loan Documents by Borrower or any of its Subsidiaries, as applicable.

7.1.20          Litigation .  Except as set forth on Exhibit 7.1.20 hereto, there are no actions, suits, proceedings or investigations pending, or to the knowledge of Borrower, threatened, against or affecting Borrower or any of its Subsidiaries, or the business, operations, Properties, prospects, profits or condition of Borrower or any of its Subsidiaries, which could reasonably be expected to have a material adverse effect on Borrower’s business, assets or prospects.  Neither Borrower nor any of its Subsidiaries is in default with respect to any order, writ, injunction, judgment, decree or rule of any court, governmental authority or arbitration board or tribunal, which default could reasonably be expected to have a material adverse effect on Borrower’s business, assets or prospects.

7.1.21          No Defaults .  No event has occurred which would constitute a Default or an Event of Default.  Neither Borrower nor any of its Subsidiaries is in default, and no event has occurred and no condition exists which constitutes, or which with the passage of time or the giving of notice or both would constitute, a default in the payment of any Indebtedness to any Person for Money Borrowed having a principal amount of $150,000 or more.

7.1.22          Leases .   Exhibit 7.1.22(a) hereto is a complete listing of all capitalized leases of Borrower and its Subsidiaries and Exhibit 7.1.22(b) hereto is a complete listing of all operating leases of Borrower and its Subsidiaries.  Each of Borrower and its Subsidiaries is in full compliance with all of the terms of each of its respective capitalized and operating leases, except where the failure to so comply would not reasonably be expected to have a material adverse effect on Borrower’s business, assets or prospects.

7.1.23          Pension Plans .  Except as disclosed on Exhibit 7.1.23 hereto, neither Borrower nor any of its Subsidiaries has any Plan.  Borrower and each of its Subsidiaries is in full compliance, in all material respects, with the requirements of ERISA and the regulations promulgated thereunder with respect to each Plan.  No fact or situation that could result in a material adverse change in the financial condition of Borrower or any of its Subsidiaries exists in connection with any Plan.  Neither Borrower nor any of its Subsidiaries has any material withdrawal liability in connection with a Multiemployer Plan.

7.1.24          Trade Relations .  There exists no actual or threatened termination, cancellation or limitation of, or any modification or change in, the business relationship between Borrower or any of its Subsidiaries and any customer or any group of customers whose purchases individually or in the aggregate are material to the business of Borrower or any of its Subsidiaries, or with any material supplier, and there exists no present condition or state of facts or circumstances which would materially affect adversely Borrower or any of its Subsidiaries or prevent Borrower or any of its Subsidiaries from conducting such business after the consummation of the transaction contemplated by this Agreement in substantially the same manner in which it has heretofore been conducted.

7.1.25          Labor Relations .  Except as described on Exhibit 7.1.25 hereto, neither Borrower nor any of its Subsidiaries is a party to any collective bargaining agreement.  There are no grievances, disputes or controversies with any union or any other organization of Borrower’s or any of its Subsidiaries’ employees, or threats of strikes, work stoppages or any asserted pending demands for collective bargaining by any union or organization which, in any case, would reasonably be expected to have a material adverse affect on Borrower’s business, assets or prospects.

7.2            Continuous Nature of Representations and Warranties .  Each representation and warranty contained in this Agreement and the other Loan Documents, unless made solely as of a specific date, shall be continuous in nature and shall remain accurate, complete and not misleading at all times during the term of this Agreement, except for changes in the nature of Borrower’s or its Subsidiaries’ business or operations that would render the information in any Exhibit attached hereto either inaccurate, incomplete or misleading, so long as Agent has consented to such changes or such changes are expressly permitted by this Agreement or such changes could not reasonably be expected to have a material adverse effect on Borrower’s business, assets or prospects.  Further, Borrower shall have the right to amend and update the Exhibits attached hereto so long as any such amendment or modification does not disclose any fact or circumstance that would reasonably be expected to have a material adverse effect on Borrower’s business, assets or prospects.

7.3            Survival of Representations and Warranties .  All representations and warranties of Borrower contained in this Agreement or any of the other Loan Documents shall survive the execution, delivery and acceptance thereof by Agent and the parties thereto and the closing of the transactions described therein or related thereto.

8.           COVENANTS AND CONTINUING AGREEMENTS

8.1           Affirmative Covenants .  During the term of this Agreement, and thereafter for so long as there are any Obligations owing to Agent or any Lender, Borrower covenants that, unless otherwise consented to by Required Lenders in writing, it shall:

8.1.1            Visits and Inspections .  Permit representatives of Agent or any Lender, from time to time, as often as may be reasonably requested, but only during normal business hours, to visit and inspect the Properties of Borrower and each of its Subsidiaries, inspect, audit and make extracts from its books and records, and discuss with its officers, its employees and its independent accountants, Borrower’s and each of its Subsidiaries’ business, assets, liabilities, financial condition, business prospects and results of operations.  So long as no Default or Event of Default has occurred and is continuing, Agent and Lenders agree to give Borrower reasonable notice of any such visit or inspection.

8.1.2            Notices .  Promptly notify Agent in writing of the occurrence of any event or the existence of any fact which renders any representation or warranty in this Agreement or any of the other Loan Documents inaccurate, incomplete or misleading.

8.1.3            Financial Statements .  Keep, and cause each Subsidiary to keep, adequate records and books of account with respect to its business activities in which proper entries are made in accordance with good business practice and, to the extent applicable, GAAP reflecting all its financial transactions; and cause to be prepared and furnished to Agent and Lenders the following (all to be prepared in accordance with GAAP applied on a consistent basis, unless Guarantor’s certified public accountants concur in any change therein and such change is disclosed to Agent and Lenders and is consistent with GAAP):

(i)           not later than 120 days after the close of each fiscal year of Guarantor, unqualified audited (in respect to the Consolidated financial statements only) financial statements of Guarantor and its Subsidiaries (including Borrower) as of the end of such year, on a Consolidated and consolidating basis, certified by a firm of independent certified (in respect to the Consolidated financial statements only) public accountants of recognized standing selected by Guarantor but acceptable to Agent (except for a qualification for a change in accounting principles with which the accountant concurs);

(ii)          not later than 30 days after the end of each month hereafter, including the last month of Guarantor’s fiscal year, unaudited interim financial statements of Guarantor and its Subsidiaries (including Borrower) as of the end of such month and of the portion of Borrower’s financial year then elapsed, on a Consolidated and consolidating basis, certified by the principal financial officer of Guarantor as prepared in accordance with GAAP and fairly presenting the Consolidated financial position and results of operations of Guarantor and its Subsidiaries (including Borrower) for such month and period subject only to changes from audit and year-end adjustments and except that such statements need not contain notes;

(iii)         promptly after the sending or filing thereof, as the case may be, copies of any proxy statements, financial statements or reports which Borrower or Guarantor has made available to its shareholders and copies of any regular, periodic and special reports or registration statements which Borrower files with the Securities and Exchange Commission or any governmental authority which may be substituted therefor, or any national securities exchange;

(iv)         promptly after the filing thereof, copies of any annual report to be filed with ERISA in connection with each Plan; and

(v)          such other data and information (financial and otherwise) as Agent, from time to time, may reasonably request, bearing upon or related to the Collateral or Guarantor’s, Borrower’s and each of their Subsidiaries’ financial condition or results of operations.

Concurrently with the delivery of the financial statements described in clause (i) of this Section 8.1.3 , Borrower shall forward to Agent a copy of the accountants’ letter to Borrower’s management that is prepared in connection with such financial statements.  Concurrently with the delivery of the financial statements described in clauses (i) and (ii) of this Section 8.1.3 , Borrower shall cause to be prepared and furnished to Agent a Compliance Certificate in the form of Exhibit 8.1.3 hereto executed on behalf of Borrower by the Chief Financial Officer of Borrower.

Borrower authorizes Agent or its designated representatives to communicate directly with its independent certified public accountants and authorizes those accountants to disclose to Agent any and all financial statements and other supporting financial documents and schedules.  At or before the initial Closing Date, Borrower shall deliver a letter addressed to such accountants instructing them to comply with the provisions of this Section 8.1.3 .  Further within five (5) days after the earlier of the last day of each fiscal year of Borrower and the date Borrower engaged independent certified public accountants to audit Borrower’s financial statements, Borrower shall deliver to such independent certified public accountants a letter from Borrower addressed to such independent certified public accountants indicating that it is a primary intention of Borrower in engaging such accountants that Agent relies upon such financial statements of Borrower and its Subsidiaries.

8.1.4            Landlord and Storage Agreements .  Provide Agent with copies of all agreements between Borrower or any of its Subsidiaries and any landlord or warehouseman which owns any premises at which any Inventory may, from time to time, be kept.  In respect  to any lease entered into after the Closing Date (other than leases for sales offices) or leases entered into by Borrower prior to the closing of the Acquisition, Borrower shall provide Agent with landlord waivers or bailee letters with respect to such leased premises.  Such landlord waivers or bailee letters shall be in a form supplied by Agent to Borrower with such reasonable revisions as are customarily accepted by Agent or by similar financial institutions in similar financial transactions.

8.1.5            Projections .  No later than the first day of each fiscal year of Borrower, deliver to Agent and Lenders Projections of Borrower for the forthcoming 2 years, quarter by quarter, and for the forthcoming fiscal year, month by month.

8.1.6            Future Subsidiaries .  Promptly notify Agent upon any Person becoming a Subsidiary and, if such Person is not a Foreign Subsidiary, cause it to guaranty the Obligations (or to become a co-borrower hereunder) in a manner satisfactory to Agent, and to execute and deliver such documents, instruments and agreements and to take such other actions as Agent shall require to evidence and perfect a Lien in favor of Agent (for the benefit of Lenders) on all assets of such Person, including delivery of such legal opinions, in form and substance satisfactory to Agent, as it shall deem appropriate.

8.2           Negative Covenants .  During the term of this Agreement, and thereafter for so long as there are any Obligations to Lender, Borrower covenants that, unless Required Lenders has first consented thereto in writing, it will not:

8.2.1            Mergers; Consolidations; Acquisitions .  Except for Permitted Acquisitions, merge or consolidate, or permit any Subsidiary of Borrower to merge or consolidate, with any Person; nor acquire, nor permit any of its Subsidiaries to acquire, all or any substantial part of the Properties of any Person.

8.2.2            Loans .  Make, or permit any Subsidiary of Borrower to make, any loans or other advances of money (other than for salary, travel advances, advances against commissions and other similar advances in the ordinary course of business) to any Person.

8.2.3            Total Indebtedness .  Create, incur, assume, or suffer to exist, or permit any Subsidiary of Borrower to create, incur or suffer to exist, any Indebtedness, except:

(i)           Obligations owing to Agent and Lenders;

(ii)          Indebtedness of any Subsidiary of Borrower to Borrower;

(iii)         accounts payable to trade creditors and current operating expenses (other than for Money Borrowed) which are not aged more than 120 days from billing date or more than 60 days from the due date, in each case incurred in the ordinary course of business and paid within such time period, unless the same are being actively contested in good faith and by appropriate and lawful proceedings; and Borrower or such Subsidiary shall have set aside such reserves, if any, with respect thereto as are required by GAAP and deemed adequate by Borrower or such Subsidiary and its independent accountants;

(iv)         Obligations to pay Rentals permitted by Section 8.2.13 ;

(v)          Permitted Purchase Money Indebtedness;

(vi)         contingent liabilities arising out of endorsements of checks and other negotiable instruments for deposit or collection in the ordinary course of business;

(vii)        Capital Lease Obligations to the extent permitted by Section 8.2.8 in an aggregate principal amount of not more than $750,000;

(viii)       Indebtedness in respect to deferred taxes;

(ix)         Indebtedness relating to compensation owed to Borrower’s employees for services rendered in the ordinary course of business;

(x)          all unfunded pension and other employee benefit plan obligations and liabilities but only to the extent they are permitted to remain unfunded under applicable law;

(xi)         insurance reserves created in the ordinary course of business; and

(xii)         Indebtedness not included in paragraphs (i) through (xii) above which does not exceed at any time, in the aggregate, the sum of $500,000.

8.2.4            Affiliate Transactions .  Enter into, or be a party to, or permit any Subsidiary of Borrower to enter into or be a party to, any transaction with any Affiliate of Borrower or stockholder, except in the ordinary course of and pursuant to the reasonable requirements of Borrower’s or such Subsidiary’s business and upon fair and reasonable terms which are fully disclosed to Agent and are no less favorable to Borrower than would obtain in a comparable arm’s length transaction with a Person not an Affiliate or stockholder of Borrower or such Subsidiary.

8.2.5            Limitation on Liens .  Create or suffer to exist, or permit any Subsidiary of Borrower to creat